[Senate Hearing 107-671]
[From the U.S. Government Publishing Office]
S. Hrg. 107-671
TEA-21 REAUTHORIZATION: FREIGHT ISSUES
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE
OF THE
COMMITTEE ON
COMMERCE, SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
AND THE
SUBCOMMITTEE ON TRANSPORTATION, INFRASTRUCTURE AND NUCLEAR SAFETY
OF THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
ON
__________
SEPTEMBER 9, 2002
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
and the Committee on Environment and Public Works
______
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COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska
Virginia CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon SAM BROWNBACK, Kansas
MAX CLELAND, Georgia GORDON SMITH, Oregon
BARBARA BOXER, California PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri GEORGE ALLEN, Virginia
BILL NELSON, Florida
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
Jeanne Bumpus, Republican Staff Director and General Counsel
______
Subcommittee on Surface Transportation and Merchant Marine
JOHN B. BREAUX, Louisiana, Chairman
DANIEL K. INOUYE, Hawaii GORDON SMITH, Oregon
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska
Virginia CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
RON WYDEN, Oregon OLYMPIA J. SNOWE, Maine
MAX CLELAND, Georgia SAM BROWNBACK, Kansas
BARBARA BOXER, California PETER G. FITZGERALD, Illinois
JEAN CARNAHAN, Missouri JOHN ENSIGN, Nevada
JOHN EDWARDS, North Carolina
______
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
JAMES M. JEFFORDS, Vermont, Chairman
MAX BAUCUS, Montana BOB SMITH, New Hampshire
HARRY REID, Nevada JOHN W. WARNER, Virginia
BOB GRAHAM, Florida JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut CHRISTOPHER S. BOND, Missouri
BARBARA BOXER, California GEORGE V. VOINOVICH, Ohio
RON WYDEN, Oregon MICHAEL D. CRAPO, Idaho
THOMAS R. CARPER, Delaware LINCOLN CHAFEE, Rhode Island
HILLARY RODHAM CLINTON, New York ARLEN SPECTER, Pennsylvania
JON S. CORZINE, New Jersey PETE V. DOMENICI, New Mexico
Ken Connolly, Majority Staff Director
Dave Conover, Minority Staff Director
______
Subcommittee on Transportation, Infrastructure and Nuclear Safety
HARRY REID, Nevada, Chairman
MAX BAUCUS, Montana JAMES M. INHOFE, Oklahoma
BOB GRAHAM, Florida JOHN W. WARNER, Virginia
JOSEPH I. LIEBERMAN, Connecticut CHRISTOPHER S. BOND, Missouri
BARBARA BOXER, California GEORGE V. VOINOVICH, Ohio
RON WYDEN, Oregon LINCOLN CHAFEE, Rhode Island
(ii)
C O N T E N T S
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Page
JULY 24, 2002
OPENING STATEMENTS
Breaux, Hon. John B., U.S. Senator from the State of Louisiana... 1
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 6
Jeffords, Hon. James M., U.S. Senator from the State of Vermont.. 4
Reid, Hon. Harry, U.S. Senator from the State of Nevada.......... 2
WITNESSES
Caruthers, John D., Jr., Chairman, I-69 Mid-Continent Highway
Coalition...................................................... 30
Prepared statement........................................... 131
Dusenberry, Katie, Chairman, Arizona Department of Transportation
Board.......................................................... 20
Prepared statement........................................... 70
Hamberger, Edward R., President and Chief Executive Officer,
Association of American Railroads.............................. 24
Prepared statement........................................... 91
Responses to additional questions from:
Senator Jeffords......................................... 119
Senator Reid............................................. 118
Hecker, JayEtta, Director, Physical Infrastructure Group, U.S.
General Accounting Office...................................... 9
Prepared statement........................................... 51
Responses to additional questions from:
Senators Reid and Jeffords............................... 65
Senator Reid............................................. 62
Huerta, Michael P., Senior Vice President and Managing Director,
ACS State and Local Solutions, on behalf of the Coalition for
America's Gateways and Trade Corridors......................... 28
Prepared statement........................................... 126
Responses to additional questions from:
Senator Jeffords......................................... 130
Senator Reid............................................. 128
Larrabee, Rick, Director of Port Commerce, Port Authority of New
York and New Jersey............................................ 26
Prepared statement........................................... 120
Responses to additional questions from Senator Reid.......... 123
Shane, Jeffrey N., Associate Deputy Secretary and Director,
Office of Intermodalism, U.S. Department of Transportation..... 7
Prepared statement........................................... 39
Responses to additional questions from:
Senator Jeffords......................................... 49
Senator Reid............................................. 46
Wickham, Michael W., Chairman and Chief Executive Officer,
Roadway Express, Inc., on behalf of American Trucking
Associations................................................... 22
Prepared statement........................................... 73
Responses to additional questions from:
Senator Jeffords......................................... 90
Senator Reid............................................. 87
ADDITIONAL MATERIAL
Statements:
Evaluation of Transportation Research Board Special Report
267, Gerard J. McCullough.................................. 102
Los Angeles County Economic Development Corporation.......... 138
Magtube, Inc., Jim Fiske..................................... 135
McGovern, Hon. James P., U.S. Representative from the
Commonwealth of Massachusetts.............................. 144
TEA-21 REAUTHORIZATION: FREIGHT ISSUES
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MONDAY, SEPTEMBER 9, 2002
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Subcommittee on Surface Transportation and Merchant Marine,
Committee on Environment and Public Works,
Subcommittee on Transportation, Infrastructure, and Nuclear
Safety,
Washington, DC.
The subcommittees jointly met, pursuant to notice, at 2:38
p.m. in room SR-253, Russell Senate Office Building, Senator
Breaux [chairman of the Subcommittee on Surface Transportation
and Merchant Marine] presiding.
Present for the Committee on Commerce, Science, and
Transportation: Senator Breaux.
Present for the Committee on Environment and Public Works:
Senators Reid, Jeffords, and Inhofe.
OPENING STATEMENT OF HON. JOHN BREAUX, U.S. SENATOR FROM THE
STATE OF LOUISIANA
Senator Breaux. The committee will please come to order. I
would like to welcome our colleagues from the Environment and
Public Works Committee who are with us this afternoon for this
very important hearing, particularly Senator Reid and Senator
Inhofe and also Senator Jeffords and others who I know will be
attending. This is a joint hearing of the Subcommittee on
Surface Transportation and Merchant Marine and the Subcommittee
on Transportation, Infrastructure, and Nuclear Safety. I also
thank all of our witnesses for being with us.
I would just make a brief comment to point out that one of
our fastest-growing segments of our economy, and our gross
domestic product for this country, is international trade. This
segment of our economy is completely dependent on our
transportation sectors and on the intermodal transportation of
the goods that are engaged in commerce.
Today we are going to look at what has become one of the
backbones of our entire Nation's economy, the infrastructure
for the intermodal transportation system of the United States.
I think all of us who represent port areas are familiar with
the importance of an intermodal, interconnected, transportation
system, that without it we will not continue to be one of the
great trading nations of the world.
Intermodal containers, for instance, in the ocean shipping
area, are increasing dramatically. It used to be that a ship
that had 2,000 containers on it was considered one of the
largest in the world. Today we have ships carrying 7,000-plus
containers. If those containers were lined up one behind the
other on rail cars, it could extend over 35 miles, just from
the containers on one large container ship.
So we want to look at the problems associated with
intermodal transportation. I am delighted that our leader on
the Democratic side, Senator Reid, who has been so active in
these transportation measures from an appropriations standpoint
and others, is with us to help with this hearing this
afternoon. Senator Reid, any comments?
OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE
STATE OF NEVADA
Senator Reid. Thank you very much, Mr. Chairman. I am very
happy that we have here with us the chairman of the full
committee, Senator Jeffords, who has been so good at allowing
us to do things on the committee. As chairman of this
subcommittee, I appreciate his allowing us to do this joint
hearing.
Senator Breaux, you being from a State where you see these
ships come in all the time, you are used to them. But for me,
every time I go to a place where we have freight that comes by
ship I am stunned how big these are. I cannot imagine a ship
could stay afloat with 35 miles of railroad cars in it. It is
just hard for me to comprehend that we have vessels that can do
all of that.
I am happy to co-chair this hearing with you, Senator
Breaux. The subcommittee that you chair, Surface Transportation
and Merchant Marine, is extremely important and, even for those
of us who are not in ports, we all understand or should
understand that solving America's freight and passenger
transportation problems will require a comprehensive intermodal
and flexible approach.
Jurisdiction over surface transportation programs is
divided between our committee and your committee. We have to do
everything we can to coordinate our efforts. You and I have
been around long enough that it is a question of what we can
get done and do it as quickly as we can. Once we get something
done, there is a lot of credit to pass out. We do nothing, and
I think we'll get discredit for that.
We need to work not only with our committees, but we have
to work in Finance, Budget, and Appropriations. So we have to
do a lot to set the policy agenda. We can do that. We cannot
begin to address the significant problems facing our Nation's
transportation system unless we have adequate funding. Each of
these committees I have mentioned will be an important partner
in our efforts to secure the additional funding and budget
protection necessary to write a transportation bill that
addresses our Nation's significant highway, transit, and rail
infrastructure needs.
Funding problems--today we will deal with freight
transportation. Efficient transportation of freight is
essential to our Nation's economic growth and global
competitiveness. Nearly $10 trillion worth of freight is
transported each year on our roads, railroads and waterways. We
depend on our transportation system to get everything from food
and other agricultural products to consumer goods to
construction materials to coal to their destinations.
Freight transportation will double in the next 20 years.
This growth in freight will vastly outpace the growth of our
road and rail system and it can simply overwhelm our
transportation infrastructure. Already, bottlenecks exist at
border crossings with Canada and Mexico and in metropolitan
areas. The next transportation bill will have to address these
capacity issues and improve access to intermodal facilities.
In addition, we have to address operational issues that
impact the reliability of our transportation system.
Intelligent transportation systems will play a critical role.
We are fortunate to have a number of distinguished
witnesses today. I especially look forward to Katie Dusenberry,
who chairs the Arizona State Transportation Board, to talk
about the traffic bottleneck at Hoover Dam. As a result of the
closure of Hoover Dam, we have had to divert traffic--2,100
trucks a day now are detoured 23 miles or more.
Senator Breaux, you have heard me talk about my home town
of Searchlight. That is where they go, 2,300 trucks every day.
It is dangerous. It is the busiest two-lane highway in Nevada
and it is extremely dangerous and it is only going to get
worse. This bridge is essential to freight movements on the
Cana-Mex corridor and is a top priority for our entire region
of the country.
Senator Breaux, one of the things that we have to keep in
mind also is if you look at a chart, on numbers, trucks haul
most of the stuff and we want to do what we can to make sure
that our highways get the attention they need. But it is kind
of a misleading figure to look simply at numbers, because the
trucks cannot haul most of the stuff until it gets to them and
most of that comes with rail or through ocean traffic, barge
traffic. So we have a lot to do to make sure that we better
understand the freight system. If there were ever an area where
we cannot be provincial, that is, we in Nevada have to care
about Louisiana even though we do not have--in Las Vegas, four
inches of rain a year. You get that much in a couple of hours--
we have to be concerned because if we are going to keep Las
Vegas economically sound, we are going to have to figure a way
to get the traffic from Long Beach, New Orleans, and other
places.
[The prepared statement of Senator Reid follows:]
Statement of Hon. Harry Reid, U.S. Senator from the State of Nevada
Welcome to today's hearing on freight transportation issues. I am
pleased to co-chair this hearing with Senator Breaux and the Commerce
Subcommittee on Surface Transportation and Merchant Marine he chairs.
Solving America's freight and passenger transportation problems will
require a comprehensive, intermodal, and flexible approach.
Jurisdiction over surface transportation programs is divided between
the Environment and Public Works Committee, the Banking Committee, and
the Commerce Committee, and we will have to closely coordinate our
efforts. This joint hearing is an important example of that
cooperation, and I look forward to working closely with Senator Breaux
and our other partners throughout the TEA-21 reauthorization process.
In addition to working with the Commerce and Banking Committees on
policy issues, I intend to work closely with the Finance, Budget, and
Appropriations Committees on funding issues. While we have a lot of
important policy work ahead of us, we cannot begin to address the
significant problems facing our nation's surface transportation system
without adequate funding. Each of these committees will be an important
partner in our efforts to secure the additional funding and budget
protection necessary to write a transportation bill that addresses our
nation's significant highway, transit, and rail infrastructure needs.
One particular funding need that we will address at our hearing
today is freight transportation. The efficient transportation of
freight is essential to our nation's economic growth and global
competitiveness. Nearly 10 trillion dollars worth of freight is
transported each year on our roads, railroads, and waterways. We depend
on our transportation system to get everything--from food and other
agricultural products to consumer goods to construction materials to
coal--to its destination.
Freight transportation is expected to double in the next 20 years,
as the economy grows and international trade increases. This growth in
freight traffic will vastly outpace the growth of our road and rail
systems and threatens to overwhelm our transportation infrastructure.
Already, key bottlenecks exist at road and rail connections to
major U.S. seaports, at border crossings with Canada and Mexico, and in
metropolitan areas where roads and rail infrastructures are stretched
beyond their capacity.
This next transportation bill will have to address these capacity
issues and improve access to intermodal facilities if we are to keep
our economy moving and maintain our leadership in international trade.
In addition, we must address operational issues that impact the
reliability of our transportation system. Intelligent Transportation
Systems will play a crucial role in improving the reliability of our
transportation infrastructure and ensuring the flow of up-to-the-minute
information to users and managers.
We are fortunate to have a number of distinguished witnesses with
us today to provide our committees with insights into the freight
challenges we face and, we hope, some proposed solutions to these
problems.
One witness I would like to particularly thank for making the trip
to be here is Katie Dusenberry, who chairs the Arizona State
Transportation Board. Ms. Dusenberry will be testifying on an issue
that is of vital importance to my State and the entire Southwestern
region--the closure of the Hoover Dam to truck traffic due to post-
September 11th security concerns.
As a result of the closure of the Hoover Dam bridge to freight
traffic, over 2,100 trucks per day are now detoured 23 miles or more.
To address this problem, the States of Arizona and Nevada are working
together, and with the Federal Government, to build a Hoover Dam Bypass
Bridge. This bridge is essential to freight movements on the CANAMEX
corridor and is a top priority for my State. The Department of Interior
has identified the Hoover Dam bypass project as its No. 1 national
security priority.
I am pleased that Ms. Dusenberry has joined us to provide her
expert testimony on this project.
Again, thank you to all of our witnesses for your participation
today. Our first panel will consist of Associate Deputy Transportation
Secretary Jeffrey Shane, who is also the Director of the Office of
Intermodalism, and Jay Etta Hecker from the U.S. General Accounting
Office. Thank you for agreeing to be with us today and I look forward
to your testimony.
Senator Breaux. Thank you very much, Senator Reid.
In order of appearance, I recognize the chairman of the
full Environment and Public Works Committee, our friend Jim
Jeffords.
OPENING STATEMENT OF HON. JIM JEFFORDS, U.S. SENATOR FROM THE
STATE OF VERMONT
Senator Jeffords. Thank you. Senator, I appreciate all the
work you have done along with Senator Reid in putting this
hearing together. Coordinating two committees is not an easy
task. It is so essential, and I applaud your efforts.
Today's hearing lays important groundwork for the TEA-21
reauthorization next year. The proper and efficient handling of
freight is absolutely critical to the American economy. It is
that simple. Without this, consumer prices would skyrocket,
factories would have temporary shutdowns, businesses could not
function, and families would even worry about food shortages in
the land of plenty.
I care about freight issues. They are important to me in
Vermont and to every county and every State in the Union.
Chairmen Reid and Breaux have highlighted some important facts.
I will repeat one: The U.S. transportation system carried over
15 billion tons of freight valued at over $10 trillion during
1998. Trucks carry about 80 percent of that value.
Now for the most critical point: The volume of freight that
needs to be carried in the United States will more than double
by the year 2020. Thus, the transportation bill for the next
generation of Americans, which we are currently crafting and
will pass next year, must address this issue in a positive
manner.
America needs to invest in vital intermodal freight
infrastructure so that American businesses have competitive
choices and more opportunities. For example, our international
ports should offer multiple options, such as train and truck,
to move incoming freight or to efficiently load ships with
American products. Careful strategic investments near urban
areas, factories, border crossings, ports or elsewhere can
greatly help. Of course, I understand that regional needs vary,
which is why the new law must embrace flexibility and local
decisionmaking. For example, Vermont has a strong tradition of
moving heavy freight by rail to the St. Lawrence Seaway.
Freight moves through Vermont north to the Province of Quebec
and south to the Eastern Seaboard. Vermont's granite and marble
quarries, its dairy farms and its timber industries produce
relatively heavy products, and its high-tech industries such as
IBM produce high value but low weight products. Allowing
flexibility, local decisionmaking, and competitive choices will
provide for efficient intermodal freight movement.
Those who ship and receive freight in America are concerned
with efficiency and timeliness. We need intelligent freight
systems in addition to intelligent transportation systems. The
buyer's cry is: I want it on time and unbroken. Yet this week's
New Yorker magazine, in an article entitled ``Stuck in
Traffic,'' explains how congestion threatens efficiency on our
highways. The article wonders if the world will end, not with a
bang, but with a traffic jam.
America has spent hundreds of billions of dollars building,
improving, and repairing our massive highway transportation
systems. I will push for a similar revitalization of our rail
system. We need a modern rail equivalent to our highways.
Rail will yield strong benefits throughout our Nation.
First, movement of goods onto rail can usually reduce
congestion on our roads and permit truck freight to move faster
and safer. Second, it will make our highways last longer as the
heavy freight is moved by rail. Truck shipments exert a
tremendous toll on our Nation's highways.
Third, more targeted, strategic, less costly investments
can help move huge volumes of freight while offering businesses
another viable option. For example, much of the truck traffic
on Route 7 in Vermont could be handled by rail through
precisely targeted strategic investments in rail corridors,
instead of through expensive road-building projects. Each
Senator in this room probably has similar examples for their
States.
In closing, let me again emphasize my interest in working
with everyone in this room on these critical freight issues. I
look forward to hearing the testimony here today. Thank you,
Mr. Chairman.
Senator Breaux. Thank you, Senator Jeffords. Senator
Inhofe.
OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM
THE STATE OF OKLAHOMA
Senator Inhofe. Thank you, Mr. Chairman. I think you are
aware that this committee is having a scheduling conflict with
Senator Armed Services. So I will not be able to stay.
I did want to come down and express myself on a couple of
things. The significance of a reliable freight transportation
system is always imperative, although it is more so now in
times of war. As the ranking member of the Transportation and
Infrastructure Subcommittee, I now have the opportunity to work
more closely on making sure that transportation needs are met.
I believe there is still much that needs to be done in
accomplishing our goals. I am pleased to be meeting today in
conjunction with the Commerce Subcommittee and discussing the
matters at hand. We face many challenges with our current
transportation system concerning the consequences on our
economy and our environment. While I understand the focus on
improving our important border infrastructures to handle
increasing traffic volumes in the future, my concern is
committing to the enhanced safety and security of commercial
vehicle operations at our borders.
Mr. Chairman, when you and Senator Reid talked about the
ports, a lot of people are not aware that Oklahoma is a port.
We are the home of America's most inland port. So we have
extensive operations there.
I am certain it is possible to have a transportation system
that is safe and secure, as well as efficient and productive.
The past two reauthorization acts developed and promoted by
this committee have been instrumental in stimulating surface
transportation policy. As the committee considers
reauthorization proposals, it is necessary to review whether
changes need to be made. I would be interested to hear our
witnesses. I believe it is necessary to define what program
changes might need to be implemented in reauthorization to aid
the improvement of intermodal connections surrounding ports,
railheads, and other intermodal transfer facilities.
Mr. Chairman, I ask unanimous consent to insert testimony
for Mr. Jim Fisk of MagTube Incorporated and Charlotte Thorton
on innovative approaches for freight transportation issues, if
I might.
Senator Breaux. Without objection, it will be made a part
of the record.
Senator Inhofe. Thank you, Mr. Chairman.
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe, U.S. Senator from the State of
Oklahoma
Thank you Mr. Chairman. Today's hearing on freight and intermodal
transportation is exceptionally important to me. A reliable freight
transportation system is always imperative, although it is particularly
important these days during times of war.
As the ranking member of the Transportation and Infrastructure
Subcommittee, I now have the opportunity to work more closely on making
sure that transportation needs are meet. I believe there is still much
that needs to be done in accomplishing our goals.
We face many challenges with our current transportation system that
causes concerning consequences on our economy and environment.
While I understand the focus on improving our port and border
infrastructures to handle increasing traffic volumes in the future, my
concern is committing to the enhanced safety and security of commercial
vehicle operations at our borders. I am certain it is possible to have
a transportation system that is safe and secure, efficient and
productive.
A better understanding of freight demands and similar issues helps
us to analyze the increasing demand for freight transportation,
assessments of the implications of freight demands for the entire
surface transportation system and improvements in freight efficiency
and security.
The past two reauthorization acts developed and promoted by this
committee have been instrumental in stimulating surface transportation
policy. As the committee considers reauthorization proposals, it is
essential to review whether changes need to be made.
I will be interested to hear if our witnesses believe it is
necessary to define what program changes might need to be implemented
in reauthorization to aid the improvement of intermodal connections
surrounding ports, railheads and other intermodal transfer facilities
near our ports and borders.
Mr. Chairman, I ask for unanimous consent to insert testimony from
Jim Fiske, from Magtube, Inc. and Charlotte Thorton on innovative
approaches for freight transportation issues.
Mr. Chairman, I look forward to today's hearing and want to welcome
all of our witnesses.
Senator Breaux. Thank you. We have that waterway all the
way up to Oklahoma from Louisiana.
Senator Inhofe. We do, we do.
Senator Breaux. Thank you very much, colleagues.
I would like to welcome and am pleased to have Mr. Jeffrey
Shane, who is Deputy Secretary for Policy at the Department of
Transportation, back before the committee; also, Ms. JayEtta
Hecker, who is with the General Accounting Office and has just
done an extensive report on some of these issues, particularly
in the marine transportation area, to present testimony.
Mr. Shane, Mr. Secretary, we have your testimony. We note
it is an extensive document. If you could help us summarize it,
we will proceed to questions. Ms. Hecker, the same for you.
STATEMENT OF JEFFREY N. SHANE, ASSOCIATE DEPUTY SECRETARY AND
DIRECTOR, OFFICE OF INTERMODALISM, UNITED STATES DEPARTMENT OF
TRANSPORTATION
Mr. Shane. Chairman Breaux, Chairman Reid, Chairman
Jeffords, and Ranking Member Inhofe: Thank you very much for
allowing me to represent Secretary Mineta today and testify on
freight transportation intermodalism. These are issues that
affect our economy, as we have just heard, in profound ways and
both committees are to be commended for the leadership you have
shown in this area.
Mr. Chairman, you referred to my longer statement. I assume
it will be placed in the record. I would appreciate that.
Senator Breaux. Without objection, it will be.
Mr. Shane. Thank you very much, and I will try to summarize
within the time allotted.
With the possible exception of our obligation to ensure for
our citizens a safe and secure transportation system, DOT has
no higher priority than facilitating the seamless
transportation of goods throughout our country and in
international trade flows. Congestion, bottlenecks, choke
points, and all the consequences of insufficient capacity and
inefficient intermodal connections impede that growth, raise
costs to consumers, and impair our economic well being in ways
that are simply too often overlooked.
Ensuring smooth global supply chains has become of even
greater importance as companies increasingly shift to just-in-
time manufacturing techniques, and ability to move freight and
cargo quickly across the different modes of our transportation
system serves as the linchpin of that manufacturing revolution.
The growth of international trade, particularly as the
world moves toward a far more liberal framework for trade,
represents another key challenge to our transportation system.
While we have included a wide range of trade and transportation
statistics in the longer statement that I have submitted for
the record, I would like to draw your attention again to just
one, the one cited by both Chairman Reid and Chairman Jeffords:
that the volume of shipments into and out of the United States
is expected to double between now and 2020.
It is essential that our ports and our airports and border
entry points have the capacity to accommodate these increases,
especially with the more aggressive security procedures that
will have been put in place in response to September 11.
ISTEA and TEA-21 have created a solid framework for
addressing the transportation and logistics needs of our
country. As we move forward with the reauthorization of TEA-21,
however, one thing is clear. The demand on our Nation's
transportation system is growing faster than supply. Statistics
show that population growth combined with substantial increases
in vehicle miles traveled and freight tonnage moved have
resulted in rising levels of congestion on our Nation's
highways, despite increased Federal investments under ISTEA and
especially under TEA-21. Projected future growth in all of
these areas will only worsen congestion without a strong
commitment to make our infrastructure far more robust and far
more efficient than it is today.
Imagine, if you will, what travel on our highway system
would be like today if our freight rail system were suddenly
shut down. By the year 2010, you will not have to imagine it,
because expected increases in truck traffic over current levels
will be equal to the entire volume of freight that is carried
on our Nation's rail system today. That is why Secretary Mineta
believes that the administration and Congress have to work
together to make increasing the efficiency of freight
transportation a central feature of our surface transportation
reauthorization legislation next year. Coordination between the
modes and enhanced private involvement in the system are two
themes that need to be emphasized in that effort because,
although much has been accomplished over the last decade based
on improvements put in place by ISTEA and TEA-21, the promise
of intermodalism, more efficient movement of passengers and
freight throughout all parts of our transportation system, and
the potential for private sector participation in
infrastructure expansion have yet to be fully realized.
In conclusion, it is clear that the commercial movement of
freight was successfully woven into a number of TEA-21's
programs, especially in the areas of funding flexibility,
border and corridor planning, and the application of new
technologies. We will need to think carefully about all of
these issues as we build on TEA-21 by enhancing existing
programs and, where appropriate, developing new ideas to ensure
that our freight transportation system can meet future
challenges.
As you know, earlier this year Secretary Mineta outlined a
series of principles that will guide us through the
reauthorization process. Using those principles as our base, we
have been carefully examining proposals put forward by
stakeholders as we develop our reauthorization proposal. For
example, we will work with our partners in the States and in
metropolitan planning organizations to achieve wider
application of innovative financing programs.
We will consider changes to the Borders and Corridors
program that will encourage broader transportation planning and
integrate infrastructure investments with national and
international business developments. We will continue to apply
innovative technologies through the ITS program and in
collecting data on freight movements and trade flows, and we
will work closely with the private sector to formulate
innovative transportation solutions that develop new ways to
utilize public-private partnerships that leverage scarce
Federal funds.
I am confident that, working together, the administration,
Congress, and our stakeholders can expand our transportation
infrastructure to ensure increased mobility, security, and
prosperity for years to come.
Thank you very much again for the opportunity to appear
here today. I look forward to answering any questions you may
have.
Senator Breaux. Thank you, Mr. Secretary.
Next, from the General Accounting Office, Ms. Hecker.
STATEMENT OF JAYETTA HECKER, DIRECTOR, PHYSICAL INFRASTRUCTURE
GROUP, UNITED STATES GENERAL ACCOUNTING OFFICE
Ms. Hecker. Thank you, Mr. Chairman, Senator Reid, and
Senator Jeffords. We are really honored to be here today. We,
as you noted, are releasing the report on marine transportation
financing and a framework for infrastructure investments today.
But because of the focus on the freight issue, I will broaden
my remarks to focus more on the broader context of freight
issues.
I will cover four areas: first, the background, which will
include this review of the growth that people have talked
about; the new data that we collected for you on expenditure
and direct receipts from users of the different modes; some
data on Customs fees that you particularly wanted us to gather;
and finally, the framework for review of critical decision
points in evaluating investments in transportation.
The scope of our work, in addition to this work on
maritime, is focused on a long body of work on capital
budgeting, needs estimates, and, Federal highway R&D. We have
work, not yet released, in response to requests from the
Environment and Public Works Committee on mobility challenges,
innovative finance, State capacity and project delivery. In
addition, there is a wide range of expert studies that date
back to 1994, a major commission on intermodal freight
challenges, the TRB report, the intermodal freight connectors
report, and many other technical reports.
The background issue that I would just like to cover is
really putting the issue on the table that you have all stated,
and that is, the enormous increase in projected freight
tonnage. According to the Federal Highway Administration's
updated figures, freight tonnage by all modes will increase by
41 percent in the next 10 years and 76 percent by 2020.
[Chart.]
This shows the different growth rates for the different
modes. As can be seen in the chart, it is estimated that there
will be a 43 percent increase in the 20-year period for freight
transported by water, a 55 percent increase by rail and an 84
percent increase by truck.
Now, this really obscures the new challenges, because the
key of intermodal transportation is really figuring out ways
that the intersection and connections between these modes are
addressed as well.
[Chart.]
The second point is the history of the funding approaches
and receipts from the different modes. This chart depicts the
average amounts collected and expended by mdoe for fiscal years
19992001. As can be seen, the maritime users, or the
expenditures in the maritime sector, are about $4 billion a
year, with user assessments covering about $1 billion. The
aviation expenditures are about $10 billion a year, with $11
billion of user assessments and the highway area has about $25
billion of expenditures, with the average for the same period
being $34 billion in user assessments.
The key difference here is that the marine system largely
relies on general revenues, whereas the aviation and highway
systems have historically relied almost exclusively on
collections from users.
[Chart.]
I turn now quickly to the third area that you asked us to
address and that is the amount of duties that are collected on
imported goods transported by the different modes. This
basically is in pie chart form and shows that a little over 75
percent of the import fees are collected on goods that come in
through the maritime sector. As you see, almost $4 billion
comes in through aviation Customs fees and less than $1 billion
comes over the land borders of Canada and Mexico.
Now, what is important about the Customs duties is that
clearly these are duties or taxes on the value of selected
imported goods. This, of course, is a traditional source of
revenue for the general fund. It is paid by importers of the
taxed goods and varies based on where our trade agreements are
and the type of commodity.
Therefore, it is not really a good proxy as a tax on users
of the marine system. Although we recognize there is a proposal
and discussions to designate Customs duties for the marine
transportation system, this is clearly a policy call by the
Congress. However, some funds, actually about 30 percent of
Customs fees, are already designated for specific uses by the
Government, and that includes such areas as agriculture and
food programs, migratory land conservation, aquatic resources,
reforestation. So some of those duties are already earmarked.
The other thing about the potential for designating Customs
duties is that they really are not a new source of capital for
the Federal Government. It is money that is already coming in,
already accounted for, already spent, and therefore, the notion
or the proposal that somehow you can draw on that would amount
to a draw on the general fund of the U.S. Treasury.
The fourth area--and I am sorry to see the yellow light go
on because this is the most interesting contribution that we
are trying to make--is a framework for developing national
freight policy for consideration of transportation investment
decisions. As you see, we basically outline four key steps:
defining national goals, defining the roles of the different
levels of Government, developing approaches and tools that
promote cost-sharing and efficiency, and finally, evaluating
performance.
The key thing about the goals issue is that it needs to be
intermodal and it has not been. This other whole issue of the
so-called ``orphan'' status of the intermodal freight
connectors. We still have a very stove-piped system and we need
a conception of national goals for transportation that are
integrated, intermodal, and freight-oriented.
Another element about the goals involves developing
Government commitment to performance and results. Therefore,
another key indicator of the goals is having performance-
oriented measures for system performance and efficiency.
Defining roles, as I said earlier, is about the relative
roles of the different levels of Government. The role of MPOs
is a key thing here. They have not really paid attention or
placed priority on freight. It is rational on their part to do
so because while they do not benefit, they bear most of the
costs. So there are some structural issues about the relative
roles of Government.
The third area, on determining appropriate tools, really is
driven by the roles issues. As you define the relative roles,
you implement and effectuate those by using the appropriate
tools that leverage Federal funding and promote accountability
and efficiency. A key thing that I think several of you already
alluded to is that in appropriate tools, we also have non-
investment and non-capital tools to improve the efficient use
of the existing system. That would involve tools such as demand
management and congestion pricing; technology improvements
which include the ITS area that several of you mentioned;
enhanced maintenance and rehabilitation, and improved
management and operations.
Quickly, the final area is basically evaluation. We need to
understand how current policies work and we need to track the
performance of proposed policies. The more it is framed as
performance of the efficiency of the system, the more likely we
will be able to determine whether we are really getting the
improved efficiency in the performance of the transportation
system instead of focusing on capital or completed projects.
Evaluations allow us to determine the outcome we want to
achieve.
That concludes--I am sorry about the red light--my remarks.
The key is that the freight intermodal focus is clearly a
cornerstone of the next generation of transportation
legislation.
Senator Breaux. Thank you, Ms. Hecker and Mr. Secretary.
I take it, Ms. Hecker, to start with you--and I want Mr.
Shane to comment on it--the fact that you are proposing what
you have labeled a framework for developing an effective
Federal investment strategy indicates that in GAO's opinion we
do not have that now?
Ms. Hecker. We continue to have policies and legislation
specific to different modes. Certainly the maritime legislation
has never been integrated in a systematic way with highway
authorization. Furthermore, the whole issue of freight has not
been systematically examined. For example, our railroad
policies and the effect of some of those policies on the
freight infrastructure and the tradeoffs between different
modes has not been systematically explored.
So yes, I think there is real value in moving toward a more
systematic view of transportation requirements.
Senator Breaux. Mr. Secretary, we have an office over in
DOT that is an Intermodal Office. Is that not what they should
be doing?
Mr. Shane. That is right, and as a matter of fact, Mr.
Chairman, I head that office. So that I like to think that we
are doing some of that.
I do not disagree, however, with Ms. Hecker that there is
certainly more room for further integration. We all know that.
To some extent there is an element of stovepiping in the
legislation that we have and that we continue to work on. But
it would be unfair to characterize ISTEA, for example, the
Intermodal Surface Transportation Efficiency Act, and the
Transportation Efficiency Act for the Twenty First Century,
TEA-21, as completely oblivious to the importance of further
integration and intermodal planning.
I think there has been an awful lot of that and there have
been some very powerful results as a result. Programs like the
CMAQ program, the congestion mitigation program, TIFIA, an
assortment of other elements of TEA-21, have indeed funded more
integrated approaches to transportation and encouraged
intermodal planning at the State and local and regional level.
So I am interested in what GAO has been doing and we would
certainly look forward to consulting more and finding out,
particularly as we move through the reauthorization process
with Congress, where there might be further opportunities for
improvement. But I do not think it is fair to characterize the
system as totally stove-piped even today.
Senator Breaux. Are you all working on the reauthorization
from a conceptual standpoint as far as recommendations to the
Congress?
Mr. Shane. We are, Mr. Chairman, and I would go further and
to say we are beyond the conceptual standpoint. We have been
organized--we have got 200 people at the Department of
Transportation organized into functional groups, cross-modal,
cross-cutting, working with stakeholders in all elements of the
transportation sector, working with each other, and thinking
great thoughts, if I might say, about the future of these
programs, such that by early next year, once we have gone
through an exercise with OMB--as you know, that is always
required as the administration puts a proposal together for the
Congress--we hope to transmit a bill which will be, I think,
hopefully, the center of gravity for Congress's deliberations
over the reauthorization of TEA-21.
Senator Breaux. Are we likely to see from those
recommendations any type of thinking outside of the box, so to
speak? Or are we talking about pretty much the same type of
planning and recommendations that we have had in the past?
Mr. Shane. I hope you are going to see some out-of-the-box
thinking, Mr. Chairman. I have been impressed probably more
than any other aspect of TEA-21 with the effectiveness of those
parts of the program which have been able to leverage Federal
money, that is to say to encourage private sector
participation, to encourage State governments and other levels
of Government to really step up to the plate in a more
important way.
In an era of scarce resources--I mean, the era of cheap
money is all over and we all know that--it is critical that we
find even more effective ways of doing that. Programs like
TIFIA, the intermodal connectors program, a variety of others,
have produced I think disproportionate gains for relatively
small expenditures, and we need to pursue as many opportunities
of that sort as we can going forward or we are simply not going
to have the resources solely at the Federal level to really
meet the demands that we all have acknowledged here this
afternoon. Senator Breaux: My final question is in what
timeframe are we likely to have a completed package of
recommendations from a conceptual standpoint?
Mr. Shane. Our intention, of course subject to OMB's
process, but I cannot imagine that that is going to be an
impediment because we have been working with OMB already, is to
get the bill, the administration bill, to the Congress very
shortly after it returns in January or February of next year.
Senator Breaux. Senator Reid.
Senator Reid. Would both of you give me your thoughts on
what we can do when we reauthorize TEA-21 to get the most
efficient use out of the transportation infrastructure? Not
theory; I mean actual things that we can do.
Ms. Hecker. I think the four areas that I mentioned in
terms of focusing on operations and not just construction----
Senator Reid. Give me specific things, because all this
theory is good, but we have to do something specific.
Ms. Hecker. ITS and the lack of integration of ITS is a
specific example. We have not really taken full advantage of
the technology to streamline the flow of traffic to have a
single standard for ITS. There is a lot more research that is
promising about the role of technology.
The focus on operations is another area. It goes precisely
to your point.
Senator Reid. Tell me what you mean by that? ``Focus on
operations,'' what does that mean?
Ms. Hecker. The efficient performance and utilization of
the existing system, that it is underutilized----
Senator Reid. How do we legislate that?
Ms. Hecker. Well, there has been a comprehensive study that
I would rather defer to, that has talked about their permeating
all aspects of the Federal relationship----
Senator Reid. Ms. Hecker, the only reason I pin you down a
little bit is it is easy to get all these theories, that we
should evaluate performance, establish goals, develop
approaches, but when it comes down to it, this subcommittee
that I am responsible for, next year we have to do real
specific things and we are not going to sit around and say,
``We are going to evaluate these goals and evaluate
performance.''
We do not have the benefit of doing that and that is why we
need experts like you and Mr. Shane to tell us specifically
what we can do to make this new transportation bill meet the
modern needs of this clogged transportation system we have.
Ms. Hecker. Well, I think the programs that we talked
about, the Border and Corridor programs and the connector
programs, it shows that they have not received adequate
attention. So some shift of either the funding available or the
restrictions will be missing to bring attention to these
intermodal links.
Senator Reid. You have the time to think about some of the
things that we should do. This is your opportunity to give us
some specific ideas of things that we could do in the next
bill.
You have mentioned the intelligent transportation system,
but be more specific. This does not mean we are going to follow
everything that you are recommending, but at least it will give
us some direction and insight as to what you think we could do
to improve the intelligent transportation system.
An example of that is the new Amber Alert that works so
well. People really look up on those road signs to get some
idea what is going on. So we will leave the record open for a
couple weeks for you to give us some specific ideas as to what
we can do to improve TEA-21.
Senator Reid. Mr. Shane, do you have any ideas?
Mr. Shane. Yes, Senator, I have a few ideas. I think what I
said before is my main--one of my main ideas, the notion that
we need to leverage our Federal funds much more effectively.
That is not a theory; that is something that we need to find
ways of doing along the lines that were explored in TEA-21, I
think quite successfully. By leverage, I mean--if you look at
the national highway system intermodal connectors, that is a
tiny fraction of the mileage on the national highway system.
Yet, according to the report that we submitted to Congress that
was requested in TEA-21, in the year 2000 the physical quality
of those portions of the national highway system is far
inferior to the national highway system generally, and the
consequences of that inferior quality have a disproportionate
negative impact on the efficiency of our whole freight
transportation system.
So by attacking a tiny little fraction of the overall
mileage on the national highway system through a program of
that kind, we extract disproportionately huge benefits. It is
that sort of opportunity that we need to pursue.
I mentioned the CMAQ program. You have got real intermodal
success stories coming out of CMAQ, including rail success
stories, because States have been able to use that money in
very creative ways. The TIFIA program, which is a loan
guarantee program, it actually requires the expenditure----
Senator Reid. I am very familiar with that.
Mr. Shane [continuing]. Of relatively little money. Again,
it stimulates private sector interest in infrastructure
expansion in ways that we have not seen before. We need to find
more ways to exploit tools like that.
Finally--and I do not mean by any means, last or least; it
is not the least; it may be the most important--the Corridors
and Borders program. There is so much interest in trying to
facilitate the movement of freight through regional planning,
including sometimes very complicated assemblages of Government
entities and private sector entities, in order to really
streamline the flow of freight in our system, that if the
Borders and Corridors program is not big enough we need to
figure out ways of either making it bigger or making it more
creative such that it has the effect.
Senator Reid. It has not worked very well. In theory it
should have worked better than it has worked. I think we have
to do some things to change it, because I think theoretically
it is a great program.
Mr. Shane. I agree, and there is a huge amount of pent-up
interest in it; and the results of solving that problem in the
reauthorized program I think will be huge and of enormous
benefit to the economy.
Let me just add one last thing if I may, and that is that
working with all of these programs one thing that continues to
impress me--and I am not just talking about the surface
transportation programs; I am talking about all of our
programs--when the private sector comes in and wants to do
business with us, whether it is to expand highway
infrastructure or airport infrastructure or anything else,
particularly if it is a program that actually makes some
Federal money available, they find themselves in a Faustian
bargain. Even when there is enormous interest in trying to
build infrastructure in ways that will respond to the demands
that we have in the system today, sometimes our procedures can
be counterproductive.
One of the things I would like to see us do in the
reauthorization process--and I am not here to make any
announcements of bright new ideas; these are in process now--is
to find ways of really streamlining our own clearance process
for these projects. I am talking about all of the
transportation projects that are funded or stimulated in any
way by the Federal level.
If I may go on for a second, I can give you an example of
the sort of thing I mean. We have a security program which has
been a huge success. It actually began, Senator Jeffords, in
Vermont, called Operation Safe Commerce--a public-private
partnership emerging more or less spontaneously in order to
test the security of container transportation in our system in
international transportation.
Nobody at the Federal level suggested it, nobody approved
it. It just happened. Well, we began to think that it was a
good idea and we set up an executive steering committee. In
fact, I co-chair the executive steering committee with the
Deputy Commissioner of Customs, Don Browning. It is an example
of how much interest there is in Washington in something that
really works.
But now I am noticing something that worries me. Now that
we have an executive steering committee, suddenly it has become
a Government program. In a funny way, one of the worst things
that happened was that they got an appropriation of $28
million. Now we have to be really responsible. Now we have to
have procedures and accountability and we have to have, you
know, the Inspector General looking at things, and all of a
sudden a spontaneous effort to set up a test bed for container
security could, unless we are very careful--and I want to
assure you that we are trying to be very careful--if we are not
very careful, we will stymie it. It'll grind to a halt just by
virtue of the fact that the Federal Government has now applied
all of its usual procedures and safeguards and everything else.
We need to get past that mentality in our transportation
infrastructure programs or we will not meet the demand that our
country will face in 2020 for sure.
Senator Breaux. Senator Jeffords.
Senator Jeffords. Well, thank you very much. I appreciate
your testimony. Thank you for your comprehensive testimony, I
should say. I look forward to working with you in the TEA-21
reauthorization effort.
Later in this hearing Mr. Huerta on behalf of the Coalition
for America's Gateways and Trade Corridors will ask for funding
of $2 billion annually for the Borders and Corridors program.
You may have just referred to that. But Mr. Wickham of the
American Trucking Associations will explain that the congestion
at the 7 busiest border crossings costs the trucking industry
about 2.6 million hours in delay time per year. Also, Mr.
Larrabee of the Port Authority of New York and New Jersey will
explain the estimate that trade in all types of cargo will not
double, but triple, by the year 2020. Just this weekend, as I
rode to New York I enjoyed a visit from Amtrak, letting us know
how they feel about the importance of moving more and more of
the cars off the highways and onto the railroads and to work in
that direction.
So we have a tremendous need here to understand exactly how
all of this is going to happen. I hope that you are working in
a way that you can assist us in finding the means and the ways
that we can accommodate all these changes that are needed. It
is going to be huge in the sense of the cost to be able to
orderly transfer our transportation systems between the freight
and airways and all of that, to do the best job we can do.
So I just believe you will be doing that, but would like
for you to tell me you will. Mr. Shane?
Mr. Shane. I will, Senator.
[Laughter.]
Senator Jeffords. Thank you. I thought that might smooth
things down a little bit.
Also, Ms. Hecker, I appreciate the detailed report the GAO
submitted to our two committees.
You point out the need for significant improvements to our
marine transportation system and note that the marine
transportation system is generating billions of dollars of
revenue. The report discusses aging infrastructure, changes in
the shipping industry, and increased concerns about security.
It has been said that the footnotes often contain either
the most boring or the most intriguing points in the study.
Footnote 12 of your report notes that under current law 30
percent of the gross receipts from Customs duties, about $15
billion per year, is reserved for agricultural and food
programs. Your report further notes that congestion challenges
often occur where transportation modes connect, such as in
ports.
You also note that if there is an enhanced Federal role,
you recommend that the enhanced Federal participation
supplement participation by others rather than just replacing
it.
Your report has drawn a picture for us, but you have not
connected the dots, which indeed may be our job. But can you
give us a rough estimate of the cost of addressing the aging
infrastructure and the new security concerns?
Ms. Hecker. I will try to answer directly, but the direct
answer is, ``No, I cannot give you the number.'' We have
actually done some of this work, and I think there was
testimony before you, Senator Reid, on reviewing all of the
estimates of the needs of the different modes. They cannot be
added up. They are done with inconsistent assessments. Most of
these assessments do not assume capacity constraints.
Therefore, if they are not capacity-constrained, these
assessments cannot tell you whether it can grow that much and
many of these studies do focus on opportunities for more
efficient management and utilization of the system.
So there really is not a single estimate of the cost of
addressing the aging infrastructure and security concerns. It
is a comprehensive challenge of the whole performance of the
system, that we need some initiatives to build, but we need
efficient, leveraging financing methods that, as you said
precisely, do not supplant or replace State, local, private
funds, but supplement entice, and trigger additional
expenditures by other parties. Then we need some of those
efficiency-inducing operations.
So there really is not a single number. I apologize; I like
to answer questions directly, but the answer is no, there is
not one single number.
Senator Jeffords. Thank you.
Thank you, Mr. Chairman.
Senator Breaux. I would like to ask one final question on
this. They tell me that 75 percent of goods that enter and exit
the United States, imports and exports, by volume, and about 60
percent I guess by value, come through the ports around the
country. But to get to the ports, a lot of it is coming by
truck, by rail, and what have you. So it really is all
interrelated.
The report from Ms. Hecker points out that about 80 percent
of the funding for the ports comes from the general treasury;
and the opposite is true, almost 100 percent of the aviation,
trucks, and highways is really coming from user fees.
The question is is the administration talking or looking at
ways to increase the funding for the ports? The ports as I have
traveled around the country are horribly congested. The trucks
cannot get in, the railroads cannot. It is very difficult to
coordinate because of the volume and the congestion at the
ports. These are very expensive propositions.
Is the administration looking at any different
recommendations on how we raise the money for ports, which are
going to affect rail and trucks as well?
Mr. Shane. Yes, Mr. Chairman, we are. Captain Bill Shubert
of the Maritime Administration has certainly been speaking with
me and with Secretary Mineta at some length about the
possibility of coming back to Congress with some proposals.
Unfortunately, I cannot suggest any detailed programs right
now, but I am hoping that in the not too distant future we will
engage in a more specific discussion of that very important
issue.
Senator Breaux. I hope this discussion is going on, because
if we have intermodalism each mode is being financed in a
different fashion and yet they are all totally interrelated. To
the extent that you can think outside of the box in trying to
figure out ways that all of these fees can be coordinated for
all methods of transportation, I think that that is going to be
very, very helpful.
The Customs duties for the ports are not going to the
ports; they are going to the general treasury and they finance
agriculture and other good things out of the general treasury.
But I think that most of the users like to see the users' fees
targeted to the services that they are getting. Now, if that
happened we may have a little less funding out of the general
treasury for the ports, if it is offset by user fees. But I
think we really need some in-depth thinking about how we are
going to be financing the intermodalism forms of
transportation. I hope you would address that specifically.
Senator Reid. Mr. Chairman, would you yield?
Senator Breaux. Absolutely.
Senator Reid. People go to the gas pump and that goes to
highways. We get all kinds of user fees to take care of our
airports. But as you say--and that money goes directly to the
airports and to the highways, whereas the problem you have with
ports, as you indicated, that money can be used for anything
else.
So I think we need some help on that.
Senator Breaux. Then we have got the 4.3 cent gas tax and
we know all the debate on that, with the railroads still, I
take it, still, and barges as well, still paying it for deficit
reduction; trucks, highways are not paying it. I mean, is there
a consistency here or is there an inconsistency here?
Do you envision any recommendation on that?
Mr. Shane. All of this is being examined. I know this is a
waffle, Mr. Chairman, but it is all being examined. We have to
get on top of these issues, and I am hoping that we will come
back to you very shortly.
Senator Breaux. That is important, because I think what I
am hearing from GAO is, when we are talking about trying to
coordinate all of this, that it has to be better coordinated if
we are going to have an intermodal transportation system. How
we help finance it, how we address the problems associated with
each one of them has to be interconnected. I think there is
room for improvement in that particular regard, and that is
what we hope we see in the new recommendations.
Senator Reid. Mr. Chairman, the other problem we have is
that typically, even though you say you think you have things
worked out with the Office of Management and Budget, you do
not, believe me. The problem we have is they are focused on a
1-year plan. All they care about is what this year looks like.
They do not care about what it looks like next year or the year
after or the year after.
We have got to pass a 5-year bill here. So we have to do
something that takes into consideration more than 1 year. That
is why the suggestion of Senator Breaux is so important. We
need somebody to help us on this. Otherwise we are going to do
some things that they really may not like. We could use some
help. That is why I was so direct with Ms. Hecker. We need more
than generalities and we need more than theories. We need some
real specific things that we can do to make this 5-year program
we are going to promote and pass next year one that is good for
5 years.
Mr. Shane. If I could just comment very briefly, the reason
I said what I said about OMB was that typically----
Senator Reid. Do not worry. We will cover for you.
[Laughter.]
Senator Breaux. We will not tell them you said it.
Mr. Shane. I am not going to even go there.
[Laughter.]
Mr. Shane. Typically we have a procedure whereby the bill
is submitted to OMB, it is all wrapped up tidily, and that will
be sometime later in the fall, and then we find out what they
think about it and then we have a big argument with them. What
we determined to do this time at DOT was to actually give them
a fairly detailed preview of the direction of some of our
thinking, because we did not want to be surprised. We did not
want to do a lot of work and then have it just ``offed'' by OMB
at some late stage.
They for their part were interested in knowing whether we
really were doing something. So we had a reciprocal reason for
wanting to meet. I have to say it was a very positive meeting.
I think there was a lot of mutuality in terms of the way both
OMB and DOT were looking at the importance of being creative
about these programs going forward.
So it is not a political statement when I say I think we
will do OK with OMB. Funding levels are obviously going to be a
struggle. They always are. That is the game. But in terms of
the actual shape of the programs, the content, and thinking out
of the box and that sort of thing, OMB is prepared to be quite
creative and they have been quite cooperative.
We would be prepared to even sit down with staff and
provide the same kind of preview, so that you do not just
receive a black box sometime early next year and open it and
see for the first time what it is we have in mind. We really do
want to work cooperatively and creatively as we move forward.
That is the only process that is going to produce the kind of
benefits we need.
So I offer that and we are prepared to come up.
Senator Breaux. And do not be afraid of new ideas.
Gentlemen, thank you. Ms. Hecker, thank you very much. Both
of you are excused.
We would like to welcome up the next panel of witnesses and
thank them for being with us: Ms. Katie Dusenberry, who is
chairman of the Arizona Department of Transportation Board; Ms.
Michael Wickham--Mr. Michael Wickham, chairman and CEO of
Roadway Express; Mr. Ed Hamberger, who is President of the
Association of American Railroads; Mr. Rick Larrabee, the
Director of Port Commerce for the Port Authority of New York
and New Jersey; Mr. Michael Huerta, Coalition for America's
Gateways and Trade Corridors; and Mr. John D. Caruthers, who is
chairman of the I-69 Mid-Continent Highway Coalition and one of
my constituents from Shreveport.
We thank all of you for being with us and are anxious to
receive your testimony. Ms. Dusenberry, we have you listed
first and we would love to hear from you first.
STATEMENT OF KATIE DUSENBERRY, CHAIRMAN, ARIZONA DEPARTMENT OF
TRANSPORTATION BOARD
Ms. Dusenberry. Good afternoon, Senator Reid, Senator
Breaux, and the other members of the committee. Thank you for
the opportunity to present to you the views of the Arizona
Department of Transportation Board and the freight industry
regarding the Hoover Dam Bypass Bridge.
I am Katie Dusenberry, as you said, chairman of the Arizona
Department of Transportation Board and chairman also of
Arizona's CanaMex Task Force Subcommittee on Transportation.
You probably are wondering why I am testifying before you in
dealing with concerns of commercial vehicles. You see, I am in
the trucking business. My husband, our son, and I own and
operate a 78-year-old family owned trucking company with
offices and warehouses in five Arizona cities. We employ over
250 hardworking people and have almost 300 pieces of commercial
vehicles. So I have a keen understanding of hauling issues.
As has been mentioned before, the freight business is
rapidly changing, from distribution of farm-to-market and
domestic products to delivery of export and import goods to and
from entry ports to consumers everywhere in our country and in
the world. If you live in the city, everything you wear,
everything you eat, even what you are sitting on, comes to you
by truck.
One of those important port-to-port transportation
corridors is the CanaMex corridor which runs from Mexico City,
Mexico, through five U.S. States and into Edmonton, Alberta,
Canada. This is an essential north-south trade route for
commercial vehicles and their products. The biggest functional
failure in this north-south corridor is the restriction of
commercial vehicles across Hoover Dam.
This brings me to sharing with you the importance of
completing full Federal funding for the Hoover Dam Bypass
Bridge across the Colorado River. Prior to the terrorist
attacks on September 11th, 2001, the only highway for freight
and passenger vehicles to go between two large metropolitan
areas, the cities of Phoenix, Arizona, and Las Vegas, Nevada,
an important link in the CanaMex corridor, was to cross the
Colorado River on a two-lane road, one in each direction, atop
the Hoover Dam.
This dam, built almost 60 years ago, reached its road
capacity more than 10 years ago. Envision the steep grades of
the approach roads, with their sharp hairpin turns, turns so
sharp that freight trucks could not pass on the turns and would
come to a complete stop before entering the turn to allow any
oncoming truck to navigate that turn. Speeds on those approach
roads ranged from 5 to 18 miles per hour. If accidents
occurred, delays of 2 to 5 hours were very common, and one
accident a few years ago resulted in an 18-hour delay. Cars and
trucks would be backed up for miles.
So planning for the bridge began long before September 11.
But since then, commercial vehicles are restricted from
crossing the dam. They are now diverted 23 miles at a cost of
$30 million per year in fuel costs alone, to another inadequate
river crossing, down a winding mountain road where some trucks
in the last few months have lost control, resulting in serious
accidents.
The Hoover Dam crossing is the only highway in the country
that has not been reopened to commercial traffic since 9-11.
This is not surprising since the dam is a high security risk
and any breach of the dam would flood more than 250,000 people
and cutoff electric power to over 1.3 million in California,
Nevada, and Arizona.
The project to build the dam and its approaches in Nevada
and Arizona will cost $234 million. Through commitments from
the States of Nevada and Arizona, together with Federal moneys
from the TEA-21 Borders and Corridors discretionary funds, we
have pieced together $126 million. The environmental impact
statement is finalized. The record of decision for the project
approval is in hand. With the money we have, design and
construction of the approach roads in Nevada and Arizona are
under way.
$108 million is needed to complete this nationally needed
project. We are asking you to give this project your highest
priority in discretionary funding to ensure full funding of
this bypass bridge and meet our anticipated completion date of
2007.
Thank you for allowing me to testify this afternoon. If you
have any questions I would be pleased to answer them.
Senator Breaux. Thank you very much.
Senator Reid.
Senator Reid. Mr. Chairman, thank you.
I am going to ask Ms. Dusenberry, have you ever been to
Searchlight?
Ms. Dusenberry. No.
Senator Reid. You have never been to Searchlight, Nevada?
Ms. Dusenberry. No.
Senator Reid. Oh, boy.
Ms. Dusenberry. Where is Searchlight, Nevada? I travel a
lot in Arizona, but I am sorry I have not been to Searchlight.
Senator Reid. Have you been to Laughlin?
Ms. Dusenberry. Yes.
Senator Reid. Just a few miles from Searchlight. You should
get up there sometime.
Ms. Dusenberry. I need to get up there.
Senator Reid. Yes.
Ms. Dusenberry. Do they have gambling--no.
[Laughter.]
Senator Reid. You realize that is where all the traffic is
going, is through Searchlight?
Ms. Dusenberry. Ah, the traffic now, the truck traffic now.
Senator Reid. Mr. Chairman, I have a series of questions
that I would like to submit to each of these witnesses. I would
ask if they within a couple weeks would get back to us with
responses to those questions. Is that OK with you?
Senator Breaux. Without objection. I know that Senator
Reid, because of his other duties, is going to have to be
departing before perhaps everyone finishes. But that would be
totally acceptable. He has worked very hard on getting these
witnesses here and I know he is going to look forward to your
responses.
Senator Reid. Thanks, Mr. Chairman.
Senator Breaux. With that, our next, Mr. Wickham.
STATEMENT OF MICHAEL W. WICKHAM, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, ROADWAY EXPRESS, INC., ON BEHALF OF AMERICAN TRUCKING
ASSOCIATIONS
Mr. Wickham. Chairman Reid, Chairman Breaux, thank you for
the opportunity to testify on behalf of the American Trucking
Association and Roadway Corporation. Having spent my entire
career at Roadway, I am most proud of the fact that we continue
to improve our safety record year after year, mile after mile,
and today our trucks and drivers are the safest on the road.
When moving freight, whether modally or intermodally,
safety is the No. 1 priority. The trucking industry, ATA, and
Roadway believe the one thing that we can and must do to
improve the efficient movement of freight is to refocus our
traffic laws to prevent excessive speeding. Excessive speed
simply is a factor in nearly one-third of all fatal accidents
and more than one-fifth of accidents involving trucks. We ask
Congress to provide specific funding for speed enforcement for
both truckers and motorists and section 402 and the MCSAPS
program.
Trucks move 67 percent of the freight tonnage, 86 percent
measured by value. This is freight that moves by trucks alone.
It does not touch any other mode. While the intermodal movement
of freight can and does play an important part and should be
encouraged, the potential for rail intermodal transportation to
slow the growth of truck traffic is limited by market forces
beyond the control of Congress, the States, and to some extent
the modes themselves. Today, just 1.2 percent of the freight
moves in rail intermodal shipments. Despite anticipated growth
in this sector, which will exceed trucking growth, by 2014 rail
intermodal shipments will capture only 1.5 percent of the
freight market, while trucking's market share as measured by
tonnage will expand to 69 percent.
It is not constructive to assume that the business
logistics trends of the past half century, which have made
trucks the dominant mover of freight, will somehow reverse
themselves and that our Nation's reliance on trucks will
subside. Congress should focus its attention and resources
where they are needed most and will pay the greatest dividends
for our country, and that is on improving the efficiency of the
highway system and the productivity of the trucking industry.
Efficient highways have allowed trucks to deliver freight
on time. This has allowed manufacturers to substantially reduce
their inventories through the use of just-in-time logistics,
saving the U.S. economy hundreds of billions of dollars and
creating thousands of jobs. Unfortunately, congested and
unreliable highways threaten to reverse these gains. Congress
should not allow the performance of critical highway corridors
to continue to deteriorate, nor should highway money be further
diverted under the false notion that investing in other modes
will negate the need for highway investments.
The national highway system carries 75 percent of all truck
traffic. Yet 40 percent of travel on urban national highway
system routes takes place under such congested conditions that
even a minor incident can cause severe traffic disruptions. We
strongly urge Congress to make improving the national highway
system its priority during highway reauthorization through
significantly higher dedicated funding. Congress should also
consider innovative ideas such as the construction of voluntary
truck-only highways.
Improving the national highway system connections to
intermodal terminals is of primary concern to all freight
modes, including the trucking industry. They should receive
dedicated funding. However, if we focus our attention on the
2,000 miles of connector highways and ignore the 160,000 miles
of other national highway system highways that tie the
intermodal facilities together, the efforts at the ports and
points will be pointless.
ATA supports the expansion of the Borders and Corridors
program. Along with representatives of other freight modes, we
are a member of the Coalition for America's Gateways and Trade
Corridors and we associate ourselves with the Coalition's
remarks. We hope that Congress will ensure that in the future
the program focuses on the most critical corridors and border
crossings and that funding eligibility is not expanded.
While infrastructure improvements are essential, we
recognize that highway capacity expansion cannot itself solve
all of our problems. Nor is there sufficient funding available
to address our many needs. Fortunately, there are ways to
improve the freight system's efficiency beyond adding highway
capacity. Congress can take a significant step by granting
States the authority they need to reform their truck size and
weight regulation. Using fewer trucks to move goods would
reduce congestion significantly and would improve important
safety, air quality, and economic benefits and lower pavement
costs.
Congress and the States should achieve--could achieve for
free what they would otherwise have to invest billions of
dollars in expanding transportation capacity to accomplish.
Missing or ignoring such opportunities would be shortsighted.
I realize that there are misgivings about the safety
implications of reforming size and weight regulations. However,
the best available evidence indicates that increasing trucks'
capacity can actually produce safer highways. A DOT study found
that triples and other longer combinations have an accident
rate which is half that of other trucks.
This evidence reflects our company's own experience with
triples. Since 1990, Roadway triples have been involved in
exactly one fatality. That is one fatality over 155 million
miles of travel. Triples are the safest trucks in our fleet by
far and there is no practical or scientific basis for the
Federal law that restricts States from determining where they
should operate.
Neither ATA nor any of us in the industry is interested in
seeing these trucks operate except where they can be run safely
and where their operation does not produce additional
infrastructure costs. ATA strongly recommends that Congress
look to the recently completed TRB study on truck size and
weight as a guide toward responsible implementation of size and
weight reform. Next year Congress has the opportunity to decide
whether the American people will share the road with a safer,
more productive truck or a lot more trucks. That choice is
critical.
Thank you for the opportunity to share the industry's
ideas.
Senator Breaux. Thank you, Mr. Wickham.
From the railroads' perspective, Mr. Hamberger.
STATEMENT OF EDWARD R. HAMBERGER, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ASSOCIATION OF AMERICAN RAILROADS
Mr. Hamberger. Thank you, Mr. Chairman, for the opportunity
to be here today. I am particularly pleased to participate in
this unprecedented joint committee hearing. I think it is
appropriate that the committees recognize the importance to
coordinate transportation public policy, much as carriers
coordinate the transportation of America's goods outside of the
Beltway.
Rail intermodal freight transportation has been the fastest
growing segment of traffic for the U.S. freight rail industry
over the past 2 decades, growing from 3.1 million trailers and
containers in 1980 to nearly 9 million in 2001. It now accounts
for approximately 20 percent of revenue for class 1 carriers
and moves seamlessly throughout the North American rail
network.
There are numerous reasons why rail intermodal
transportation has become such a vital part of the U.S. and
indeed North American freight transportation mix. One, it saves
shippers and customers money by combining the door to door
convenience of trucks with the long haul efficiency and cost
effectiveness of rail.
Two, it saves fuel. In fact, on average a railroad can
carry a single ton of freight 400 miles on one gallon of fuel,
the equivalent of Baltimore to Boston.
Rail intermodal improves air quality. According to the EPA,
for every ton-mile, a typical locomotive emits roughly three
times less nitrogen oxide and particulate matter than a typical
truck.
Four, rail intermodal reduces highway congestion. An
intermodal train can take approximately 280 trucks from the
highways or the equivalent of 1,100 automobiles.
We have heard a lot about the increased demand that is
going to be out there for freight transportation, and clearly
to meet that demand freight railroads will have to invest
heavily in projects that increase efficiency and capacity.
Railroads are incredibly capital-intensive, as you know, Mr.
Chairman. In the year 2000, railroads put almost 18 percent of
their revenues into capital expenditures, more than four times
as much as the average for manufacturing.
In terms that Congress often deals with, if that had been
translated into a per-gallon excise tax it would have equaled
$2.05 for every gallon of fuel burned by the industry
reinvested back into that industry, our industry, the freight
railroads.
Unlike my good friend Jeff Shane, let me not waffle, Mr.
Chairman. We need that 4.3 cents back. It is $170 million a
year, $2 billion since it was enacted, that would go back into
the industry and back into the infrastructure.
We have joined the Freight Stakeholders Coalition and in my
testimony we have outlined nine specific recommendations. Let
me just highlight four of those: one, dedicate funds for the
NHS connectors to the intermodal freight facilities.
Two, develop ways to increase available funds without new
user fees and taxes, through innovative financing options. We
have identified two of those. One would be to institute tax
incentives and tax-exempt financing for companies that invest
in intermodal freight infrastructure. Examples of qualified
assets would include track and roadbed located on intermodal
corridors and intermodal transfer facilities and related
equipment. The second option would allow the funding of rail
infrastructure through tax-exempt indebtedness, which would
include track, bridges, tunnels, terminal facilities, signals,
and computer systems.
Let me just digress for 1 second because I cannot let Mr.
Wickham's statement go unanswered when he said that it would
not cost the Government anything to increase the size and
weight of trucks. You realize, of course, that the Secretary,
the Department of Transportation, has issued a report that
indicates that at 80,000 pounds trucks pay approximately 60
percent of the damage that they do to roads and bridges. At
100,000 pounds that number falls below 50 percent. So indeed it
is not at no cost at all and in fact it would merely exacerbate
the already uneven playing field on which we find ourselves
competing.
Three, significantly increase funds for an expanded
corridor, border, and gateway program. We belong to Mr.
Huerta's coalition and he will talk about that.
Four, increase funding and promote the use of the CMAQ
program to reduce congestion and improve air quality.
In addition to the Freight Stakeholders Coalition agenda
items, we have two additional others: one which we discussed at
length with the Environment Committee some time ago, to
increase funding of the section 130 grade crossing program and
clarify that the funds may be used for maintenance; and two,
expand the rail rehabilitation and financing program and remove
the restrictive program requirements. This committee has
already endorsed that by a vote of 17 to 3.
As you mentioned in your opening comments, Mr. Chairman,
our Nation's global supremacy is derived in large part from a
transportation system that is second to none. Freight railroads
are an indispensable part of that system. We are confident that
we can continue to play a major role in meeting our Nation's
future transportation needs. As you know, we move 40 percent of
the Nation's goods by ton-mile right now.
But for those needs to be met efficiently, it is imperative
that the intermodal push initiated by ISTEA and TEA-21 be
developed further. We look forward to working with both these
committees, others in Congress and others in the private sector
to see that this can occur.
Thank you.
Senator Breaux. Thank you, Mr. Hamberger.
Next we have Admiral Larrabee. I am particularly glad to
have you with us today, Admiral. I know that a year ago
tomorrow you were in the World Trade Center in obviously
extreme difficult circumstances and situation. We are very
delighted to have you with us today and look forward to hearing
your testimony.
STATEMENT OF RICK LARRABEE, DIRECTOR OF PORT COMMERCE, PORT
AUTHORITY OF NEW YORK AND NEW JERSEY
Mr. Larrabee. Thank you, Mr. Chairman. Mr. Chairman, thank
you for the invitation to be here today to testify on matters
of intermodal transportation and port access. The work of your
committees demonstrates the importance of considering how
separate modes of transportation operate as part of a total
system. My hope is that this hearing will heighten your
interest in this subject, further your understanding of how the
efficient movement of intermodal cargo is a matter of national
interest, and convince you that improvements in the Federal
policy and the level of assistance are warranted.
The Port Authority of New York and New Jersey is a bi-State
public authority whose mission on behalf of the States is to
identify and meet the critical transportation infrastructure
needs of our region and provide access to the rest of the
Nation and to the world. We operate the region's major aviation
and marine facilities, as well as PATH, the commuter transit
system, ferry and bus terminals, the interstate tunnels and
bridges, and other facilities.
Our airports are responsible for roughly 20 percent of all
U.S. international cargo, which, combined with domestic cargo,
totaled nearly 2.9 million tons in 2000 and a value of $150
billion.
The seaport serves 35 percent of the U.S. population and
over 200 nations. The terminals in New York and New Jersey
handled over 3 million containers last year and $80 billion of
general bulk and breakbulk cargo moved through the port in
2001. Another 1 million containers arrive in our region via
rail from the West Coast.
Meanwhile, 250 million vehicles traveled annually over our
bridges and through our tunnels and 2.5 million buses used our
two bus terminals in New York City.
These statistics attest to the vitality of the trade and
the economic activity of the Nation and our region. But it also
hints at a major challenge we and other regions face: to make
sure American gateways and freight corridors have the capacity
to keep up with the growth in trade and a larger economy. To be
clear, this is not a case of ``build it and they will come.''
It is a matter of build it because the cargo is already coming.
In fact, it is already here, resulting in even greater
congestion.
Addressing these challenges will require investing in the
infrastructure and adjusting policies to foster smart solutions
for long terms. Partnerships are coming together locally and
regionally to support projects and we need a strong Federal
partner to accelerate these activities.
The Port Authority is coordinating with the States of New
York and New Jersey and is in the process of developing
specific recommendations for future legislation. Therefore, I
will devote the remainder of my statement to some general
observations for your consideration. These are in no particular
order.
First, we and other ports greatly appreciate the attention
that Congress and the administration are giving the maritime
transportation system. It is our hope that the Federal
Government will act affirmatively on identifying MTS
infrastructure requirements.
Second, congestion can be found throughout the country, but
it is especially severe in major gateways and metropolitan
areas that are essential elements of the Nation's economic
infrastructure and security. These areas, including the New
York-New Jersey region, deserve special attention and face
unique challenges to upgrade aging facilities, new, modern
standards to accommodate larger and heavier container freight
movements.
Third, expanding capacity should not mean that trucking
alone will have to bear the brunt of the growth. Clearly,
trucking will be an essential part of the transport strategy in
the decades to come, carrying more and more freight, but in our
region and others trucking and the highways on which they
depend are not expected to have the capacity to handle the
growing population and anticipated doubling and tripling of
domestic and international cargo. Therefore, a greater share of
our future transportation needs needs to be addressed by other
modes, which leads me to my fourth point.
Your committee should consider to foster the development of
other modes to accelerate increased demand. Rail certainly is
one part of the answer. We are building three new intermodal
rail yards at our maritime terminals in order to dramatically
expand our capacity to move containers on rail. In addition,
the Port Authority is working with the railroads and public
agencies to identify specific rail regional projects that will
improve line and terminal capacity.
Another answer can be found off our shores. We are
undertaking a program to encourage intermodal cargo to move by
water wherever possible. There is tremendous underutilization
of capacity on the water that can bring new capacity to
intermodal transportation along major corridors with less
investment. It is not the solution, but if examined for
associated capital, energy, and environmental costs, it can be
part of a solution with Federal support.
Fifth, innovations approved by Congress in TEA-21, such as
Congestion Mitigation Air Quality and national corridor
planning and development programs, were very worthwhile policy
steps to take. These innovative programs could be improved and
expanded even further, especially to add to the capacity of
major gateways.
Sixth, investments in freight movements could also benefit
passenger services. These include TEA-21 projects intended to
divert freight from heavily traveled automobile routes to
dedicated freight corridors, whether on land or water. We have
undertaken a comprehensive look at how intermodal freight
improvements can be strategically planned and implemented to
stitch together freight corridors. Already underway is a
project to bring intermodal rail to Howland Hook Marine
Terminal on Staten Island, a significant step to improving
direct rail service to New York City.
Another project referred to is the Port Authority's Port
Inland Distribution Network, PIDN, which would mitigate against
growing congestion at marine terminals and highways by
transshipping cargo via railroads and barges destined for
Northeast locations. There is a strong interest in PIDN among
Northeast States as alternatives to congested corridors like I-
95.
Federal interest and support could help such initiatives
demonstrate how water transportation can manage part of the
freight growth. Flexibility in Federal programs can be a way to
support these initiatives.
Last, the use of intelligent technology has proved very
worthwhile in our region for managing the flow of our busy
highways and crossings.
I think your committee can benefit greatly by the
thoughtful attention that has been given to these issues by my
counterparts here today as well as in Government and the
private sector, including a number of transportation and
freight-related associations identified in my written
testimony. Federal freight transportation policy is still in
its adolescent stage, which means there is great opportunity
for improvement to meet the challenges I have described.
Thank you again for allowing the Port Authority of New York
and New Jersey to participate.
Senator Breaux. Thank you very much, Admiral.
Mr. Michael Huerta.
STATEMENT OF MICHAEL P. HUERTA, SENIOR VICE PRESIDENT AND
MANAGING DIRECTOR, ACS STATE AND LOCAL SOLUTIONS, ON BEHALF OF
THE COALITION FOR AMERICA'S GATEWAYS AND TRADE CORRIDORS
Mr. Huerta. Good afternoon, Chairman Breaux. It is my
pleasure to be with you today to review our Nation's freight
transportation system and needs. I would like to briefly
summarize my formal statement and would welcome the opportunity
to respond to any questions that you might have.
As you know, my name is Michael Huerta. I am a Senior Vice
President and Managing Director of ACS State and Local
Solutions. ACS is a premier provider of business process and
information technology outsourcing solutions to world-class
commercial and Government clients. We provide travelers with
time and money-saving transportation technologies, including
the operation on behalf of several agencies of EasyPass, the
electronic toll collection system in the Northeast, which is
actually fully interoperable from Maryland to Massachusetts,
and the PrePass waste station preclearance system at more than
200 locations in 24 States coast to coast.
From 1993 to 1997, I served as Associate Deputy Secretary
of Transportation and was the Director of the Office of
Intermodalism.
I appear today on behalf of the 23 groups that comprise the
Coalition of America's Gateways and Trade Corridors. The
coalition's sole interest is to encourage adequate Federal
investment in our Nation's intermodal freight infrastructure.
Our members include motor carriers, railroads, ports, and
freight corridors--in short, the men and women that move
America's freight.
International trade is the key to America's economic
future. The imports and exports that fuel our economy are
doubling every 10 years and freight traffic within the U.S.
borders will increase 100 percent by 2020. You have heard from
all the witnesses about the tremendous growth in international
trade. Any way you cut it, freight transportation is growing
dramatically.
This growth in freight is good for all of us, in fact very
good. Rapidly accelerating trade, combined with domestic
growth, have created a $10 trillion U.S. commodity flow that
produced millions of new job opportunities and a higher
standard of living for Americans.
However, these benefits will only last as long as we can
keep the freight moving. As part of the reauthorization
process, we must rethink the portion of TEA-21 that was devoted
to freight-related projects. The facts are the current port and
trade corridor system is at the present time very pressed to
accommodate the traffic we have today. That infrastructure is
failing. Intermodal connectors currently have up to twice as
many engineering deficiencies and pavement deterioration issues
as the national highway system routes, and at the same time
demands on intermodal connectors are expected to double by
2020.
Recognizing the growing freight needs, as part of TEA-21
Congress established the National Corridor Planning and
Development Program and the Coordinated Border Infrastructure
Program, commonly referred to as the Borders and Corridors
programs. The legislation also provided $140 million annually
for these programs combined.
Unfortunately, the current Borders and Corridors programs
have fallen short of the intended goals for two reasons. First,
the programs were funded at levels far less than necessary to
meet freight transportation and intermodal connector needs. As
witness to that, since the beginning of the programs, requests
from the States and metropolitan planning organizations have
exceeded Federal funds available by a ratio of 15 to 1.
Second, the Borders and Corridors programs have been
extensively earmarked in the annual appropriations process,
frequently allocating funds to projects that may or may not
have been those with the greatest national significance to the
movement of freight.
With respect to the reauthorization of TEA-21, the
coalition strongly recommends that the programs be continued,
but bolstered to ensure that the original goals are met. The
coalition respectfully commends several recommendations to the
committee for your consideration.
First, to meet the high level of demand, funding for the
Borders and Corridors programs must be increased and increased
dramatically. The coalition believes that a minimum of $2
billion is needed annually. The distribution of funds should be
freight-specific. There should be a qualification threshold
based on freight volumes and freight-related congestion to
ensure that the limited dollars that are received reach the
corridors, the borders, and the gateways of the greatest
significance to trade.
Third, the designation of entities eligible should be
expanded to include other public and quasi-public organizations
that may not today be qualified to receive funds under the
program.
Fourth, the Borders and Corridors program should be
redefined to address the needs of all trade gateways, not only
the land corridors and gateway-connected trade corridors. Many
gateways that handle huge volumes of freight are not eligible
for funding because they may not be at so-called borders. For
example, we do not think of Illinois as being a border State,
but one-third of the Nation's freight passes through Chicago
and it is the largest intermodal hub in the Nation. Similarly,
inland ports are also important gateways that enable the
efficient movement of goods throughout the entire country.
The designated high priority corridors available for
funding under the Borders and Corridors programs need to be
reexamined to ensure freight-intensive areas can apply for
funding. Currently there are many important projects in need of
funding that do not fall in one of the 43 priority corridors
designated under TEA-21. In conclusion, I would like to say
that America's freight is America's future. We must keep the
infrastructure that underpins the movement of freight strong.
That means additional Federal investment. Every dollar invested
in the highway system yields $5.70 in economic benefits to the
Nation, but at the same time investment in the freight
infrastructure is also critical for national defense. Ports and
their connectors have always been the point of embarkation for
defense material and this role is even more important in the
wake of the terrorist attacks of a year ago.
Thank you for the opportunity to offer the coalition's
views and I look forward to responding to your questions.
Senator Breaux. Thank you very much, Mr. Huerta.
Next we will hear from my friend John Caruthers, who is
chairman of the I-69 Highway Coalition. I kind of use the names
``Caruthers'' and ``I-69'' interchangeably now. It is like you
are one and the same thing. So we are delighted to have you
with us, John, and pleased to receive your testimony.
STATEMENT OF JOHN D. CARUTHERS, JR., CHAIRMAN, I-69 MID-
CONTINENT HIGHWAY COALITION
Mr. Caruthers. Thank you, Mr. Chairman, and thank you for
the compliment, and thank you for the opportunity to discuss
with you the importance of I-69 to the efficient movement of
the Nation's freight.
I-69 when finished will span the Nation's heartland from
the Canadian border to the Mexican border, traversing 9
States--Michigan, Illinois, Indiana, Kentucky, Tennessee,
Mississippi, Arkansas, Louisiana, and Texas. Two sections of
this system are already existing and open to traffic. The first
one starts at Port Huron, Michigan, on the Canadian border and
extends to Indianapolis. The second, Interstate 94, extends
from Port Huron southwest to Detroit and west to Chicago.
The rest of I-69 is under development, from Indianapolis
south to Memphis, Tennessee; Shreveport; Bossier City,
Louisiana; and Houston, Texas; to the Lower Rio Grande Valley
and Laredo at the Mexican border. Completion of I-69 will not
require an entirely new facility. In some areas it will link
existing interstates or upgrade and link other existing
highways. Work is under way along the entire I-69 corridor.
While I-69 traverses 9 States, it is important to the
Nation as a whole. Trade has shifted, particularly since NAFTA,
from an east-west to a north-south trend. Canada and Mexico are
now our two largest trading partners. Last year, 2001, 80
percent of the U.S. trade with Mexico and 67 percent of U.S.
trade with Canada went by truck and I-69 corridor accounted for
63 percent of the Nation's truck-borne trade with both Canada
and Mexico.
The Michigan border points of Detroit and Port Huron
account for 48 percent of our truck-borne trade with Canada and
the Texas border between Laredo and the Lower Rio Grande,
Brownsville and McAllen, accounts for over 49 percent of our
truck-borne trade with Mexico.
Looking at freight flows nationwide, not just with Canada
and Mexico, approximately half of the total freight shipped in
the United States in 1997, over 5 billion tons, passed through,
originated, or terminated in the I-69 corridor. Freight is
entering and leaving the I-69 corridor by truck, rail, air, and
water. 17 of the Nation's top 25 seaports are in this corridor.
13 inland waterway ports and 15 of the Nation's top 25 air
cargo airports are directly served by I-69.
Every major eastern and western rail carrier and both
Canadian carriers have terminal operations on the I-69
corridor. There are truck-rail intermodal facilities in every
major city along the corridor. I-69's port of Houston leads the
Nation in foreign waterborne tonnage, and container traffic in
the Gulf of Mexico ports served by I-69 is growing faster than
the national average or faster than traffic at Atlantic or
Pacific ports.
Trade entering I-69 from all modes of transportation is
growing faster than in the rest of the Nation. Trade tonnage
moving through I-69 points of entry from 1990 to 1999,
including land, sea, and air, grew 18.3 percent, or more than
twice as fast as the national average of 8.3 percent.
A Federal Highway Administration study suggests that the
recent growth in freight traffic will continue through the year
2020. The vast majority of the new growth will be in the
trucking industry, with the dominant movement on the Southwest
to Northeast direction, a movement ideally suited for the I-69
corridor.
Yet there is no direct interstate-level highway from
Indianapolis to the Mexican border. When the interstate system
was initially designed, it was laid out generally east-west,
reflecting the demographics, trade patterns, and defense needs
at the time. When the interstate was completed in 1995, some of
the newer north-south sections like I-69 were left unfinished.
The premise of the Corridors and Borders program was the
recognition that within the 160,000 mile National Highway
System there were unfinished corridors essential to the
Nation's trade and economic growth that needed to be completed
and merited a separate program. The program, however was only
funded at $140 million a year nationwide and many of the
projects that qualified or were earmarked for funding were of
local, not national, interest.
Despite insufficient funding, the I-69 corridor made such
significant progress that all of I-69 can go to construction
during the period of the TEA-21 reauthorization. Much of it can
be completed if dedicated funds are available to do so.
Having built the interstate system, we cannot rest on our
laurels. We must invest our resources in those unfinished
corridors that serve today's and tomorrow's 21st century trade
flows, such as I-69. There are a number of mechanisms to
accomplish this: limiting the Borders and Corridors program to
major trade corridors and increasing its funding, dedicating
program funds to complete unfinished interstate links, or
funding freight corridors. Any of these options would work,
whether alone or in combination.
The point is we must recognize the need for and build the
infrastructure to serve our Nation's freight flows. The traffic
is there. The intermodal connections, rail, water, and air, are
also there. The trade is surging at Houston, Detroit, and
Laredo. Yet the interstate-level facility to transport these
products safely, efficiently, and economically, I-69, remains
unfinished.
Thank you very much.
Senator Breaux. Perfect timing, John. Thank you very much,
and thank all of the witnesses for being here. I think the
discussion today has been good. It is going to give a lot of
our professional staff some ideas and thoughts as we approach
the reauthorization of TEA-21.
Obviously, I heard my questions to the Assistant Secretary
to start thinking outside the box about what we need to be
doing in these areas. I realize that in the private sector it
is awfully difficult to bring about a great deal of cooperation
because all of you--not all of you at the table, but railroads
and truckers and ocean-bearing traffic and aviation--are all
financially competitors. So it is hard for you to sit down and
figure out what is good for the whole country when you have a
responsibility to your independent modes of transportation,
with railroads and the trucking industry and aviation industry
and ocean-bearing traffic for the ports.
Mr. Huerta, in the coalition that you have, how difficult
is it to get these various competitive modes to sit down and
say, all right, what are we going to do to make it work? I
mean, we have got congestion at the ports. We do not have
enough railroads coming into the ports, we cannot get enough
trucks in to pick up the containers. We are going to double the
amount of containers coming in and going out in the foreseeable
future.
How difficult is it to try and bring about cooperation?
What needs to be done in that area? I am sure each one of these
segments would like to do it all by themselves, and that is not
going to happen. So how do we get them to work together to come
up with some recommendations that can make sense for the
Congress?
Mr. Huerta. Mr. Chairman, one thing that we hear in our
coalition meetings and that I think you heard today is that
there is unanimity among all the modes of surface
transportation that we are not doing enough about freight
transportation. The discussions that we have had at the
coalition focus on the fact that, while there are many ways
that you can fund freight programs under the current categories
through which the surface program is reauthorized, generally it
is very hard to build the level of support for freight
programs, because they may extend beyond the borders of a
particular State or a particular metropolitan area.
These are national needs that are out there and when you
are looking at something from the point of view of a particular
region, it is sometimes hard to put that national lens on and
look at the world that way. What you have heard from all of us
is that international trade is extremely important, the growth
of the economy domestically is extremely important, and moving
the freight through the system is going to be essential in the
coming years.
So we all agree on things like the Borders and Corridors
program. It was a terrific concept. It has worked very well.
There just is not enough money.
Likewise, there are many other ways that you can get
freight projects identified. What we would like to see is how
do you give them the priority. We are looking for more than
just, yeah, you can spend money on a freight project. We would
actually like to see some funds designated for freight
projects. Senator Breaux: Address a question that is a concern
to me about the congestion at the ports of our Nation. We have
got 75 percent of the traffic by volume either going out or
coming into ports internationally, and of course NAFTA has
brought a lot more by trucks through Canada and through Mexico.
But that traffic coming in and out of the ports which are so
congested is going to be coming by rail, it is going to be
coming by trucks, and if we do not have a system in these ports
to make it work better, we are just going to have some ports
that are so congested you are not going to get railroads coming
in or trucks coming in or anything going in and out, in the
timeframe that we need it, to be effective and to be efficient
in the world community.
So I mean, tell me a little bit about what they did to the
Alameda corridor? Is that helpful in looking at possible
solutions, what they were doing out there?
Mr. Huerta. It is helpful and it in fact has been used as a
model for many other port access projects around the country.
But let us step back and look at Alameda in terms of what it
involved. The project had something like a 13-year history
before it actually got into construction and it was an
extremely complicated thing to try to move through the
traditional funding process.
Ultimately, it was funded through a combination of user
fees and local funds that were generated by the two port
authorities in Los Angeles and Long Beach. Then the Federal
portion, the largest piece of the Federal portion, was actually
a Federal loan. But we did not have the authority to do that
project when the loan idea was first proposed. It required
special legislation that was enacted by Congress as part of the
national highway system designation.
That success at Alameda, though, became the model for the
TIFIA program, which works for large infrastructure projects
such as this, where there is a user fee that can perhaps repay
the costs of the loan and other funds that might be in place.
However, a loan program is not going to work all the time.
There are major corridor and access projects at rail terminals,
at trucking terminals, and at ports around the country that
might not be able to support a user fee, and that does not make
them any less important in terms of elevating their profile for
funding.
But they have the added complexity that a port access
project, for example, in the State of Washington or in the
State of New York, benefits people far into the interior of the
country. Under the current planning and funding framework, it
really falls to the State or the metropolitan area where that
project is located to lead that project through the overall
funding mechanism and to make it a priority in that region.
What we need is a way for these big mega-projects to assume
the national profile that they really have, such that they are
not the responsibility of a single State or a single
metropolitan area to carry them out and fund them.
Senator Breaux. Maybe, Admiral, you can get in on this. But
if we have needs at all of the ports--and I am talking about
ports, but I am really talking about making it more efficient
for railroads to serve ports, for the trucking industry to
serve the ports, as well as the ships taking the goods and
services in and the containers in and out of the ports to
operate more efficiently.
So give me some discussion on the concept of port user
fees. I know there is all this, all right, we are going to be
noncompetitive if we have to have user fees. Well, user fees
are paid by the ultimate consumers of the product. I have
always had the concept that if they are the same across the
board no one has an unfair advantage, if everybody is paying
the same user fee that is dedicated for port development and
infrastructure in those seaports around the country.
Is that concept a viable concept as a means of getting
extra funds for fixing the ports and eliminating some of the
congestion, or is it a bad idea? We have got to find out where
we have the money and it is not going to be easy and somebody
is going to be unhappy. Talking about taxes, they are unhappy.
Talking about fuel taxes, they are unhappy. Talking about user
fees, they are unhappy. Do we need more money? Yes.
Admiral
[Laughter.]
Senator Breaux. The shippers are behind you.
Mr. Larrabee. There are a lot of people behind me, Senator.
I do not know. To me it goes back to I think the testimony
given for GAO today, and that is what are our real needs, what
are the benefits that we can look at, and then I think the
question of where do we get our funding. For us, as we spend--
in my particular port over the next 3 years, we will spend
nearly $2 billion on improving channels, on improving
terminals, and on improving rail infrastructure. We are going
to spend about $290 million just to create a greater capacity
to handle cargo by rail. We think that in the next 10 years we
can shift, at least in our port, what now constitutes about 14
percent of our cargo going out by rail to about 24 percent. We
can shift barge traffic by from 2 percent to about 21 percent.
I am not suggesting that we are going to change the fact that
trucks are still going to be a predominant feature in our
region, but the notion that there is great public benefit by
looking at this system in a smarter way to me has value, and I
think the issue of who pays for it can be a lot easier when you
have figured out a better way to handle this.
The issue of who pays for this right now, of course, and
things like the harbor maintenance tax, there is a great deal
of controversy over that and I do not know that you can get
anybody to agree on a rational approach. That is a decision the
Federal Government is going to have to make.
Senator Breaux. We cannot even decide whether it is a fee
or a tax.
What about the concept of moving some of the traffic in the
ports to staging areas away from the ports? I mean, most of our
ports are right in the urbanized areas. The port of New Orleans
is right downtown. The port of Houston is right downtown. Your
ports in New Jersey and New York are right in the middle of the
greatest urban area probably in the world. Los Angeles, they
all have it.
We all have the same problem, which is the port is right in
the middle of urbanized areas. That was fine 100 years ago, but
today how do you get the trains in, how do you get the trucks
in, how do you handle all that volume going right down in the
middle of an urbanized area in order to pick it up or to take
it there? It does not work anymore.
So the concept by some is to move, I guess, the staging
area further away from the actual port facility in an urbanized
area, so you can get the stuff to an area and put it on the
rails and put it on the trucks, instead of having to do it
right in the middle of New Orleans or right in the middle of
New York City, for instance. Does that make any sense?
Mr. Larrabee. We have over the last couple of years looked
at where all of our freight goes. I can tell you by zip code
where every container that comes into the port ultimately is
destined for. We know that about 90 percent of the cargo that
goes outside the immediate New York-New Jersey region goes to
one of 7 or 8 load centers, places like Albany, New York, and
Buffalo, New York, places like Camden, New Jersey, and
Providence, Rhode Island. Once we have identified the fact that
a lot of that cargo goes to those places, the next thing we
have looked at is how do you get it there in a more efficient
way. Dedicated rail and dedicated barge service has become the
way that we have begun to look at it. We think that we can move
cargo more efficiently, at a cheaper price, in about the same
amount of time, with a greater degree of reliability, by using
dedicated rail and barge.
As I suggested before, we think we can improve the
intermodal split from what now is an 85 to 87 percent truck-
only operation to something that closely approaches 50 percent
by truck and the rest by other modes. That is an approach that
is gaining interest in all the Northeast States. It reduces
traffic and congestion and air quality problems. It reduces
maintenance on the roads, and in our mind is going to
dramatically increase the productivity of the Port of New York
and New Jersey.
Senator Breaux. Mr. Wickham, let me have your comments and
thoughts about that? I am not suggesting this is a way of
lessening traffic overall, but only in the immediate vicinity
of the downtown urban ports around the country, to have a
staging area, I would take it, where trucks would come in away
from the actual port sites. Do these ideas have any merit or
what are your thoughts?
Mr. Wickham. I think they do. That freight ends up on a
truck sooner or later anyway. When it goes to Albany, the
container is unstuffed and it becomes a trucking shipment at
that time.
When I look at the national transportation system that we
have, I think some of the fights that modes have over
productivity are silly, because at the end of the day the whole
system is more productive if every element of the system is as
productive as it can be safely. So some of the debate that goes
on I think does not serve any good purpose.
I think the way to look at this system is to maximize the
productivity of every participant in the transportation system.
That takes away the need for more capacity in a lot of cases.
Productivity is capacity. So that concept that you are talking
about, consolidating farther away from the port to reduce the
transportation out of the port, does not bother me at all.
Senator Breaux. I am glad to hear you say that. It seems to
me--I am just thinking offhand, which is what I normally do--is
the fact that these ports around the country are trying to
build all these staging areas where you come in with your
trucks, and it is like--how you do it I will never understand.
You have got this big yard of containers and the trucks are
coming in, picking them up, taking them out, and trying to do
all of this in the middle of a city.
It seems to me that if you had a dedicated rail line
leaving that port facility and just running these container
cars out further away from the port outside the city, and then
having their trucks come in, because all these containers
cannot go to every little town and destination in America by
rail because they are not there. But you could have the
dedicated rail line taking it outside of the port to a central
staging area where the trucks could come in.
It seems to me that that certainly helps the congestion and
makes it more efficient as far as the ports are concerned.
Mr. Wickham. Well, it is one of the reasons that you have
as many containers in Chicago as you do. They originated in
Alameda and came through on a rail leg to be distributed in the
Midwest. That I think is maximizing the efficiency of the whole
system.
Senator Breaux. I was interested in your comments, Mr.
Wickham, on safety and speed and also the recommendations on
the States having greater authority again on the size and
weights. All of these are arguments we have been through on
will continue, and I appreciate your recommendations on those
areas.
On speed, I thought in the old days all the trucks had
Governors on them that would restrict the amount of speed. They
do not do that anymore, or do they?
Mr. Wickham. Oh, yes, we do. Our fleet does. Most big
fleets do. But my point was not just the truck speed; it is the
automobile speed as well. The statistics indicated that in a
large percentage of the accidents involving trucks the other
vehicle was speeding. We want to see very strict enforcement of
speed for cars and trucks, because I think that is the lowest-
hanging fruit we have in the safety area right now.
Senator Breaux. Well, those are things that we are going to
be discussing, I know, in the reauthorization and they are good
suggestions.
Mr. Hamberger, on the question about rails in the ports, I
take it, am I correct, that the cost of the rails serving the
ports is a port cost, not a railroad cost? And if you are
building something to do business, should not the rails be
picking up the costs of the equipment?
Mr. Hamberger. I am not precisely sure what you are asking.
It is my understanding that the intermodal yards that are
built, for example just 18 miles outside of L.A., are those
built, maintained, and run by the railroad companies. I know
that each of our members has spent hundreds of millions of
dollars in the last 2 years building intermodal yards, in some
cases, establishing partnerships with ports on facility
improvements. Two of them right outside of Chicago, both UP and
BN-SF; down in Georgia, Norfolk Southern. I know they have done
some work in Harrisburg to take intermodal shipments from New
York-New Jersey as well.
Senator Breaux. Admiral, is that your understanding about
who bears the costs of the rails within the port system? Is
that the port or is that the railroads?
Mr. Larrabee. Senator, typically the formula that I am
familiar with is that the port builds the intermodal rail
facility inside the port. But as you build capacity in a port
like New York and New Jersey, you have to look down that system
to make sure that you are not creating a bottleneck someplace
else.
So we have been working very closely with all of our
railroads to make sure that as we build the capacity in the
Port of New York and New Jersey that their systems are able to
handle that increase in activity. So I think that there is a
balance as you get further away from the port.
Senator Breaux. So the current system, I take it, from a
port perspective is working all right as far as the intermodal
railroads? I mean, you would like the railroads to pick it all
up, I am sure.
Mr. Larrabee. My agency is unique in that we are required
to be financially self-sufficient. So when I propose a project
like ``ExpressRail,'' which will grow our rail capacity in one
terminal from about 25,000 lifts to a million lifts in the next
5 years, I have got to find a way to get a return on that
investment. And I will charge a user fee or a tariff for those
movements. We have used that formula very successfully.
Senator Breaux. Do you have the authority to do that as the
port?
Mr. Larrabee. Yes. We have bonding authority that covers
all of our lines, and that is where all of our capital money
comes from, paid back to investors. But I have got a
responsibility as a business line to make sure that that money
is recovered.
Senator Breaux. Ms. Dusenberry, thank you. I know that
Senator Reid was very much wanting to hear what you had to say
and was very aware of the project that you spoke to. With
regard to that project, what does Congress need to do to help
in getting it implemented? Is it a funding question or is it--
what is it?
Ms. Dusenberry. It is a very definite funding question. The
shortfall in the amount of funds we have been able to
accumulate is $108 million and we feel this needs to come in a
stream from the Federal Government, either a stream that we can
borrow against, or one lump sum would be very nice if you
wanted to give it to us in one lump sum.
Senator Breaux. But I take it your people say that under
the existing highway formulas that you do not get adequate
funding to do the type of project that you suggested?
Ms. Dusenberry. That is true. Both Nevada and Arizona have
contributed $20 million, each State, toward this project out of
our regular flow of HRF funds that come into our State, and we
feel from this point on that it is a Federal highway, it is on
Federal land, it is going to be run by FHWA, and we feel our
contribution cannot be any more.
Senator Breaux. Well, I think you have made a good point. I
think Senator Reid has been a big supporter of this project. My
only suggestion is that I think you ought to go visit
Searchlight, Nevada.
Ms. Dusenberry. I will need to go to Searchlight.
Senator Breaux. If you could just drive through
Searchlight, I think it would make----
Ms. Dusenberry. I think I can drive through it very
quickly.
Senator Breaux. Oh, yes, it will not take a lot of time.
[Laughter.]
Ms. Dusenberry. We would like to invite you to the
groundbreaking of our bypass bridge approaches.
Senator Breaux. Well, I would like to come.
Ms. Dusenberry. On October 21st, if you can. It is going to
be on the top of Hoover Dam, so you can see what the congestion
is.
Senator Breaux. I will go there right after----
Ms. Dusenberry. We will go to Searchlight.
Senator Breaux. I will go there right after I go to the I-
69 groundbreaking.
[Laughter.]
Senator Breaux. Mr. Caruthers, thanks, John, for being with
us. I've never seen--I have been in this business almost 30
years this month and I do not think I have ever seen a
coalition nationally on a project like this that you have been
able to put together. I think that is what really has made it
successful, because it has really involved not just one State,
but all the States along the route, and that is not easy
because everybody has different ideas about how to do it. But
it has been really important.
I guess one of the things that--I do not know why, but when
we built the interstates back starting in the Fifties it really
was an east-west bias, was it not? We were building highways
east and west, but north-south sort of to a large port of the
country really got left out.
How much more important is that north-south highway now
since NAFTA was passed? It seems like you talked about we have
had huge numbers of increase in amount of trade from Canada and
from Mexico going north-south.
Mr. Caruthers. That is right. I believe I mentioned that
Louisiana exports to Mexico have tripled. Texas has doubled.
Truck-borne freight I am talking about, travel, now. Even as
far north as Indiana--and for example, Illinois' trade exports
to Mexico by truck have tripled. Their trade with Canada has
doubled. So this is going on in every State in the I-69
corridor.
Senator Breaux. Mr. Wickham, how important is that type of
a corridor? It seems to me when you are going north-south
through the central part of the country you are really on--you
do not have a lot of interstates that you can travel over.
Mr. Wickham. That is correct, and it is becoming more
important. You can obviously see the east-west bias. I think it
was done for the defense reasons, that the highway system was
put in place. But it is apparent that the north-south direction
was lacking and it is becoming more and more important.
We have subsidiaries in Canada and in Mexico and we can
connect ourselves operationally and information systems-wise,
but the crossings become problematic and then transportation
north and south after you make the crossing is a little more
difficult than it is east and west. But it is obviously
becoming more and more important because of NAFTA and the
growth.
Senator Breaux. Thank you.
Mr. Caruthers, what is the most important priority that we
should be doing from a congressional standpoint? I guess maybe
the reauthorization for I-69. Where are we in terms of--what
are the priorities now? Where are we now?
Mr. Caruthers. Well, it seems to me--and I am thinking like
you, from off the cuff right now--the freight bottlenecks are
at the borders and in the corridors, and the Borders and
Corridors program seems to me to be the simple structure
already in effect that needs only one thing, and that is
funding.
Senator Breaux. I-69, if we had more funding in it, would
be able to benefit directly from that.
Mr. Caruthers. That is right. That is right. We can finish
it almost within the TEA-21 reauthorization of 6 years if the
funding is provided.
Senator Breaux. Ms. Dusenberry, you had a comment?
Ms. Dusenberry. I mentioned in my testimony that the Hoover
Dam Bypass Bridge was a part of the CanaMex corridor. Mexico is
a--the western part of Mexico, west of the Sierra Nevada
mountains, which are hard to traverse across in Mexico, is the
largest producer of produce that comes into the United States.
That border crossing--those border crossings in Arizona are
extremely important.
We are working on a study now, we are calling it ``The
CyperPort,'' in Nogales, Arizona, where we are looking at
electronically serving all of the trucking so there is no paper
exchanged. We are working on a uniform bill of lading so that
the trucking across the border can run paperless and seamless
across the border.
We hope that this technology that we are developing will
transfer to other border crossings, both in Canada--Canada has
been interested in what we are doing--in Canada and the other
Mexican ports when we get this seamless system developed.
Senator Breaux. Well, I think the committee has had some
good ideas and some good suggestions. I think it is good that
we were able to start talking about this before the fact. We
have TEA-21 coming up, but I think with Senator Reid and
Senator Jeffords and Senator Inhofe all wanted, and our staffs,
to get some discussion now so we get these ideas being thought
about as to what we need to be doing. I think that your points
are all well taken.
Admiral, good luck to you and all the people at the port
for the rest of the week. I know it is a particularly trying
time, but we appreciate your service and being with us today.
With that, the committees will stand adjourned.
Whereupon, at 4:37 p.m., the hearing was adjourned.]
[Additional statements submitted for the record follow:]
Statement of Hon. Jeffrey N. Shane, Associate Deputy Secretary and
Director, Office of Intermodalism, U.S. Department of Transportation
Chairman Breaux, Chairman Reid, Ranking Members Smith and Inhofe,
and Members of the Committee: Thank you for inviting me to testify
today on the topic of ``Freight and Intermodalism.'' I would like to
commend your committees for their continued leadership on these
important issues and in supporting our efforts to ensure the seamless
transportation of goods throughout our country. I believe that ISTEA
and TEA-21 have created a solid framework for addressing the
transportation and logistics policy issues currently facing our Nation,
and the lessons we have learned will serve as important guideposts
during the upcoming reauthorization debate.
Demands on our nation's transportation system are growing faster
than supply. While statistics show that since 1970 our population has
grown 40 percent and vehicle miles traveled have doubled, the Federal
Highway Administration's Highway Statistics Manual indicates that our
highway physical infrastructure has increased by only 6 percent during
that timeframe. In fact, according to the Texas Transportation
Institute, the costs associated with congestion in the 68 urban areas
they studied totaled $67.5 billion for 2000, including 3.6 billion
hours of extra travel time and 5.7 billion gallons of fuel burned by
vehicles sitting in traffic. Even after the significant investments in
surface transportation infrastructure under ISTEA and TEA-21, our
transportation system is still experiencing rising levels of congestion
that adversely impacts the free movement of freight on our nation's
roadways.
In 1998 (the latest year for which data are available), the U.S.
transportation system carried nearly 4 trillion ton-miles of freight
valued at over $9 trillion. Of this, shipments totaling $7.8 trillion
were primarily domestic movements, with an additional $1 trillion
representing international merchandise. By the year 2020, forecasts
predict that the U.S. transportation system will handle cargo valued at
over $28 trillion, of which $24 trillion will be domestic movements and
over $4 trillion will pass through our nation's gateways.
Truck shipments accounted for 71 percent of total tonnage and 83
percent of the value of U.S. shipments based on the 1998 data. Trucks
also make the vast majority of local deliveries, although the industry
also carries large volumes of freight between regional and national
markets. Water and rail also carry significant shares of total U.S.
tonnage, but much smaller shares when measured on a value basis. Air
cargo shipments, on the other hand, moved less than 1 percent of total
tonnage but carried 12 percent of the value of freight shipments during
1998.
To put these figures into a broader context and provide a better
sense of the challenges we must face, the increase in the volume of
freight being shipped on our nation's highways will, by the year 2010,
equal the total volume of freight currently carried on our entire rail
system in the average year.
One of Congress' principal goals in establishing a unified, Federal
Department of Transportation (DOT) in 1967 was to facilitate
coordinated transportation services across all modes while encouraging
these services to be provided by private enterprise whenever possible.
Another goal was to ensure that the connections between and among the
transportation modes function smoothly while facilitating international
trade and economic development. The Department provides a common
framework that meets the various needs of our highway, marine, aviation
and rail systems by ensuring greater coordination among programs
affecting different modes of transportation while increasing the
connectivity of these modes.
The landmark Intermodal Surface Transportation Efficiency Act of
1991 (ISTEA) increased funding flexibility and emphasized intermodal
planning. The financial reforms of the Transportation Equity Act for
the 21st Century (TEA-21) gave States and local governments vastly
greater resources and the flexibility with which to implement the
intermodal solutions fostered by ISTEA. Together, they have laid a
sound framework for future Federal surface transportation programs and
the intermodal strategies needed to leverage and improve system
management and utilization.
Although much has been done over the past decade, the promise of
intermodalism--the efficient movement of freight and passengers through
all modes of our transportation system--has not yet been fully
realized. As bottlenecks grow and system congestion worsens, the
Department increasingly will be asked to facilitate projects that
enhance freight transportation efficiency. Also, in the aftermath of 9/
11 participants in the transportation system have been called upon to
integrate security measures into their operations, and the Department
has initiated several programs to encourage that integration. For the
freight industry, this will require strong private sector involvement
with the Federal Government empowered to foster cooperation across all
modes through new public/private partnerships.
Freight Movement and International Trade
Understanding future freight activity, both foreign and domestic,
is important for matching infrastructure supply to demand and for
assessing investment and operational strategies. The U.S. economy
depends upon a wide variety of products that move within State
boundaries, through interstate commerce, and to and from various parts
to the world. Using data from its Freight Analysis Framework (FAF), the
Department has developed information on current and projected freight
flows, including a forecast of activity through the year 2020.
FAF projects annual domestic freight volumes will nearly double
between 1998 and 2020, increasing from 13.4 billion tons to over 22.5
billion, which raises the question of which modes will carry these new
shipments. The FAF forecast assumes that growth in freight activity
will be captured largely by increases in air and truck shipments.
Domestic air cargo tonnages are projected to double, although its share
of total tonnage would remain fairly small. Movements by truck are
expected to almost double over the 1998 to 2020 period, capturing a
larger share of total traffic. Finally, while both rail and domestic
water shipments are projected to increase, their volumes are not
expected to grow as dramatically over the forecast period, mainly
because of slower demand growth in many of the key commodities carried
by these modes.
Since the 1970's, international trade has emerged as a major
component of the U.S. economy, as imports of consumer goods, petroleum,
and manufactured products have increased along with exports of raw
materials, agricultural products, and manufactured goods. This trend
toward increased international trade is expected to continue, as
suggested by DRI/WEFA's projection that over 30 percent of the U.S.
economy will be tied to international trade in goods and services by
the year 2020, up from 23 percent in 1998.
This projected growth in trade has led to concerns over congestion
at U.S. ports, airports, and borders entry points. International trade,
expressed in tons, is forecasted to grow at an annual rate of 2.8
percent and more than double by 2020. While increases are expected for
all regions of the world, the largest growth will likely come in our
trade with Mexico, Canada, Asia and South America. Cargo trade with our
NAFTA partners moves primarily by truck and/or rail, and most
international shipments of water and air cargo are transferred to or
from trucks, rail cars or barges after arriving in the United States or
before heading to export markets. Given the importance of trade to our
nation's economy, identifying ways to more efficiently move freight
across our borders will be critical in the years ahead.
NHS Intermodal Connectors
The condition of the existing transportation system and its
connections directly affects the efficient movement of cargo. When
Congress created the National Highway System (NHS), it recognized the
need to provide adequate highway access to intermodal freight
terminals. Intermodal passenger terminals are generally well served by
NHS connectors but infrastructure connecting freight terminals to
primary NHS routes is often in need of improvement.
NHS connectors are typically short, averaging less than two miles
in length, and are usually local, county or city streets that have
lower design standards than mainline NHS routes. They typically serve
heavy truck volumes moving between intermodal freight terminals and
mainline NHS routes, primarily in major metropolitan areas. Despite the
fact that connectors are less than 1 percent of total NHS mileage, they
are the ``front door'' to the freight community for a broad array of
intermodal transport services and options.
TEA-21 directed the Secretary of Transportation to conduct a review
of the NHS connectors that serve intermodal freight terminals and
submit a report to Congress. The objectives of the review were to: (1)
evaluate the condition of NHS connector highway infrastructure to major
intermodal freight terminals; (2) review improvements and investments
made or programmed for these connectors; and (3) identify impediments
and options to making improvements to the intermodal freight
connectors.
The findings of our report to Congress, dated July 2000, are
especially relevant as we consider reauthorization of TEA-21:
Intermodal connectors that primarily serve freight
terminals have significant mileage with pavement deficiencies and
generally exhibit inferior physical and operational performance than
other similar NHS facilities;
An analysis of investment practices shows a general lack
of awareness and coordination for freight improvements within the State
departments of transportation and metropolitan planning organizations
(MPO) planning and programming process; and
Given the pressing needs for passenger-related projects
and the fact that many of the benefits from an increased freight
investment are received outside of the investing jurisdiction, there is
little incentive for local investment in freight projects.
The ability to recognize and effectively address connector needs
within the context of our overall intermodal freight system are
important elements in preserving and promoting the substantial
productivity gains we have witnessed as a result of better supply chain
management.
Multi-State and Cross-Border Transportation Planning
End-to-end movements of commercial freight must be viewed within
the context of a transportation system that is not bounded by State or
international borders. A regional perspective and decisionmaking
capability is required to provide effective coordination for the
infrastructure planning and investments that support these commercial
activities. Recognizing that the health of their economies depends upon
efficient movement of goods along regional transportation system
segments that often lie beyond their immediate responsibility, several
State and Provincial Departments of Transportation have joined together
to promote regional transportation consortia. The following examples
illustrate this coordinated and complementary approach to regional
transportation planning and infrastructure development:
I-95 Corridor Coalition (I-95CC): The geographic region
represented by the I-95CC consists of 12 States (ME, VT, NH, MA, CT,
RI, NY, NJ, PA, DE, MD, VA) and the District of Columbia. With a
population of just over 67 million people, it is home to nearly a
quarter of the nation's inhabitants and a quarter of the nation's jobs,
but contains only 6 percent of the landmass of the Nation. The
population density of the region makes efficient goods movements both
essential and extremely challenging in this largely urbanized
environment. DOT representatives from the 12 States and the District of
Columbia have developed an intermodal strategic plan for the I-95CC
that is addressing freight transportation needs within the context of
the region's social, economic, and environmental goals.
Gulf/Rivers Intermodal Partnership (G/RIP): In a
cooperative effort of seven southeastern and Gulf State departments of
transportation, regional planning entities and four public port
authorities, G/RIP works to improve waterside/landside infrastructure
investments through education programs for public planners. The
partnership uses the region's ports as classrooms in addition to
periodic forums with senior regional public and private sector
policymakers to discuss topical infrastructure issues.
International Mobility and Trade Corridor (IMTC): The
IMTC is a coalition of over 60 U.S. and Canadian business and
government entities whose mission is to identify and pursue
improvements to cross-border mobility in the ``Cascade Gateway'', which
includes four land border crossings between British Columbia and
Washington State. Two-way trade at the Blaine, WA, border crossing
alone was valued at more than $35 million per day in 2000. Congestion
and processing delays at the Blaine border crossing result in over $40
million in additional operating costs annually--losses that exceed 1
day's revenue generated by this commercial traffic. IMTC-sponsored
projects are funded through bi-national financial partnerships at
Federal, regional, and local levels.
TEA-21's Record
congressional support for the commercial movement of freight was
woven into many parts of TEA-21, helping to strengthen the nation's
transportation system through: enhanced stability and flexibility of
funding; the borders and corridors programs; and increased application
of new information technologies.
Stability and Flexibility of Funding
TEA-21 revolutionized transportation funding through its budgetary
firewalls and innovative financing provisions as well as by providing
record amounts for surface transportation programs. The budgetary
firewalls that were introduced created confidence among grantees
regarding program funding. As a result, States and localities have
relied upon these assurances and increased their funding levels to
match or even exceed Federal commitments made in TEA-21. The Department
sees its role as one of exercising leadership in convening public and
private sector parties to undertake innovative financing of major
transportation projects.
One of the most impressive intermodal success stories is the
Alameda Corridor freight project. The Alameda Corridor is a multi-modal
project that uses a mix of private funds and public programs, including
a $400 million loan from the Department of Transportation, to improve
rail and highway access and to reduce traffic delays in the critically
important area of the Ports of Los Angeles and Long Beach. The recently
completed $2.4 billion project, which opened for revenue service on
April 15, 2002--on time and within budget--will have far-reaching
economic benefits that extend well beyond Southern California.
The funding flexibility created under ISTEA and continued in TEA-21
allows States and communities to tailor their transportation choices to
meet their unique needs. It enables State and local decisionmakers to
consider all transportation options and their impacts on traffic
congestion, air pollution, urban sprawl, economic development, and
quality of life.
TEA-21's innovative credit program has further augmented both the
highway and transit programs. The Transportation Infrastructure Finance
and Innovation Act (TIFIA) has provided almost $3.6 billion in Federal
credit assistance to 11 projects of national significance, representing
$15 billion in infrastructure improvements. These loans, loan
guarantees, and lines of credit for highway, transit, rail, and
intermodal projects have encouraged private investment to strengthen
transportation infrastructure.
Despite these successes, there are still areas where we can
improve. For example, while freight transportation projects are often
regional or multi-State in scope, funding is typically distributed
through States and localities. Also, conventional financing programs
have provided funding for a wide variety of projects focused on
individual modes of transportation, but when dealing with major
intermodal projects these programs have often proven insufficient.
Finally, because TEA-21's programs are oriented toward the public
sector, it can be difficult to truly incorporate the needs of private
sector transportation carriers and shippers in the planning process.
The Borders & Corridors Program
TEA-21 established the National Corridor Planning and Development
and Coordinated Border Infrastructure Program (also known as the
``Borders and Corridors'' program). Both programs are financed by one
funding source, which is authorized at $140 million annually from
fiscal year 1999-2003. Due to the obligation limitation provisions of
TEA-21, awards the first 3 years averaged about $123 million, but based
on the law's RABA provisions and congressional direction awards for the
fourth year (FY 2002) will be nearly $480 million.
congressional designation (or ``earmarking'') of projects in the
Borders and Corridors program increased from 0 percent in fiscal year
1999 to about 50 percent in fiscal year 2000 and 65 percent in fiscal
year 2001. Given this trend and the cost of preparing full
applications, in May 2001 the FHWA solicited 'Intent to Apply' for
fiscal year 2002 in place of full applications with a provision that
full applications would only be requested if warranted based on that
year's DOT Appropriations Act. When Congress designated 100 percent of
the funding for fiscal year 2002, FHWA did not solicit full
applications and instead requested abbreviated applications for
projects designated by Congress. As a result, congressional earmarking
has prevented the Department from taking a strategic approach and using
the program to facilitate trade through targeted transportation
investments that maximize system efficiency.
Awards under the Borders and Corridors program have been as
follows:
FY 1999--$123.1 million
FY 2000--$121.8 million
FY 2001--$123.6 million
FY 2002--$478.0 million
For some projects construction is nearly complete or underway. One
project that has essentially been completed is near the World Trade
Bridge between Laredo, Texas and Nuevo Laredo, Mexico. Before this
bridge was opened, traffic queues up to 4 miles long were common on an
existing bridge and traffic was grid locked for several miles along I-
35. Subsequent to its opening, trucks were diverted to the new bridge
leaving the existing bridge to serve autos, buses and pedestrians. The
gridlock has now disappeared and travel time has been reduced
dramatically for trucks, autos and pedestrians while improving safety
and creating jobs.
Some construction projects currently underway that are likely to be
completed in the next two or 3 years include the FAST (Freight Action
Strategies) corridor in Washington State and the Bridge of the Americas
and the Paso del Norte Bridge between El Paso, Texas and Ciudad Juarez,
Mexico. In the FAST project, replacing a number of highway/rail grade
crossings with grade separations will improve safety, relieve
congestion and improve operation of the water ports and the rail lines.
In El Paso, a modest expenditure (about $3 million for each bridge)
will improve physical inspection capacity on each bridge by as much as
40 percent.
Other projects are at least three or more years from completion
including such important bottleneck relief projects as: the Ambassador
Bridge Gateway in Detroit, Michigan; the SR 905 connector to the border
crossing south of San Diego, California; and the Hoover Dam Bypass
between Arizona and Nevada. Finally, the future I-69 between Michigan
and the Texas lower Rio Grande Valley, which is more of a new access
and economic development project, is probably more than a decade from
completion.
Application of New Information Technologies
Any seamless transportation system--present or future--relies
heavily on information technology. The same information revolution that
has swept through the private sector and increased our nation's
productivity must also be applied to our transportation systems.
``Smarter'' systems have the potential to dramatically reduce the
barriers and costs that currently limit the ability of passengers and
freight carriers to operate across modes. They also will help us to
ensure safer and more secure freight transportation networks.
TEA-21 authorized a total of $603 million for Intelligent
Transportation Systems (ITS) research for fiscal years 1998 through
2003, which has funded important research projects that support freight
movements by focusing on system optimization and more effective use of
existing infrastructure. These efforts also facilitate the integration
of the operational aspects of all of our transportation systems, while
system construction projects address their physical connectivity.
Intermodal freight is a major emphasis of DOT's ITS efforts, and the
Department is currently conducting several ITS operational tests
designed to improve the efficiency and security of the inter-modal
movement of freight.
For example, the Chicago O'Hare cargo project uses a ``smart card''
and biometric identifiers to identify the shipment, vehicle and driver
during transportation from the shipper to and through the air cargo
terminal. Another project, Cargo-Mate, has particular applicability to
port and container security, in addition to enhancing the efficiency of
freight movement. This system is designed to perform real-time
processing of asset and cargo transactions, provide for the
surveillance of cargo movement to and from ports, and provide an
integrated incident and emergency response capability.
In a cooperative venture between Washington State and British
Columbia, under the auspices of the International Mobility and Trade
Corridor (IMTC), electronic cargo seals are being deployed to
demonstrate the use of low cost disposable technology to track cargo
movements and monitor the security of containerized freight. This test
will examine the use of a Congestion Notification System to improve
truck access to the Port of Tacoma. When these and related projects are
completed and the technologies deployed, the IMTC will have the first
fully operational bi-national electronic commercial vehicle operations
(CVO) border crossing system in North America.
The Department also is participating in the International Trade
Data System (ITDS), which will create a single Federal data base for
all international trade and transportation transactions. Expected to
become operational in FY2004 at the nation's busiest land borders, and
at all land, sea and air ports of entry by 2006, ITDS will extend the
benefits of customs modernization across the entire Federal Government.
The ITDS and Customs' Automated Commercial Environment (ACE) are being
jointly developed so that taxpayers and Federal agencies will have a
single system for processing international trade and transportation
information that will also serve as an important tool in facilitating
the transport of cargo.
Continued Federal, State and local investment in the development of
new transportation technology has the potential to yield enormous
operational benefits and give transportation professionals much greater
capacity to manage increasingly complex systems.
Security Issues
The events of 9/11 have made us all realize that transportation
planning must also make the security of freight shipments a top
priority, in addition to the system's safety and efficiency. As freight
moves from one mode to another, from ship to rail to truck for example,
we must ensure that these modes and the public are protected from
terrorist attacks. The Transportation Security Administration (TSA) now
oversees transportation security across all modes, with the most
prominent of course being the new requirements for aviation. However,
TSA is also concentrating on sea, rail and land shipments and the links
between these modes when assessing possible security threats.
Intermodal connectivity is critical for national security, and TSA is
coordinating with the other modes in DOT, other Federal agencies, and
industry to achieve the highest possible security levels for the
transport of goods.
Operation Safe Commerce (OSC) is an innovative public-private
partnership dedicated to enhancing security throughout international
and domestic supply chains while facilitating the efficient movement of
legitimate commerce. The overall objective is to provide valid
recommendations and workable solutions to legislators, regulatory
agencies, the International Maritime Organization and the World Customs
Organization on how best to address the critical issue of international
cargo security. I serve as co-chairman of the Executive Steering
Committee that directs the OSC initiative along with the Deputy
Commissioner of the U.S. Customs Service, and have been very pleased
with the substantial progress we have made so far.
A recently completed initial pilot test applied available
technology to analyze the supply chain security of a shipment from
Eastern Europe to New Hampshire by equipping a cargo container with
onboard tracking, sensor and container door seals. This shipment was
monitored as it was transported through numerous countries, and the
jurisdictions of several Customs administrations, using various
transportation modes. I11OSC proposes to develop and test security
practices to govern the packing, loading and movement of cargo
throughout several international supply chains. This effort will seek
to prototype various solution sets in order to test combinations of
physical, technological and logistical security practices that will
best secure domestic and international supply chains.
Operation Safe Commerce will attempt to do this by addressing three
key components to secure supply chain management. First, it will
demonstrate what is needed to ensure that a shipper exerts reasonable
care and due diligence in properly packing, securing and manifesting
the contents of a shipment of goods. Second, it will demonstrate
various methods to ensure that the electronic documentation
accompanying a cargo shipment is complete, accurate and secure from
unauthorized access. Third, it will test supply chain security
procedures and practices, and implement enhanced manifest data elements
and container sealing procedures, to determine which applications of
information and technology are most effective in securing international
and domestic shipments.
Operation Safe Commerce will serve as a technology and business
practice ``laboratory'' to vet innovate solution sets that support the
objectives of other Federal initiatives such as the Department of
Transportation Container Working Group, the U.S. Customs Container
Security Initiative and Customs--Trade Partnership Against Terrorism,
and the Department's Intelligent Transportation System and the Borders
and Corridors Programs.
These efforts will continue once TSA and the United States Coast
Guard transfer their missions and functions to the proposed Department
of Homeland Security. Secretary Mineta fully supports these efforts to
improve our Nation's homeland security, and if approved by Congress the
Secretary has pledged to fully cooperate with the new Department to
ensure that security over all modes of transportation is enhanced.
Building on TEA-21
As we consider the reauthorization of TEA-21, we continue to face
many of the same challenges that confronted the authors of ISTEA and
TEA-21. Applying an intermodal approach to these challenges enables us
to extract the maximum amount of capacity from our existing
infrastructure through creative programs and wise investments.
Accordingly, intermodalism plays a large role in the core
principles and values that motivate the Department's preparation for
TEA-21's reauthorization. We will seek to do the following:
Preserve funding flexibility to allow the broadest
application of funds to transportation solutions, as identified by
States and local communities.
Strengthen the efficiency and integration of the Nation's
system of goods movement by improving international gateways and points
of intermodal connection.
Focus more on the management and performance of the
system as a whole rather than on ``inputs'' or functional components.
Develop the data and analyses critical to sound
transportation decisionmaking.
Foster the development and deployment of technology, to
support intermodal freight security, productivity, and safety.
Expand and improve innovative financing programs, in
order to encourage greater private sector investment in the
transportation system, and examining other means to augment existing
trust funds and revenue streams.
Supporting the efficiency of commercial freight transportation
continues to be a cornerstone of the Department's vision for America's
transportation system. ISTEA and TEA-21 legislation gave us many tools
to bring this vision to reality, and our experience has given us new
ideas for programs that will get us even closer to our goal of a
seamless transportation network. Greater investments in transportation
infrastructure and wider use of information technology will certainly
be required to achieve this goal.
The Department looks forward to working with our partners in State
DOTs, metropolitan planning organizations, and private industry to
apply innovative funding strategies such as TIFIA and State
Infrastructure Banks to develop large-scale projects that might
otherwise be beyond the financial means of the individual stakeholders.
We will also consider possible changes to the Borders and Corridors
Program that would encourage broader transportation planning on the
basis of economic regions and export markets to ensure that our
infrastructure investments are truly integrated with regional and
national business developments.
Private industry has made it clear to the Department that reliable
information on product shipments is of critical importance to them. If
our transportation system is to provide adequate levels of service for
the freight industry and their customers, we must continue to apply
innovative technologies through the ITS Program and collect information
on commodity movements to provide a firm foundation for transportation
planning.
The Department will also work with the private sector to formulate
innovative approaches to providing transportation solutions and develop
the professional capacity to apply these solutions to the challenges
that confront us. We will consider new ways to develop public-private
partnerships that can leverage public infrastructure investments and
ensure that the private sector is more engaged in our planning
processes.
I am confident that working together, the Administration, Congress,
States and localities, and the private sector can preserve, enhance,
and establish surface transportation programs that will result in
increased mobility, security and prosperity, as well as more
transportation choices for all Americans.
Mr. Chairman and members of the committee, thank you again for the
opportunity to testify before you today. I look forward to responding
to any questions you may have.
______
Responses by Jeffrey N. Shane to Additional Questions from Senator Reid
Question 1. Freight transportation is expected to double in the
next 20 years. This increase in freight traffic will occur at the same
time that congestion on our roads is already at levels many of us
consider unacceptable. Clearly capacity issues have to be at the top of
our list as we begin to reauthorize our surface transportation
programs. However, in addition to building new physical capacity, we
will need to seek ways to squeeze more out of our existing
transportation infrastructure through intelligent transportation
systems, better operations, and perhaps a more efficient mix of
transportation choices. For example, to move passengers and freight
from congested roads to rail. Please give your thoughts on what we can
do when we reauthorize TEA-21 to get the most efficient use out of our
transportation infrastructure.
Response. Improving intermodal freight efficiency will involve both
public agencies and private freight companies. In particular, we must
focus on:
(1) improvements to the NHS freight connectors, providing for
greater opportunities to use truck/water and truck/rail options to move
freight in and out of terminals;
(2) greater deployment of Intelligent Transportation Systems to
improve system operations and to ensure intermodal conveyance of
critical freight information for efficiency and security-this should
include not only an ITS backbone for information exchange between the
roadside and vehicles, but should also include other transport modes,
and agencies involved in trade facilitation and security;
(3) continued development of international standards for cargo
security, to enable efficient and secure trade among NAFTA partners,
and with other international trading partners;
(4) enhanced use of innovative finance to leverage additional
investment for freight transportation improvements; and
(5) additional emphasis on intermodalism to make better use of all
modes for freight transport.
Question 2. We clearly have significant freight transportation
needs across our Nation. How do we determine what our freight
priorities should be? Do we have sufficient information to determine
which freight corridors, border crossings, port, intermodal facilities
and connector should be our top funding priorities? Where is our
freight infrastructure least efficient and where is the growth expected
to occur?
Response. Since 2000, the Department has engaged in a comprehensive
effort to (1) improve our understanding of freight flows; (2) define
and analyze trends that might affect the demand, supply, and
distribution of future freight transport requirements; and (3) work
with State and local governments, other Federal agencies, and the
private sector to define public policy strategies to enhance the
planning, finance, and operation of the Nation's intermodal freight
network. As part of this effort, we continue to work with major trade
associations and governmental organizations to devise strategies that
appropriately address freight efficiency, along with the national
objectives of safety, security, and environmental awareness.
As part of this effort, we have developed the Freight Analysis
Framework (FAF), a multimodal analytical system that enables us to map
domestic and international freight movements and, when linked with
transport network information systems, to match and compare systems
demands with supply, both under current conditions and under future
scenarios. When combined with other information systems developed to
track maritime and rail movements and cross border freight flows, the
FAF provides a powerful data/analytical system to determine the
relative importance of corridors, gateways and border crossings, and
regional freight movements.
The FAF, validated by extensive meetings with State and local
officials and the private sector, suggests that major freight transport
challenges form around: (1) major trade transport gateways, including
certain maritime ports of entry, land crossings with Canada and Mexico,
and significant trade hubs; (2) long distance multistate and
international trade corridors; and (3) State and local freight
concerns. Future trade forecasts suggest that volumes will increase at
all major gateways and along trade corridors. This growth is likely to
vary by region, however, as population and economic growth continues to
shift and international trading patterns change in response to
variations in market conditions.
Domestic freight demand is expected to increase by approximately 67
percent from 1998-2020 while international freight is expected to
increase by approximately 85 percent. For example, US-Canada trade is
expected to double over that time period, and US-Mexico trade is
expected to increase by more than 200 percent. These increases in trade
will require an emphasis on gateways, hubs, border crossings, and long
distance trade corridors as we prepare to reauthorize our nation's
surface transportation programs next year.
The FAF, in combination with stakeholder documentation of need, can
be used to quantify the relative magnitude of growth along major
corridors, and has been used extensively as we define the Department's
surface transportation reauthorization initiatives. Mapping current and
future freight flows is a valuable first step in defining the geography
and magnitude of freight movement but is not, in itself, sufficient to
define where our resources and attention should be focused. When
overlaid on system condition information, however, the combination of
demand and supply provides valuable insight into the freight
bottlenecks that we need to address in this reauthorization package.
With freight transportation primarily the responsibility of the
private sector, Federal transportation policies offering near term
solutions to these problems are limited in their effectiveness. Longer
term, federally led strategies to identify and deal with these
problems, however, can have significant effects on future efficiencies.
Advanced Federal policies and programs to strengthen intermodal
capacity at gateways and along major trade corridors can result in
important improvements to the Nation's trade transport network.
As we look to the future, we are evaluating institutional,
financial, and technology enhancements that would enable State and
local governments, in partnership with the Federal Government, to
identify bottlenecks, establish priorities, and develop comprehensive
funding strategies to mitigate the freight bottlenecks that can
threaten our economic well-being if they are not properly addressed.
Question 3. The Borders and Corridors Program has not worked very
well. One improvement we should consider is to revise this program to
encourage public-private partnerships through a greater emphasis on
innovative finance and other creative incentives. How else can we
improve the Borders and Corridors program to target the highest
priority freight corridors and intermodal facilities.
Response. It is difficult to judge exactly how well the National
Corridor Planning and Development and Coordinated Border Infrastructure
(NCPD/CBI) discretionary grant program, as set forth under the
Transportation Equity Act for the 21st Century (TEA-21), has performed.
This is due, in part, to the fact that projects funded under the
program have increasingly been earmarked during the appropriations
process rather than selected through a competitive application process
as originally intended by Congress. From fiscal year 1999 to fiscal
year 2002, over two thirds of all NCPD/CBI funds went to projects
identified in appropriation act report language (the percentage was 100
percent in fiscal year 2002), thereby severely limiting the Department
of Transportation's ability to administer these programs in a strategic
way. Moreover, the amounts made available often are not sufficient to
fund an entire project, further limiting the program's usefulness in
enhancing our nation's primary border crossings and trade corridors.
With respect to your suggestion ``to encourage public-private
partnerships through a greater emphasis on innovative finance and other
creative incentives'', the Department agrees that a greater emphasis on
innovative finance should be a part of any future program.
The Department also agrees that projects should ``target the
highest priority freight corridors and intermodal facilities.'' One way
to accomplish this is to emphasize the importance of having proposed
projects be consistent with the continuing, cooperative, and
comprehensive transportation planning process required by sections 134
and 135 of title 23 United States Code.
Question 4. One way to squeeze more capacity out of existing
infrastructure is through more rapid deployment of ITS and an increased
focus on the operations and management of regional transportation
systems. How much potential do ITS initiatives have for improving the
efficiency of freight operations and what can we do to promote the
development of a freight-friendly ITS infrastructure?
Response. Freight oriented ITS provides a direct benefit by linking
improvements in systems operations to supply chain logistics and
domestic and international cargo security. Following 9/11, various
Federal agencies have developed cooperative agendas designed to promote
more secure domestic and international cargo movement, combining the
resources of ITS with trade facilitation functions (Customs, INS, USDA,
etc.), and our international trade partners. Cooperative efforts with
the private sector, through the Intermodal Freight Technology Working
Group (IFTWG) have identified opportunities, currently deployed and
under evaluation, to use ITS to enhance ``end to end'' supply chains.
Programs like Operation Safe Commerce and the Container Working Group
are identifying best practices in technology deployment, standards, and
interoperability, and the lessons being learned will provide valuable
guidance on the use of ITS to better integrate improvements in safety,
security, and freight productivity.
ITS and systems operations strategies have enormous potential to
effect capacity improvements and enhance freight flow. Whether the ITS
initiative is focused on passenger movement or transportation more
generally, freight movement can be enhanced. For example, advanced
traveler information systems or incident management systems provide for
better system utilization through improvements in real time information
and the management of recurring and non-recurring types of delay. While
passenger transportation clearly benefits from such ITS initiatives,
trucking--both long distance shipments through metropolitan areas and
local runs handling pick up and deliveries, also benefit from improved
network utilization.
Advanced technology through the expanded use of ITS is widely
regarded, both within government and by the private sector, as perhaps
the most cost-effective strategy to improve both trade transport
efficiency and security.
Question 5. What can we do to promote better regional freight
planning and how do we ensure that planning agencies take a
comprehensive, intermodal approach to infrastructure planning and
development? In particular, when it comes to freight, how do we bring
the private sector into the public planning process?
Response. Traditionally, the metropolitan planning process has
primarily focused on the movement of passengers, with the movement of
freight generally treated as secondary. The general public typically
views freight as a necessary evil, with people complaining about
waiting at rail crossings or sharing roads with trucks and public
agencies complaining about the damage trucks cause to a region's
roadways. While existing Federal regulations stipulate that freight is
to be considered in local transportation planning, relatively few
regions have successfully implemented freight projects through
traditional planning approaches.
Development of a better regional freight planning process requires
both a mutual understanding of public and private sector perspectives
and outreach by State and local transportation planners to the freight
industry. Freight operators generally believe that the transportation
planning process is too slow to address their short-term, bottom-line
needs, and therefore not worth their time and effort. Local
transportation planners can help overcome this perception by soliciting
the involvement of local freight operators in planning operational
changes as part of Congestion Management System (CMS) initiatives. They
can also do so through timely implementation of small, non-
controversial improvements like turning radii or signal timing at key
intersections identified by local freight operators.
In addition, there is a need to provide strategic data, analysis,
and information for decisionmakers in both the public and private
sectors. In this regard, the work of the Freight Analysis Framework
(FAF) serves as a bridge between the two groups. The private sector,
which may be unwilling to share detailed commodity information or
operational strategies, can use the FAF to highlight the need for
increased focus on freight, while the public sector can use the FAF to
understand the growth of freight movements and its potential impact on
both the local economy and its infrastructure. Maps generated using the
FAF have been very useful in redirecting the discussion from an ``Us
versus Them'' mentality to a ``We'' based on a shared perception of the
need to improve freight productivity.
______
Responses by Jeffrey N. Shane to Additional Questions from Senator
Jeffords
Question 1. Mr. Shane, in your testimony you mention a project
involving the monitoring of containers from overseas as they travel to,
and in, the United States.
I assume that this relates to putting electronic devices which can
be tracked by satellite onto sealed containers coming into the U.S.
either by water, rail, or on trucks. These devices could be placed on
the containers overseas or in other countries, or at entry into the
United States after inspection of the contents. Under this approach a
container packed anywhere in the world and certified safe at that point
can be tracked and delivered to a consignee in the U.S. with assurance
it has not been tampered with enroute.
The objective is to have a ``real-time solution'' that can be
monitored in the appropriate marine, rail, or other intermodal
terminal. At first, this approach could be integrated into an overall
regional approach where marine and rail terminals are interconnected
and where appropriate governmental agencies such as Customs can also be
connected. As other regions come on line this could expand to national
coverage. These devices could be built into the locking device and
could also indicate whether the container was opened prior to intended
delivery.
From a security standpoint the idea is, if an emergency situation
arises, that law enforcement would be able to obtain a history of how
containers were moved within the U.S., or to be able to locate a
particular container in the U.S. In addition, this information could be
very useful to the shipper and the intended recipient if there were
unexpected delays.
Would you explain your views on this approach? What would be the
cost and lead time necessary to implement this concept to all
containers entering or leaving the U.S.?
Response. DOT has co-chaired with U.S. Customs two significant
efforts to address the vulnerability posed by marine containers and
other freight, also pulling together the expertise of other
governmental and private sector stakeholders. Most notably have been
our joint efforts on the Container Working Group (CWG) and Operation
Safe Commerce (OSC), two important efforts that support the President's
National Strategy for Homeland Security.
The Container Working Group has been an ongoing effort since
December 2001. The working group explored the problem of improving
container security through solutions offered by business practices,
security technology, information technology, and international
activities. They produced a report with a number of recommendations in
March, and they continue to pursue these recommendations. Key to these
efforts will be the continued development of Intelligent Transportation
Systems, the International Trade Data System, the U.S. Customs
Automated Commercial Environment (ACE) System, and the implementation
of G-7/WCO standardized messages and data sets.
Operation Safe Commerce will complement the CWG by testing
technology or process solutions offered by the private sector to
improve supply chain security. OSC was initiated by a test of off-the-
shelf technology to seal, track, and monitor a single container shipped
from Slovakia to New Hampshire This is the test I mentioned during my
testimony. It would be premature to assume, however, that this approach
is the best answer since we haven't yet embarked upon the more
comprehensive set of OSC tests that we hope to fund in the coming
months.
We intend to continue rapid progress on both the CWG and OSC, and
wherever possible, encourage multi-use systems that improve service
quality for the transportation system as well as security and safety.
The costs for developing and implementing a secure container regime
have yet to be determined given that we must first test what does or
doesn't work in real operating environments. By encouraging the private
sector to test out solution sets for container security through the OSC
initiative, we will be able to identify what in fact works and what is
cost effective to the government and the industry. Accordingly, the
lead-time must be viewed as a series of incremental steps over a period
of time as we incorporate security proven solutions into the world
fleet of over 14 million containers in active use today.
Question 2. Since 9/11 there have been numerous studies and
articles that have been written on the lack of knowledge we have on the
contents and travel paths of goods in our country. Do you see this as a
problem that needs to be rectified? What can be done to make sure, at
the very least, hazardous materials are being tracked?
Response. Judicious application of emerging technology for certain
high-risk hazardous materials, including technology designed to track
and monitor shipments, can be an important security tool. Indeed, we
have encouraged hazardous materials shippers and transporters to
investigate the use of tracking or monitoring systems for enhancing
hazardous materials transportation security.
In a Security Advisory published in the Federal Register on
February 14, 2002, DOT's Research and Special Programs Administration
(RSPA) identified a number of actions that persons involved in the
transportation of hazardous materials could take to enhance security
and recommended actions commensurate with the level of threat posed by
the specific hazardous material being transported. To improve en route
security, RSPA recommended that shippers and carriers consider
utilizing advanced technology to track or protect shipments en route to
their destinations. Such tracking technology could include satellite
tracking or surveillance systems or could be as simple as frequent
checks with drivers by cell phone to ensure everything is in order.
In a May 2, 2002 NPRM RSPA proposed that shippers and carriers
develop and implement security plans for certain high-risk shipments of
hazardous materials. The security plan would be based on a risk
assessment performed by the shipper or carrier to identify security
risks and develop appropriate measures to reduce or eliminate risk. As
proposed, a security plan must include measures to improve en route
security, and such measures could include shipment tracking or
monitoring systems. In addition, we proposed revisions to current
shipping documentation requirements to assist law enforcement personnel
to promptly ascertain the legitimacy of hazardous materials shipments
during routine or random roadside inspections and to identify
suspicious or questionable situations where additional investigation
may be necessary.
On July 16, 2002, RSPA and DOT's Federal Motor Carrier Safety
Administration (FMCSA) issued a joint ANPRM inviting comments on the
feasibility of specific security enhancements and the potential costs
and benefits of deploying such enhancements. Security measures being
considered include: escorts, vehicle tracking and monitoring systems,
remote vehicle shut-offs, direct short-range communications, and
notifications to State and local authorities.
Finally, DOT has also undertaken an operational evaluation of
cutting-edge communications and tracking technology, electronic seals,
and biometric identification to evaluate their potential for enhancing
security.
If we find tracking or other methods to be effective, we will
consider initiating appropriate regulatory actions.
Question 3. Has the Department undertaken, or do you know of any
studies that could be provided to the committee that discuss the
benefits of improving rail corridors to freight movement?
Response. There has been growing interest in the possibility of
alleviating regional transportation problems by improving rail
corridors and eliminating critical rail bottlenecks.
AASHTO has prepared a ``Freight Bottom Line'' report that
considers the national implications of such an approach and finds that
the benefits of public sector investment in rail corridors could be
substantial. The report should be available from AASHTO soon.
The city of Chicago, all the major railroads and several
other groups are developing a plan to alleviate rail congestion in
Chicago while also reducing highway congestion due to blocked grade
crossings. This study is expected to identify a number of critical
projects that will establish several high volume corridors through
Chicago.
The Mid-Atlantic Rail Operations Study identified a $6.2
billion program of public and private investments to address choke
points limiting the capacity of the rail system between Virginia and
New York.
The State of Virginia has done a study of the potential
for upgrading the rail lines that parallel I-81 to alleviate the need
to rebuild and expand that highway that is now very congested with
trucks. In cooperation with the Federal Railroad Administration and the
State of Tennessee, that study is being expanded to consider marketing
issues so as to better estimate the service requirements and diversion
potential from a rail improvement program.
Question 4. We have heard that the Department does not have
sufficient personnel to effectively handle important issues of the
freight community. I would be willing to work with DOT on this
important matter. How can Congress assist the Department in ensuring
that the mission and personnel of DOT are suited not only to providing
mobility to the general public but to the freight community as well?
Response. The Department is committed to ensuring that freight has
a ``voice'' in policy deliberations, legislative initiatives, and in
resource commitments. Congress can further assist the Department in
effectively handling issues important to the freight community by
acting on the Administration's request to establish an Under Secretary
of Transportation Policy position as part of an overall restructuring
of the Department's policy apparatus. Within this new and elevated
structure, we would be able to combine and enhance resources to ensure
that freight issues are accorded their rightful attention and
visibility, and are addressed on an even par with passenger issues.
__________
Statement of JayEtta Hecker, Director, Physical Infrastructure Issues,
General Accounting Office
Mr. Chairmen and Members: We are pleased to be here today to
discuss challenges in defining the Federal role with respect to freight
transportation issues. There are concerns that the projected increases
in freight tonnage for all transportation modes will place pressures on
the marine, aviation, and highway transportation systems. As a result,
there is growing awareness of the need to view various transportation
modes, and freight movement in particular, from an integrated
standpoint, particularly for the purposes of developing and
implementing a Federal investment strategy and considering alternative
funding approaches. An intermodal perspective appears especially
important as the Nation reacts to the increased security needs for
transportation networks and as it plans for better, more efficient
transportation for the future. At your request, we have done work
focusing on the marine component of the national transportation system.
My testimony today, which is based on our report\1\ that is being
issued today, addresses three topics: (1) the Federal funding
approaches used for the marine transportation system as compared with
the aviation and highway systems, (2) the amount of customs duties on
imported goods shipped through the marine, aviation, and highway
systems, and (3) a framework to assist the Congress as it considers
future Federal investment decisions. Our recently completed work on
marine transportation is based on our analysis of data collected from
15 Federal agencies that expended revenue on the various transportation
systems and/or collected funds from users of the systems during fiscal
years 1999 through 2001. We also collected data from the U.S. Customs
Service on the amount of duty collected on commodities imported by the
various transportation modes. We applied the estimates developed by the
U.S. Census Bureau on the percent of collections attributable to water,
sea, and land transportation modes to total customs duties collected by
the U.S. Customs Service during fiscal years 1999 through 2001. To
develop a framework to assist the Congress in making decisions about
the Federal role in financing the marine transportation system, we
built on prior GAO work on Federal investment approaches and managerial
best practices and interviewed U.S. Army Corps of Engineers and
Department of Transportation officials. See appendix I for a more
detailed explanation of our scope and methodology.
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\1\U.S. General Accounting Office, Marine Transportation: Federal
Financing and a Framework for Infrastructure Investments, GAO-02-1033
(Washington, DC.: Sept. 9, 2002).
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In summary:
The Federal approach for funding the marine
transportation system relies heavily on general revenues, while the
approach for funding the aviation and highway systems relies almost
exclusively on collections from users of the systems. During fiscal
years 1999 through 2001, funding for about 80 percent of the average
$3.9 billion expended each year on the marine transportation system
came from the U.S. Treasury's general fund. During the same period,
nearly all of the $10 billion in Federal funds expended each year for
the aviation system and the $25 billion in Federal funds expended each
year for the highway system came from revenues generated by users of
those two systems.
During fiscal years 1999 through 2001, customs duties on
imported goods transported through the transportation systems averaged
$15 billion each year for the marine transportation system, $4 billion
each year for the aviation system, and $900 million each year for the
highway system. Customs duties are taxes on the value of imported goods
and have traditionally been viewed as revenues to be used for the
support of the general activities of the Federal Government. Unlike the
collections based on the use of the highway and aviation systems,
customs duties are paid by the importers of the taxed goods. Revenues
from these duties are deposited into the U.S. Treasury's general fund,
and the majority of these revenues are used for the general support of
Federal activities. To help finance improvements to the marine
transportation system, some maritime stakeholders, such as port
authorities, have suggested earmarking a portion of revenues generated
from customs duties. Some customs duties are currently earmarked for
specific purposes, such as agriculture and food programs. However, in
that case, a portion of the duties on imports must be used to encourage
the export and the domestic consumption of farm products and to
reestablish farmers' purchasing power--that is, for assisting markets
that are arguably adversely affected by the importation of goods.
Further earmarking of customs duties for new spending would have
significant budget ramifications in an already constrained Federal
budget environment.
Diverse industry stakeholders believe that substantial
new investments in the maritime infrastructure may be required from
public and private sources because of an aging infrastructure, changes
in the shipping industry, and increased concerns about security.\2\ A
systematic framework would be helpful to decisionmakers as they
consider the Federal Government's purpose and role in providing funding
for the system and as they develop a sound investment approach to guide
Federal participation. In examining Federal investment approaches
across many national activities, we have identified four key components
of such a framework--establishing national goals, defining the Federal
role, determining appropriate funding tools, and evaluating
performance--could potentially be applied to all transportation
systems.
---------------------------------------------------------------------------
\2\We did not systematically evaluate the claims regarding new
infrastructure investments. Recent work has recognized the as yet
undefined financial requirements for enhancing the security of ports.
See U.S. General Accounting Office, Port Security: Nation Faces
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T
(Washington, DC.: Aug. 5, 2002).
---------------------------------------------------------------------------
The first component--establishing national goals for the
system--requires an in-depth understanding of the needs of the system
and the relationship of the system to other transportation modes. For
example, the efficient movement of freight often involves using several
different transportation modes, making investment decisions, and
developing coherent freight policies would logically need to occur
while focusing on the entire transportation system rather than a single
mode.
The second component--clearly defining the Federal role
relative to other stakeholders--is important to help facilitate the
planning and implementation of improvements across modes and to better
ensure that Federal participation supplements and enhances
participation by others, rather than simply replacing their
participation.
A third component--determining the funding tools and
other approaches that will maximize the impact of any Federal
investment--is important to help expand the capacity to leverage
funding resources and to promote shared responsibilities. For example,
in the $2.4 billion Alameda Corridor Program, State and local
stakeholders had both a financial incentive to relieve congestion and
the commitment and ability to bring financial resources to bear.
The final component ensures that a process is in place
for evaluating performance and accountability periodically so that
defined goals, roles, and approaches can be reexamined and modified, as
necessary.
Background
The nation's surface transportation systems facilitate mobility
through an extensive network of infrastructure and operators, as well
as through the vehicles and vessels that permit passengers and freight
to move within the system. Maintaining the systems is critical to
sustaining America's economic growth. This is especially important
given that projected increases in freight tonnage will likely place
pressures on these systems. According to the Federal Highway
Administration, domestic and international freight tonnage across all
surface modes will increase 41 percent, from 14.4 billion tons in 1998
to 20.3 billion tons in 2010. According to the forecasts, by 2010, 15.6
billion tons are projected to move by truck, a 44 percent increase; 3
billion tons by rail, a 32 percent increase; and 1.5 billion tons by
water, a 27 percent increase.\3\ Some freight may be moved by more than
one mode before reaching its destination, such as moving by ship for
one segment of the trip, then by truck to its final destination.
---------------------------------------------------------------------------
\3\The Federal Highway Administration's maritime freight
projections do not include international trade of bulk products and
some inland domestic bulk shipments.
---------------------------------------------------------------------------
Over 95 percent of the U.S. overseas freight tonnage is shipped by
sea. The United States accounts for 1 billion metric tons, or nearly 20
percent of the world's oceanborne trade. As the world's leading
maritime trading nation, the United States depends on a vast marine
transportation system. In addition to the economic role it plays, the
system also has an important role in national defense; serves as an
alternative transportation mode to roads and rails; and provides
recreational value through boating, fishing, and cruises.
Traditionally, Federal participation in the maritime industry has
been directed mainly at projects related to ``waterside'' issues, such
as keeping navigation channels open by dredging, icebreaking, or
improving the system of locks and dams; maintaining navigational aids
such as lighthouses or radio systems; and monitoring the movement of
ships in and out of the nation's coastal waters. Federal participation
has generally not extended to ``landside'' projects related to ports'
capabilities, such as building terminals or piers and purchasing cranes
or other equipment to unload cargo.\4\
---------------------------------------------------------------------------
\4\One exception has been intermodal connections, such as rail or
highway connections. The Federal Government has traditionally
participated in funding such projects.
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These traditional areas of Federal assistance are under pressure,
according to a congressionally mandated report issued by the Department
of Transportation in 1999,\5\ which cites calls to modernize aging
structures and dredge channels to new depths to accommodate larger
ships. Since this report, and in the aftermath of September 11, the
funding focus has further expanded to include greater emphasis on port
security. Many of the security improvements will require costly outlays
for infrastructure, technology, and personnel. For example, when the
Congress recently made $92.3 million in Federal funding available for
port security as part of a supplemental appropriations bill,\6\ the
Transportation Security Administration received grant applications
totaling almost $700 million.\7\
---------------------------------------------------------------------------
\5\U.S. Department of Transportation, An Assessment of the U.S.
Marine Transportation System: A Report to Congress (Washington, DC.:
September 1999). GAO did not verify the accuracy of the information
contained in this report.
\6\Although $93.3 million was made available in the supplemental
appropriations bill, $1 million was authorized for administrative
expenses. As of June 17, 2002, 77 grants for 144 ports security
projects were awarded.
\7\The Transportation Security Administration, the Coast Guard,
and the Maritime Administration reviewed applications under the Port
Security Grants Program, which is based on the seaport security
provisions contained in the Department of Defense and Emergency
Supplemental Appropriations for Recovery from and Response to Terrorist
Attacks on the United States Act of 2002 (Pub. L. No. 107-117, H.R.
Conference Report 107-350). An additional $105 million was appropriated
for the Port Security Grant Program as part of another supplemental
appropriation act passed August 2, 2002 (Pub. L. No. 107-206).
---------------------------------------------------------------------------
With growing system demands and increased security concerns, some
stakeholders have suggested a different source of funding for the
marine transportation system. For example, U.S. public port authorities
have advocated increased Federal funding for harbor dredging.
Currently, funding for such maintenance is derived from a fee on
passengers and the value of imported and domestic cargo loaded and
unloaded in U.S. ports. Ports and shippers would like to see funding
for maintenance dredging come from the general fund instead, and there
was legislation introduced in 1999 to do so.\8\ Regarding funding for
security, ports are seeking substantial Federal assistance to enhance
security in the aftermath of the events of September 11. In other work
we have conducted on port security,\9\ port and private-sector
officials have said that they believe combating terrorism is the
Federal Government's responsibility and that, if additional security is
needed, the Federal Government should provide or pay for it.
---------------------------------------------------------------------------
\8\H.R. 1260 was introduced, but not enacted, in the 106th
Congress to repeal the Harbor Maintenance Tax and return to funding the
costs of operating and maintaining Federal navigation channels from
general revenues.
\9\U.S. General Accounting office, Port Security: Nation Faces
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T
(Washington, DC.: Aug. 5, 2002).
---------------------------------------------------------------------------
Federal Approach to Financing the Marine Transportation System as
Compared with the Aviation and Highway Systems
Unlike the funding approach used for the aviation and highway
transportation systems, which are primarily funded by collections from
users of the systems, the commercial marine transportation system
relies heavily on general tax revenue. For all three transportation
systems, most of the revenue collected from users of the systems was
deposited into trust fund accounts. Figure 1 summarizes the expenditure
and assessment comparisons across the three transportation systems.
During fiscal years 1999 through 2001, Federal agencies expended an
average of $3.9 billion each year on the marine transportation system
with about 80 percent of the funding coming from the general revenues.
During the same period, Federal agencies expended an average of $10
billion each year on the aviation system and $25 billion each year on
the highway system. The vast majority of the funding for these
expenditures came from trust fund accounts. (See app. II.):
Federal agencies collected revenue from assessments on users of all
three transportation systems during fiscal years 1999 through 2001.\10\
Collections from assessments on system users during this period
amounted to an average of $1 billion each year from marine
transportation system users, $11 billion each year from aviation system
users, and $34 billion each year from highway system users. Most of the
collections for the three systems were deposited into trust funds that
support the marine, aviation, and highway transportation systems.\11\
(See app. III.) Trust funds that support the marine transportation
system include the Harbor Maintenance Trust Fund and the Inland
Waterways Trust Fund. Trust funds that support the aviation and highway
transportation systems include the Airport and Airway Trust Fund and
the Highway Trust Fund.
---------------------------------------------------------------------------
\10\Such assessments include both user fees and excise taxes. User
fees are charged to users for goods or services provided by, or
activities regulated by, the Federal Government. User fees generally
apply to activities that provide benefits to identifiable recipients
and are normally related to the cost of the goods or services provided.
They may be paid into the general fund or, under specific statutory
authority, may be made available to an agency carrying out the
activity. User fees may also be collected through a tax such as an
excise tax. Since these collections result from the government's
sovereign powers, the proceeds are generally recorded as budget
receipts, not as offsetting collections. Excise taxes can also be
dedicated to specific programs and agencies.
\11\Collections are deposited into the U.S. Treasury and can be
used for the general support of Federal activities or may be earmarked
by law for specific purposes and credited to a trust fund. A Federal
trust fund is an accounting mechanism used to link earmarked receipts
with the expenditures of those receipts. It is designated in law as a
``trust'' fund.
---------------------------------------------------------------------------
Comparison by Transportation Modes of the Amount of Customs Duties
Collected
The Federal Government assesses customs duties on goods imported
into the United States and the majority of these collections are
deposited into the U.S. Treasury's general fund to be used for the
support of Federal activities. As can be seen in figure 2, the amounts
from customs duties levied on imported goods carried through the marine
transportation system are more than triple the combined amounts
collected from customs duties levied on the goods carried through the
aviation and highway systems. During fiscal years 1999 through 2001,
customs duties on imported goods shipped through the transportation
systems averaged $15.2 billion each year for the marine transportation
system, $3.7 billion for the aviation system, and $928 million for the
highway system. (See app. IV for details on customs duty collections by
year.):
Some maritime stakeholders, particularly port owners and operators,
have proposed using a portion of the customs duties for infrastructure
improvements to the marine transportation system. They point out that
the marine transportation system is generating billions of dollars in
revenue, and some of these funds should be returned to maintain and
enhance the system. However, unlike transportation excise taxes,
customs duties are taxes on the value of imported goods paid by
importers and ultimately their consumers--not on the users of the
system--and have traditionally been viewed as revenues to be used for
the support of the general activities of the Federal Government.
Notwithstanding the general trend, a portion of revenues from
customs duties are currently earmarked for agriculture and food
programs, migratory bird conservation, aquatic resources, and
reforestation.\12\ It should be noted, however, that in these cases,
some relationship exists between the goods being taxed and the uses for
which the taxes are earmarked. Designating a portion of the remaining
customs fees for maritime uses would not represent a new source of
capital for the Federal Government, but rather it would be a draw on
the general fund of the U.S. Treasury. This could lead to additional
deficit financing, unless other spending were cut or taxes were
increased.
---------------------------------------------------------------------------
\12\Under Section 612c of Title 7, 30 percent of the gross
receipts from customs duties are designated for agricultural and food
programs. Pursuant to 16 U.S.C. 3912, all duties on guns and
ammunitions are credited to the Migratory Bird Conservation Fund and
pursuant to 26 U.S.C. 9504, duties on fishing tackle and yachts and
pleasure craft are credited to the Sports Fish Restoration Account of
the Aquatic Resources Trust Fund. In addition, tariffs from wood and
certain wood products are credited to the Reforestation Trust Fund up
to a total of $30 million (16 U.S.C. 1606(a)).
---------------------------------------------------------------------------
Systematic Framework Could Help Guide Decisions When Making Investment
Choices for the Marine Transportation System
Some maritime industry stakeholders have suggested that substantial
new investments in the maritime infrastructure by Federal, State, and
local governments and by the private sector may be required because of
an aging infrastructure, changes in the shipping industry, and
increased concerns about security.\13\ These growing and varied demands
for increased investments in the maritime transportation system
heighten the need for a clear understanding about the Federal
Government's purpose and role in providing funding for the system and
for a sound investment approach to guide Federal participation. In
examining Federal investment approaches across many national
activities, we have found that issues such as these are best addressed
through a systematic framework. As shown in figure 2, this framework
has the following four components that potentially could be applied to
all transportation systems:
---------------------------------------------------------------------------
\13\We did not systematically evaluate these claims regarding new
infrastructure investments. Recent work has recognized the as yet
undefined financial requirements for enhancing the security of ports.
See U.S. General Accounting Office, Port Security: Nation Faces
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T
(Washington, DC.: Aug. 5, 2002).
---------------------------------------------------------------------------
Set national goals for the system. These goals, which
would establish what Federal participation in the system is designed to
accomplish, should be specific and measurable.
Define clearly what the Federal role should be relative
to other stakeholders. This step is important to help ensure that
Federal participation supplements and enhances participation by others,
rather than simply replacing their participation.
Determine which funding tools and other approaches, such
as alternatives to investment in new infrastructure, will maximize the
impact of any Federal investment. This step can help expand the
capacity to leverage funding resources and promote shared
responsibilities.
Ensure that a process is in place for evaluating
performance periodically so that defined goals, roles, and approaches
can be reexamined and modified, as necessary.
Establish National Goals to Guide Federal Participation
An initial decision for Congress when evaluating Federal
investments concerns the goals of the marine transportation system.
Clearly defined national goals can serve as a basis for guiding Federal
participation by charting a clear direction, establishing priorities
among competing issues, specifying the desired results, and laying the
foundation for such other decisions as determining how assistance will
be provided. At the Federal level, measuring results for Federal
programs has been a longstanding objective of the Congress. The
Government Performance and Results Act of 1993\14\ has become the
primary legislative framework through which agencies are required to
set strategic and annual goals that are based on national goals,
measure performance, and report on the degree to which goals are met
and on what actions are needed to achieve or modify goals that have not
been met. Establishing clear goals and performance measures for the
marine transportation system is critical to ensuring both a successful
and a fiscally responsible effort.
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\14\Pub. L. No. 103-62.
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Before national goals for the system can be established, however,
an in-depth understanding of the relationship of the system to other
transportation modes is required. Transportation experts highlight the
need to view the system in the context of the entire transportation
system in addressing congestion, mobility, and other challenges and,
ultimately, investment decisions. For example, congestion challenges
often occur where modes connect or should connect, such as ports where
freight is transferred from one mode to another. The connections
require coordination of more than one mode of transportation and
cooperation among multiple transportation providers and planners. A
systemwide approach to transportation planning and funding, as opposed
to focus on a single mode or type of travel, could improve the focus on
outcomes related to customer or community needs.
Meaningful goal setting also requires a comprehensive understanding
of the scope and extent of issues and priorities facing the marine
transportation system. However, there are clear signs that certain key
issues and priorities are not yet understood well enough to establish
meaningful goals for the system. For example, a comprehensive analysis
of the issues and problems facing the marine transportation system has
not yet been completed.\15\ In setting goals for investment decisions,
leading organizations usually perform comprehensive needs assessments
to obtain a clear understanding of the extent and scope of their
issues, problems, and needs and, ultimately, to identify resources
needed. These assessments should be results-oriented in that they
determine what is needed to obtain specific outcomes rather than what
is needed to maintain or expand existing capital stock.\16\ Developing
such information is important for ensuring that goals are framed in an
adequate context. The call by many ports for Federal assistance in
dredging channels or harbors to 50 feet is an example. Dredging to 50
feet allows a port to accommodate the largest of the container ships
currently being constructed and placed in service. However, developing
the capacity to serve such ships is no guarantee that companies with
such ships will actually choose to use a port. Every port's desire to
be competitive by having a 50-foot channel could thus lead to a
situation in which the Nation as a whole has an overcapacity for
accommodating larger ships. The result, at least for the excess
capacity, would signal an inefficient use of Federal resources that
might have been put to better use in other ways.
---------------------------------------------------------------------------
\15\The 1999 marine transportation system report identified a
number of issues and problems facing the marine transportation system.
These included increased dredging requirements to accommodate larger
container ships, aging and limited capacity of lock and dam systems on
inland waterways, and congestion due to ineffective intermodal
connections. In January 2000, the Secretary of Transportation chartered
the Marine Transportation System National Advisory Council to help
implement the recommendations contained in a report issued by the
Department of Transportation entitled An Assessment of the U.S. Marine
Transportation System: A Report to Congress. An interagency committee
was also established to facilitate implementation of the
recommendations in the report. Recognizing the need to thoroughly
analyze the issues and problems facing the marine transportation
system, the interagency committee is in the process of seeking contract
support for a comprehensive analysis assessing the future needs and
funding of the marine transportation system.
\16\U.S. General Accounting Office, U.S. Infrastructure: Funding
Trends and Federal Agencies' Investment Estimates, GAO-01-986T
(Washington, DC.: July 23, 2001).
---------------------------------------------------------------------------
Define the Federal Role Relative to Other Stakeholders
Establishing the roles of the Federal, State, and local governments
and private entities will help to ensure that goals can be achieved.
The Federal Government is only one of many stakeholders in the marine
transportation system. While these various stakeholders may all be able
to share a general vision of the system, they are likely to diverge in
the priorities and emphasis they place on specific goals. For example,
the Federal Government, with its national point of view, is in a much
different position than a local port intensely involved in head-to-head
competition with other ports for the business of shipping companies or
other businesses. For a port, its own infrastructure is paramount,
while the Federal Government's perspective is focused on the national
and broader public interest.
Since there are so many stakeholders involved with the marine
transportation system, achieving national goals for the system hinges
on the ability of the Federal Government to forge effective
partnerships with nonFederal entities. Decision makers have to balance
national goals with the unique needs and interests of all nonFederal
stakeholders in order to leverage the resources and capabilities that
reside within State and local governments and the private sector.
Future partnering among key maritime stakeholders may take on a
different form as transportation planners begin focusing across
transportation modes in making investment decisions instead of making
investment decisions for each mode separately. The Alameda Corridor
Program in the Los Angeles area provides an example of how effective
partnering allowed the capabilities of the various stakeholders to be
more fully utilized. Called the Alameda Corridor because of the street
it parallels, the program created a 20-mile, $2.4 billion railroad
express line connecting the ports of Los Angeles and Long Beach to the
transcontinental rail network east of downtown Los Angeles. The express
line eliminates approximately 200 street-level railroad crossings,
relieving congestion and improving freight mobility for cargo. This
project made substantial use of local stakeholders' ability to raise
funds. While the Federal Government participated in the cost, its share
was only about 20 percent of the total cost, most of which was in the
form of a loan rather than a grant.
Just as partnerships offer opportunities, they also pose risks
based upon the different interests reflected by each stakeholder. While
gaining the opportunity to leverage the resources and capabilities of
partners, each of these nonFederal entities has goals and priorities
that are independent of the Federal Government. For the Federal
Government, there is concern that State and local governments may not
share the same priorities for use of the Federal funds. This may result
in nonFederal entities replacing or ``supplanting'' their previous
levels of commitment in areas with new Federal resources. For example,
in the area of port security, there is a significant funding need at
the local level for overtime pay for police and security guards. Given
the degree of need, if more Federal funding was made available, local
interests might push to apply Federal funding in this way, thereby
transferring a previously local function to the Federal arena. In
moving toward Federal coverage of basic public services, the Congress
and Federal officials would be substantially expanding the Federal
role.
Develop Funding Tools and Other Approaches That Maximize the Federal
Return
When evaluating Federal investments, a careful choice of the
approaches and funding tools that would best leverage Federal funds in
meeting identified goals should be made. A well-designed funding
approach can help encourage investment by other stakeholders and
maximize the application of limited Federal dollars. An important step
in selecting the appropriate approach is to effectively harness the
financial capabilities of local, State, and private stakeholders. The
Alameda Corridor Program is a good example. In this program, State and
local stakeholders had both a financial incentive to relieve congestion
and the commitment and ability to bring financial resources to bear.
Some other ports may not have the same level of financial incentives or
capabilities to undertake projects largely on their own. For example,
in studying the extent to which Florida ports were able to implement a
set of security requirements imposed by the State, we found that some
ports were able to draw on more financial resources than others, based
on such factors as size, economic climate, and funding base.\17\ While
such information would be valuable in crafting Federal assistance, it
currently is largely unavailable. Relatively little is known about the
extent of State, local, and private-sector funding resources across the
country.
---------------------------------------------------------------------------
\17\U.S. General Accounting Office, Port Security: Nation Faces
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T
(Washington, DC.: Aug. 5, 2002).
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The Federal Government has a variety of funding tools potentially
available for use such as grants, direct loans, loan guarantees, tax
expenditures, and user fees. Through cost sharing and other
arrangements, the Federal Government can use these approaches to help
ensure that Federal funds supplement--and not supplant--funds from
other stakeholders. For example, an effective use of funding tools,
with appropriate nonFederal matches and incentives, can be valuable in
implementing a national strategy to support Federal port investments,
without putting the government in the position of choosing winners or
losers.
Federal approaches can take other forms besides those that relate
specifically to making funding available. These following approaches
allow increased output without making major capital investments:
Demand management. Demand management is designed to
reduce travel at the most congested times and on the most congested
routes. One demand management strategy involves requiring users to pay
more to use congested parts of the system during such periods, with the
idea that the charge will provide an incentive for some users to shift
their use to a less congested time or to less congested routes or
transportation modes. On inland waterways, for example, congestion
pricing for locks---that is, charging a toll during congested periods
to reflect the additional cost of delay that a vessel imposes on other
vessels--might be a way to space out demand on the system. Many
economists generally believe that such surcharges or tolls enhance
economic efficiency by making operators take into account the external
costs they impose on others in deciding when, where, and how to travel.
Technology improvements. Instead of making extensive
modifications to infrastructure such as locks and dams, it may be
possible to apply Federal investments to technology that makes the
existing system more efficient. For example, technological improvements
may be able to help barges on the inland waterways navigate locks in
inclement weather, thereby reducing delays on the inland waterway
system.
Maintenance and rehabilitation. Enhancing capacity of
existing infrastructure through increased maintenance and
rehabilitation is an important supplement to, and sometimes a
substitute for, building new infrastructure. Maintenance and
rehabilitation can improve the speed and reliability of passenger and
freight travel, thereby optimizing capital investments.
Management and operation improvements. Better management and
operation of existing infrastructure may allow the existing
transportation system to accommodate additional travel without having
to add new infrastructure. For example, the U.S. Army Corps of
Engineers is investigating the possibility of automating the operation
of locks and dams on the inland waterways to reduce congestion at
bottlenecks.
Examining Outcomes to Determine the Effectiveness of Investments
Regardless of the tools selected, results should be evaluated and
lessons learned should be incorporated into the decisionmaking process.
Evaluating the effectiveness of existing or proposed Federal investment
programs could provide decisionmakers with valuable information for
determining whether intended benefits have been achieved and whether
goals, responsibilities, and approaches should be modified. Such
evaluations are also useful for better ensuring accountability and
providing incentives for achieving results.
Leading organizations that we have studied have stressed the
importance of developing performance measures and linking investment
decisions and their expected outcomes to overall strategic goals and
objectives.\18\ Hypothetically, for example, one goal for the marine
transportation system might be to increase throughput (that is, the
volume of cargo) that can be transported through a particular lock and
dam system on the nation's inland waterways. A performance measure to
gauge the results of an investment for this goal might be the increased
use (such as number of barges passing through per hour) that results
from this investment and the economic benefits associated with that
increase.
---------------------------------------------------------------------------
\18\U.S. General Accounting Office, Executive Guide: Leading
Practices in Capital Decision-Making, GAO/AIMD-99-32 (Washington, DC.:
Dec. 1998).
---------------------------------------------------------------------------
In summary, Mr. Chairmen, the projected increases in freight
tonnage will likely place pressures on the nation's surface
transportation systems. Maintaining these systems is critical to
sustaining America's economic growth. Therefore, there is a need to
view various transportation modes from an integrated standpoint,
particularly for the purposes of developing and implementing a Federal
investment strategy and alternative funding approaches. In such an
effort, the framework of goals, roles, tools, and evaluation can be
particularly helpful--not only for marine transportation funding, but
for other modes as well.
Mr. Chairmen, this concludes my testimony. I will be happy to
respond to any questions you or other Members may have.
______
Appendix I: Scope and Methodology
To determine the amount of Federal expenditures to support the
commercial marine,\19\ aviation, and highway transportation systems and
the amount of collections from Federal assessments on the users of
these systems for fiscal years 1999, 2000, and 2001, we reviewed prior
GAO reports and other relevant documents, and interviewed officials
from the Office of Management and Budget and various industry
representatives. On the basis of this determination, we contacted 15
Federal agencies and asked them to provide information on the
expenditures\20\ and collections\21\ that were specific to the
transportation systems, relying on each agency to identify expenditures
and collections related to activities that support the transportation
systems. In addition, we also received data from the U.S. Customs
Service on the amount of duty collected on commodities imported by the
transportation modes. The U.S. Customs Service provided estimates,
developed by the U.S. Census Bureau, on the percent of collections that
were attributable to water, sea, and land transportation modes. We
applied these percentages to the total customs duties collected for
fiscal years 1999, 2000, and 2001 provided by the U.S. Customs Service
to compute the amount of total customs duties collected by the marine,
aviation, and highway transportation systems each year.
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\19\Noncommercial activities, to include Coast Guard missions such
as search and rescue and drug and migrant interdiction, as well as
recreational activities, were excluded from our review as our focus was
on the commercial marine transportation system.
\20\For the purposes of this report, expenditures are outlays to
pay Federal obligations identified by the agency for each fiscal year
to support these systems, but may include payments for obligations
incurred in previous fiscal years.
\21\Assessment collections are fees and taxes paid by users of a
system that were identified by the agencies and may include revenues
credited to Federal funds, offsetting collections, and offsetting
revenue.
---------------------------------------------------------------------------
We performed limited reasonableness tests on the data by comparing
the data with the actual trust fund outlays contained in the budget of
the U.S. Government for fiscal years 2001, 2002, and 2003. Although we
had each agency validate the data provided, we did not verify agency
expenditures and collections.
To identify initial considerations that could help the Congress in
addressing whether to change the scope or nature of Federal investments
in the marine transportation system, we conducted a review of prior GAO
reports and other relevant studies to identify managerial best
practices in establishing strategic plans and Federal investment
approaches. We also interviewed U.S. Army Corps of Engineers and
Department of Transportation officials to obtain information on the
current state of the commercial marine transportation system, the
ability of the system to keep pace with growing demand, and activities
that are under way to assess the condition and capacity of the
infrastructure. Our work was carried out from January 2002 to September
2002 in accordance with generally accepted government auditing
standards.
______
Appendix II: Expenditures for the Marine, Aviation, and Highway
Transportation Systems by Source of Funds (Fiscal Years 1999-2001)
Federal agencies spent an average of $3.9 billion annually on the
marine transportation system, $10 billion annually on the aviation
system, and $25 billion annually on the highway system. Whereas the
primary source of funding for the marine transportation system is
general tax revenues, the vast majority of Federal funding invested in
both the aviation and highway systems came from assessments on users of
the systems. During the 3-year period, general revenues were the
funding source for 80 percent of the expenditures for the marine
transportation system. In contrast, assessments on system users were
the funding source for 88 percent of the amount spent on the aviation
system and nearly 100 percent of the amount spent on the highway
system.
Table 1: Total Expenditures for the Marine, Aviation, and Highway
Transportation Systems Summarized by the Source of Funds (Fiscal Years
1999--2001)
dollars in millions
------------------------------------------------------------------------
Sources of funds 1999 2000 2001 Average
------------------------------------------------------------------------
Marine Transportation System
General revenues................ $3,250 $2,994 $3,117 $3,120
Revenue from system users\1\.... 467 902 876 748
---------------------------------------
Total Marine Transportation $3,717 $3,896 $3,993 $3,868
System.....................
Aviation Transportation System
General revenues................ $969 $1,007 $1,070 $1,015
Revenue from system users\1\.... 8,410 9,438 9,963 9,270
---------------------------------------
Total Aviation $9,379 $10,445 $11,033 $10,285
Transportation System......
Highway Transportation System
General revenues................ $90 $68 $116 $91
Revenue from system users\1\.... 22,730 25,031 27,231 24,997
---------------------------------------
Total Highway Transportation $22,820 $25,099 $27,347 $25,088
System.....................
------------------------------------------------------------------------
Note: Figures are nominal and have not been adjusted for inflation.
\1\Includes trust fund and reimbursable agency accounts.
Source: GAO analysis of data provided by agencies that expended funds
______
Appendix III: Distribution of Amounts Collected from Users of the
Transportation Systems (Fiscal Years 1999-2001)
Federal agencies collected an average of $1 billion annually from
users of the marine transportation system, $11.1 billion annually from
users of the aviation system, and $33.7 billion annually from users of
the highway system. For all three transportation systems, most of the
collections were deposited into trust fund accounts. During the 3-year
period, 85 percent of the amounts collected from marine transportation
system users, 94 percent of the amounts collected from aviation system
users, and nearly 100 percent of the amounts collected from highway
system users were deposited into trust fund accounts.
Table 2: Amounts Collected from Marine, Aviation, and Highway
Transportation System Users and Accounts Receiving the Collection
(Fiscal Years 1999--2001)
dollars in millions
------------------------------------------------------------------------
Source of funds 1999 2000 2001 Average
------------------------------------------------------------------------
Marine Transportation System
General fund.................... $93 $97 $99 $96
Trust fund accounts............. 741 857 891 830
Reimbursable agency acounts..... 41 51 54 49
---------------------------------------
Total Marine Transportation $875 $1,005 $1,044 $975
System.....................
Aviation Transportation System
General fund.................... $421 $437 $466 $441
Trust fund accounts............. 11,663 9,860 9,581 10,368
Reimbursable agency acounts..... 236 255 265 252
---------------------------------------
Total Aviation $12,320 $10,552 $10,312 $11,061
Transportation System......
Highway Transportation System
General revenues................ $1 $2 $2 $2
Trust fund accounts............. 32,255 35,134 33,683 33,691
Reimbursable agency acounts..... 24 24 22 23
---------------------------------------
Total Highway Transportation $32,280 $35,160 $33,707 $33,716
System.....................
------------------------------------------------------------------------
Note: Figures are nominal and have not been adjusted for inflation.
Source: GAO analysis of data provided by agencies that expended funds
Appendix IV: Amount Collected From Customs Duties on Commodities
Transported on the Transportation Systems (Fiscal Years 1999-2001)
Unlike the fees and taxes on users that are earmarked to support
the transportation systems, customs duties are not an assessment on the
system; rather, duties are assessed on imported goods transported by
the systems. The majority of customs duties collected are deposited in
the U.S. Treasury's general fund for the general support of Federal
activities.\22\ On average, the Customs Service reported $19.8 billion
collected annually for commodities imported by the transportation
modes, with nearly 80 percent collected from the marine system.
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\22\Under Section 612 of Title 7, about 30 percent of the gross
receipts from customs duties are designated for agricultural and food
programs. In addition, pursuant to 16 U.S.C. 3912, all duties on guns
and ammunitions go to the Migratory Bird Conservation Fund and pursuant
to 26 U.S.C. 9504, duties on fishing tackle and yachts and pleasure
craft go to the Sports Fish Restoration account of the Aquatic
Resources Trust Fund. Also, tariffs from wood and certain wood products
are transferred to the Reforestation Trust Fund up to a total of $30
million (16 U.S.C. 1606(a)).
Table 3: Amount of Customs Duties Collected for Commodities Transported on the Marine, Aviation, and Highway
Transportation Systems, Fiscal Years 1999 through 2001
dollars in millions
----------------------------------------------------------------------------------------------------------------
1999 2000 2001
Transportation System ------------------------------------------------ Percent Average
Amount Percent Amount Percent Amount Amount
----------------------------------------------------------------------------------------------------------------
Marine....................................... $14,310 75 $15,624 76 $15,637 79 $15,190
Aviation..................................... 3,577 19 4,053 20 3,371 17 3,667
Highway\1\................................... 1,168 6 880 4 735 4 928
Total custom duties collected............ $19,055 ....... $20,557 ....... $19,743 ....... $19,785
----------------------------------------------------------------------------------------------------------------
Note: Figures are nominal and have not been adjusted for inflation.
\1\Includes amounts collected by rail.
Source: GAO computations based on data provided by the U.S. Customs Service.
______
Responses by JayEtta Hecker to Additional Questions from Senator Reid
Question. In your statement, you emphasize the importance of a more
system-wide approach to Federal transportation programs-and in
particular, focus on promoting intermodal approaches to meeting the
rapidly growing requirements for freight infrastructure. You also
proposed use of a framework to assist in refining Federal
transportation policies focusing on national goals, defining roles of
the many public and private stakeholders, selecting appropriate
government tools to best leverage Federal resources, and evaluating
performance of programs and policies. Can you discuss how this
framework might assist the Congress in defining and developing a
coherent national freight policy-and challenges and options that should
be considered during the forthcoming reauthorization of the
Transportation Equity Act for the 21st Century (TEA-21)?
Response. Moving toward a coherent national freight policy requires
solutions that cut across modes and better prepare the Nation for the
ever-expanding growth of international trade. Responding to that
challenge requires evaluating the performance of existing legislation
and programs in promoting an efficient intermodal freight
transportation industry, establishing the promotion of an efficient
intermodal freight industry as a national goal, defining the Federal
role relative to other stakeholders, and developing funding tools and
other approaches that maximize the return on the Federal investment. An
elaboration of each component of this framework follows:
Evaluation of Performance of Existing Legislative Framework and
Programs in Promoting an Efficient Intermodal Freight
Transportation Industry
Evaluating the results of Federal investment programs and
incorporating lessons learned into the decisionmaking process could
provide decisionmakers with valuable information for determining
whether intended benefits have been achieved and whether goals,
responsibilities, and approaches should be modified. Such evaluations
are also useful for better ensuring accountability and providing
incentives for achieving results. For example, one goal for the marine
transportation system might be to increase throughput (the volume of
cargo) that can be transported through a particular lock and dam system
on the nation's inland waterways. A performance measure to gauge the
results of an investment for this goal might be the increased capacity
that results from this investment and the economic benefits associated
with that increase. Assessing progress in achieving this goal is,
therefore, dependent on carrying out analyses of accurate and complete
data.
Establishing Promotion of an Efficient Intermodal Freight Industry as a
National Goal to Guide Federal Participation
There appears to be substantial consensus that promoting an
efficient intermodal freight industry should be a central national goal
for reauthorization of the core transportation legislation. The
challenge is how to make such language more integral to the future
structure and performance of transportation programs. One shift would
be to consider articulation of a national goal related to freight/
intermodal transportation in performance terms--and to structure
revised or new programs around specific performance goals.
Clearly, in setting national goals and defining outcomes, the
explicit focus would be on a system-wide, rather than mode-specific
approach to transportation planning and funding and could include a
focus on outcomes that users--both freight and passengers, both
intercity and local--desire from the transportation system.\1\ The key
for achieving the goals, regardless of how detailed, is to align the
goal with the roles of the various stakeholders and the funding
approaches selected. For example, a performance oriented funding system
could be developed in which the Federal Government would first define
certain national interests of the transportation system--such as
identifying freight corridors of importance to the national economy--
then set national performance standards for those systems that States
and localities must meet. Federal funds would be distributed to those
entities that are addressing national interests and established
standards. Any Federal funds remaining after meeting the performance
standards could then be used for whatever transportation purpose the
State or locality deems most appropriate to achieve State or local
mobility goals.
---------------------------------------------------------------------------
\1\U.S. General Accounting Office, Surface and Maritime
Transportation: Developing Strategies for Enhancing Mobility: A
National Challenge, GAO-02-775, (Washington, DC: Aug. 2002).
---------------------------------------------------------------------------
Another feature of performance goals could include a focus on
congestion, which is increasingly affecting travel times and the
reliability of transportation systems. In the aggregate, congestion
results in thousands of hours of delay every day, which can translate
into costs such as lost productivity and increased fuel consumption. In
addition, a decrease in travel reliability imposes costs on the
traveler in terms of raising the cost of moving goods resulting in
higher prices for consumers. While there is some evidence that freight
transportation costs related to managing business operations have
decreased as a percentage of gross national product (indicating that
producers and manufacturers adjust to transportation supply by
switching modes or altering delivery schedules to avoid delays and
resulting cost increases), these adaptations by businesses represent
economic inefficiencies that can be very costly. Increasing congestion
can cause businesses to avoid a substantial number of trips that might
result in a corresponding loss of the benefits of those trips.
National goals for the transportation system could also recognize
that the concept of capacity is broader than just the physical
characteristics of the transportation network (e.g., the number of
lane-miles of road or locks on a waterway). The capacity of
transportation systems is also determined by how well they are managed
and operated. Evidence has mounted that congestion on highways was in
part due to poor management of traffic flows on the connectors between
highways and poor management in clearing roads that are blocked due to
accidents, inclement weather, or construction. For example, in the 75
metropolitan areas studied by the Texas Transportation Institute, 54
percent of annual vehicle delays in 2000 were due to incidents such as
breakdowns or crashes. In addition, the Oak Ridge National Laboratory
reported that, nationwide, significant delays are caused by work zones
on highways; poorly timed traffic signals; and snow, ice, and fog.\2\
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\2\S.M. Chin, O. Franzede, D.L. Greene, H.L. Hwang, and R. Gibson,
Temporary Losses of Capacity Study and Impacts on Performance, Report
No. ORNL/TM-2002/3 (Oak Ridge, TN: Oak Ridge National Laboratory, May
2002).
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Another dimension of sound and efficient transportation systems
that could be defined in national goals is the recognition of full
life-cycle costs and benefits of various transportation programs, and
building that concept into system-wide transportation planning and
funding. Cost-benefit frameworks that transportation agencies currently
use to evaluate various transportation projects could be more
comprehensive in considering a wider array of social and economic costs
and benefits, recognizing transportation systems' links to each other
and to other social and financial systems. A model worthy of
exploration is the Federal Transit Administration New Starts Program,
where projects compete nationally, and are all scored not only for
their projected transportation benefits but also for their
effectiveness in assuring provisions are made to cover the long term
operational costs of the system.
Defining the Federal Role Relative to Other Stakeholders
A central challenge of developing and refining national
transportation policies and programs, particularly relative to freight
transportation, is the intersection of public and private interests. A
specific role issue surrounding development and refinement of a
national freight transportation policy is the Federal vs. the State and
local role in selecting and prioritizing freight projects. The
structure of the core highway and transit programs since passage of the
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) is to
delegate decisionmaking and project prioritization to States and
metropolitan planning organizations (MPOs). Because control of
transportation investment decisions has been delegated to State and
local governments, freight projects funded through programs such as the
Congestion Mitigation and Air Quality Program (CMAQ), the National
Highway System (NHS), and the Surface Transportation Program (STP) have
to be identified as priorities within the State and MPO planning
processes. In contrast, Federal discretionary grant programs such as
the National Corridor Planning and Development and Coordinated Border
Infrastructure programs (Borders and Corridors programs) provides funds
over and above the annual State highway apportionment. Therefore, to
address the role issues, congressional action could be guided by
assessment of the relative strengths and weaknesses of programs that
require freight projects to be identified as priorities within the
State and MPO-led planning processes (CMAQ, NHS, and STP) relative to
the experience with programs funded with resources over and above the
regular formula allocations to the States (Borders and Corridors
programs).
The diverse proposals put forth by various freight interests range
from expanding eligibility and funding of any or all of these existing
programs to numerous proposals for new freight set-aside programs.
Thus, a central decision point for the Congress in defining a national
freight policy is determination of the extent to which incentives can
be refined sufficiently to enable local transportation planning to
reflect national interests and priorities for intermodal freight needs
or whether a directly federally administered program holds greater
promise to efficiently meet the critical needs of this key segment of
the transportation industry.
Developing Funding Tools and Other Approaches That Maximize the Return
on the Federal Investment
Our recent mobility report on strategies for enhancing mobility
identified the need for using a full range of tools to achieve desired
mobility outcomes, providing more financing options, and developing
additional revenue sources.\3\ While new construction may hold some
promise to ease congestion in certain bottlenecks, it is not always a
viable solution due to cost, land, regulatory, or administrative
constraints. Thus, balanced attention and priority needs to be given to
using noncapital alternatives to meet capital investment needs. In
December 1998, GAO reported that leading private sector and public
organizations consider just such alternatives in their capital
decisionmaking process.\4\ These alternatives can include (1) improving
the management and operation of the existing system by increasing
corrective and preventative maintenance and rehabilitation and (2)
managing or reducing travel demand through pricing incentives. For
example, capacity can be enhanced by performing needed maintenance on
existing transportation systems to improve the speed and reliability of
passenger as well as freight travel. In addition, investing in
Intelligent Transportation Systems--technologies that enhance the
safety, efficiency, and effectiveness of the transportation network--
can serve as another way of increasing capacity and mobility without
making major capital investments.\5\ Finally, instituting tolls or fees
during peak travel times may lead people to schedule recreational trips
or move freight during less congested times or by alternate routes.
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\3\U.S. General Accounting Office, Surface and Maritime
Transportation: Developing Strategies for Enhancing Mobility: A
National Challenge, GAO-02-775, (Washington, DC: Aug. 2002).
\4\U.S. General Accounting Office, Executive Guide: Leading
Practices in Capital Decision-Making, GAO/AIMD-99-32, (Washington, DC:
Dec. 1998).
\5\Intelligent transportation systems include technologies that
improve traffic flow by adjusting traffic flow on highways;
facilitating traffic flow at toll plazas; alerting emergency management
services to the locations of crashes; increasing the efficiency of
transit fare payment systems; and other actions.
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Regarding financing, the current system of financing surface and
maritime transportation projects limits options for addressing mobility
challenges. Separate funding for each mode at the Federal, State, and
local level can make it difficult to consider possible efficient and
effective ways for enhancing mobility. Providing more flexibility in
funding across modes could help address this limitation. Transportation
experts have also expressed concern that ``earmarking'' or designation
by the Congress of Federal funds for particular transportation projects
bypasses traditional planning processes used to identify the highest
priority projects, thus potentially limiting transportation agencies'
options for addressing the most severe mobility challenges. Bypassing
transportation planning processes can also result in logical
connections or interconnections between projects being overlooked.
The public sector could expand support for alternative financing
mechanisms to access new sources of capital and stimulate additional
investment in surface and maritime transportation infrastructure. These
mechanisms include both newly emerging and existing financing
techniques such as providing credit assistance to State and local
governments for capital projects and using tax policy to provide
incentives to the private sector for investing in surface and maritime
transportation infrastructure. However, these mechanisms currently
provide only a small portion of the total funding that is needed for
capital investment and are not, by themselves, a major strategy for
addressing mobility challenges. Furthermore some of these mechanisms,
such as Grant Anticipation Revenue Vehicles, could create difficulties
for State and local agencies to address future transportation problems,
because agencies would be reliant on future Federal revenues to repay
the bonds.\6\
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\6\U.S. General Accounting Office, Transportation Infrastructure:
Alternative Financing Mechanisms for Surface Transportation, GAO-02-
1126T, (Washington, DC: Sept. 25, 2002). In addition, a broad review of
the performance of Innovative Finance alternatives has recently been
released by a FHWA contractor. See Performance Review of U.S. DOT
Innovative Finance Initiatives, Cambridge Systematics, Inc., July 2002.
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Finally, a key issue is how Federal revenues are raised and what
level of funding is targeted. New or increased taxes or other fees
imposed on the freight sector, while never an attractive option, could
also help fund mobility improvements. For example, one way to raise
revenue for funding mobility improvements would be to increase taxes on
heavy trucks that move freight. According to FHWA, heavy trucks
(weighing over 55,000 pounds) cause a disproportionate amount of damage
to the nation's highways and have not paid a corresponding share for
the cost of pavement damage they cause.
Better aligning sources of revenues or user fees with actual use
and damage, including contributions to congestion and pollution, hold
promise to not only provide a source of revenue, but to promote more
efficient use of congested infrastructure. Congestion is in part due to
inefficient pricing of the infrastructure because users--whether they
are drivers on a highway or barge operators moving through a lock--do
not pay the full costs they impose on the system and on other users for
their use of the system. If travelers and freight carriers had to pay a
higher cost for using transportation systems during peak periods to
reflect the full costs they impose, they would have an incentive to
avoid or reschedule some trips and to load vehicles more fully,
resulting in less congestion.
______
Responses of JayEtta Hecker to Additional Questions from Senator Reid
and Senator Jeffords
Question 1. Freight transportation is expected to double in the
next 20 years. This increase in freight traffic will occur at the same
time that congestion on our roads is already at levels many of us
consider unacceptable. Clearly, capacity issues have to be at the top
of our list as we begin to reauthorize our surface transportation
programs. However, in addition to building new physical capacity, we
will need to seek ways to squeeze more out of our existing
transportation infrastructure through intelligent transportation
systems, better operations, and perhaps a more efficient mix of
transportation choices. Please give your thoughts on what we can do
when we reauthorize Transportation Equity Act for the 21st Century
(TEA-21) to get the most efficient use out of our transportation
infrastructure.
Response. Our recent work on surface and maritime transportation
mobility provides insight on several strategies that offer promise for
enhancing the efficiency of the transportation infrastructure and
addressing mobility challenges, especially growing congestion.\7\ We
developed these strategies based upon expert opinion drawn from two
panels of surface and maritime transportation experts that we convened
in April 2002. These strategies include:
---------------------------------------------------------------------------
\7\See U.S. General Accounting Office, Surface and Maritime
Transportation: Developing Strategies for Enhancing Mobility: A
National Challenge, GAO-02-775 (Washington, DC: Aug. 30, 2002) and U.S.
General Accounting Office, Surface and Maritime Transportation:
Challenges and Strategies for Enhancing Mobility, GAO-02-1132T
(Washington, DC: Sept. 30, 2002).
---------------------------------------------------------------------------
Strategy 1: Encourage the development of transportation planning
and funding systems that focus on the entire surface and maritime
transportation system rather than on specific modes or types of travel
to achieve desired mobility outcomes. Some examples of alternative
planning and funding systems include the following:
Performance-oriented funding system. The Federal
Government would define certain national interests of the
transportation system, set national performance standards for those
systems, and distribute Federal funds to entities that address national
interests and meet the performance standards.
Federal financial reward-based system. Federal support
would reward those States or localities that apply Federal money to
gain efficiencies in their transportation systems, or tie
transportation projects to land use and other local policies to achieve
community and environmental goals, as well as mobility goals.
System with different Federal matching criteria for
different types of expenditures that might reflect Federal priorities.
For example, if infrastructure preservation became a higher national
priority than building new capacity, matching requirements could be
changed to a 50 percent Federal share for building new physical
capacity and an 80 percent Federal share for preservation.
System in which State and local governments pay for a
larger share of transportation projects, which might provide them with
incentives to invest in more cost-effective projects. Reducing the
Federal match for projects in all modes may give States and localities
more fiscal responsibility for projects they are planning. If cost
savings resulted, these entities might have more funds available to
address other mobility challenges. Making Federal matching requirements
equal for all modes may avoid creating incentives to pursue projects in
one mode that might be less effective than projects in other modes.
Strategy 2: Use a full range of techniques to achieve desired
mobility outcomes. The techniques that offer promise for achieving more
efficient use of the transportation infrastructure are as follows:
Increase infrastructure maintenance and rehabilitation.
An emphasis on enhancing capacity from existing infrastructure through
increased corrective and preventive maintenance and rehabilitation is
an important supplement to, and sometimes a substitute for, building
new infrastructure. Maintaining and rehabilitating transportation
systems can improve the speed and reliability of passenger and freight
travel, thereby optimizing capital investments.
Improve management and operations. Better management and
operation of existing surface and maritime transportation
infrastructure is another technique for enhancing mobility because it
may allow the existing transportation system to accommodate additional
travel without having to add new infrastructure. For example, the Texas
Transportation Institute reported that coordinating traffic signal
timing with changing traffic conditions could improve flow on congested
roadways. Shifting the focus of transportation planning from building
capital facilities to an ``operations mindset'' may require a cultural
shift in many transportation institutions, particularly in the public
sector, so that the organizational structure, hierarchy, and rewards
and incentives are all focused on improving transportation management
and operations.\8\
---------------------------------------------------------------------------
\8\Joseph M. Sussman, ``Transitions in the World of
Transportation: A Systems View,'' Transportation Quarterly 56 (2002):
21-22.
---------------------------------------------------------------------------
Increase investment in technology. Increasing public
sector investment in Intelligent Transportation System (ITS)
technologies that are designed to enhance the safety, efficiency, and
effectiveness of the transportation network, can serve as a way of
increasing capacity and mobility without making major capital
investments. ITS includes technologies that improve traffic flow by
adjusting signals, facilitating traffic flow at toll plazas, alerting
emergency management services to the locations of crashes, increasing
the efficiency of transit fare payment systems, and other actions.
Other technological improvements include increasing information
available to users of the transportation system to help people avoid
congested areas and to improve customer satisfaction with the system.
Use demand management techniques. Another approach to
reducing congestion without making major capital investments is to use
demand management techniques to reduce the number of vehicles traveling
at the most congested times and on the most congested routes. One type
of demand management for travel on public roads is to make greater use
of pricing incentives. In particular, some economists have proposed
using congestion pricing that involves charging surcharges or tolls to
drivers who choose to travel during peak periods when their use of the
roads increases congestion. These surcharges might help reduce
congestion by providing incentives for travelers to share rides, use
transit, travel at less congested (generally off-peak) times and on
less congested routes, or make other adjustments. The surcharges may
also lead businesses to move freight during less congested times or by
alternate routes. At the same time, congestion pricing generates more
revenues that can be targeted to alleviating congestion in those
specific corridors. In addition to pricing incentives, other demand
management techniques that encourage ride-sharing through carpools and
vanpools may also be useful in reducing congestion. We note, however,
that demand management techniques on roads, particularly those
involving pricing, often provoke strong political opposition and raise
equity issues that arise from the potentially regressive nature of
these charges (i.e., the surcharges constitute a larger portion of the
earnings of lower income households and therefore impose a greater
financial burden on them).
Strategy 3: Provide more options for financing mobility
improvements and consider additional sources of revenue. There are
three potential elements to this strategy, as follows:
Increase funding flexibility. The current system of
financing surface and maritime transportation projects limits options
for addressing mobility challenges. For example, separate funding for
each mode at the Federal, State, and local level can make it difficult
to consider possible efficient and effective ways for enhancing
mobility. Providing more flexibility in funding across modes could help
address this limitation.
Expand support for alternative financing mechanisms. The
public sector could also expand its financial support for alternative
financing mechanisms to access new sources of capital and stimulate
additional investment in surface and maritime transportation
infrastructure. These mechanisms include both newly emerging and
existing financing techniques such as providing credit assistance to
State and local governments for capital projects and using tax policy
to provide incentives to the private sector for investing in surface
and maritime transportation infrastructure.\9\ These mechanisms
currently provide a small portion of the total funding that is needed
for capital investment and some of them could create future funding
difficulties for State and local agencies because they involve greater
borrowing from the private sector.
---------------------------------------------------------------------------
\9\See U.S. General Accounting Office, Transportation
Infrastructure: Alternative Financing Mechanisms for Surface
Transportation, GAO1-02-1126T (Washington, DC: Sept. 25, 2002).
---------------------------------------------------------------------------
Consider new revenue sources. A possible future shortage
of revenues may limit efforts to address mobility challenges, according
to many of the panelists that we consulted. For example, some panelists
said that because of the increasing use of alternative fuels, revenues
from the gas tax are expected to decrease, possibly limiting funds
available to finance future transportation projects. One method of
raising revenue is for counties and other regional authorities to
impose sales taxes for funding transportation projects. A number of
counties have already passed such taxes and more are being considered
nationwide. However, several panelists expressed concerns that this
method might not be the best option for addressing mobility challenges
because (1) moving away from transportation user charges to sales taxes
that are not directly tied to the use of transportation systems weakens
the ties between transportation planning and finance and (2) counties
and other taxing authorities may be able to bypass traditional State
and metropolitan planning processes because sales taxes provide them
with their owns funding sources for transportation.
New or increased taxes or other fees imposed on the freight sector
could also help fund mobility improvements, for example, by increasing
taxes on freight trucking. The Joint Committee on Taxation estimated
that raising the ceiling on the tax paid by heavy vehicles to $1,900
could generate about $100 million per year.\10\ Another revenue raising
method would be to dedicate more of the revenues from taxes on
alternative fuels, such as gasohol, to the Highway Trust Fund rather
than to Treasury's general fund, as currently happens. However, this
would decrease the amount of funds available for other Federal
programs. Finally, pricing strategies, mentioned earlier in this
statement as a technique to reduce congestion, are also possible
additional sources of revenue for transportation purposes.
---------------------------------------------------------------------------
\10\See U.S. General Accounting Office, Highway Financing: Factors
Affecting Highway Trust Fund Revenues, GAO-02-667T (Washington, DC: May
9, 2002).
Question 2. We clearly have significant freight transportation
needs across our Nation. How do we determine what our freight
priorities should be? Do we have sufficient information to determine
which freight corridors, border crossings, ports, intermodal
facilities, and connectors should be our top funding priorities? Where
is our freight infrastructure least efficient and where is the growth
expected to occur?
Response. GAO has not performed work in this area. Therefore, we
are unable to directly address your questions concerning the nation's
freight priorities. We believe, however, that the Federal programs
established in core transportation legislation should be evaluated to
determine the extent to which these programs are enhancing freight
transportation. As such, we are currently working with your staffs to
undertake such work.
It would be prudent to evaluate the results of Federal programs to
determine if programs are enhancing freight transportation. There
appears to be substantial consensus that the reliability and
effectiveness of the nation's freight transportation system is being
constrained because of increasing demand and capacity limitations.
Projected increases in the volume of freight being transported over the
nation's transportation infrastructure and changes in the freight
industry, such as just-in-time delivery and e-commerce, are placing new
demands on the transportation system by requiring more freight to be
shipped more frequently over the system. Furthermore, capacity and
mobility limitations of the existing infrastructure-such as the need
for deeper harbor channels to accommodate bigger ships, terminal
capacity/expansion limitations, congestion on intermodal connectors,
and aging and limited low-capacity locks on our nation's rivers-could
potentially pose threats to our ability to move goods efficiently.
While system stakeholders have maintained that demand and capacity
limitations have not received the attention necessary to meet projected
needs, these issues have not been evaluated on a system-wide basis.
Although the Intermodal Surface Transportation Efficiency Act
(ISTEA) and TEA-21 allowed transportation planners to consider freight
transportation requirements when developing transportation plans and
making investment decisions, freight carriers and users have questioned
whether the mandate set forth in core transportation legislation has
been successful. Because control of transportation investment decisions
has been delegated to State and local governments, freight projects
funded through most of the programs have to be identified as priorities
within the State and metropolitan planning organization (MPO) planning
processes. States and MPOs, however, must weigh the need for freight
transportation projects against priorities for other transportation
projects. Furthermore, freight systems are global in scope whereas the
perspective of State and local planners is limited to the area over
which they have jurisdiction.
In our recent report on maritime finance,\11\ we provide a
framework for national infrastructure investment. The first component
of this framework calls for evaluating results and incorporating
lessons learned into the decisionmaking process. We are currently
working with your staffs to evaluate many of these freight
transportation issues.
---------------------------------------------------------------------------
\11\U.S. General Accounting Office, Marine Transportation: Federal
Financing and a Framework for Infrastructure Investments, GAO-02-1033,
(Washington, DC: Sept. 9, 2002).
Question 3. The Borders and Corridors programs have not worked very
well. One improvement we should consider is to revise this program to
encourage public-private partnerships through a greater emphasis on
innovative finance and other creative incentives. How else can we
improve the Borders and Corridors programs to target the highest
priority freight corridors and intermodal facilities?
Response. In your question, you raised concern that the Borders and
Corridors programs have not worked well and inquired about approaches
(other than innovative finance and incentives) that might improve the
programs. Absent an evaluation of the programs, we are not able to take
a position on whether the programs have been successful in advancing
freight projects. We can, however, provide information on noncapital
alternatives to meet capital investment needs based on our recent work
on surface and maritime transportation mobility.\12\
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\12\U.S. General Accounting Office, Surface and Maritime
Transportation: Developing Strategies for Enhancing Mobility: A
National Challenge, GAO-02-775, (Washington, DC: Aug. 30, 2002).
---------------------------------------------------------------------------
According to a report issued by the Federal Highway Administration
(FHWA),\13\ since States and MPOs must balance competing priorities for
scarce transportation funding, the project prioritization process
established in ISTEA and TEA-21 may serve to detract focus from freight
projects within the State and MPO decisionmaking process. A common
complaint of freight carriers and users of the system is that freight
issues cannot compete with other politically popular projects, such as
passenger projects. The Borders and Corridors programs, established in
TEA-21, addressed this difficulty by providing funds over and above the
annual State highway apportionment.
---------------------------------------------------------------------------
\13\Federal Highway Administration, Freight Financing Options for
National Freight Productivity, (Washington, DC: Apr. 2001).
---------------------------------------------------------------------------
The FHWA report also notes that although the programs have been a
good source of funding for freight projects, the programs have
purportedly been oversubscribed and much of the program funds have been
earmarked for non-freight projects. The apparent demand for funds under
these programs suggests that there is a need for such programs. As
previously noted, we are not able to take a position on whether the
programs have been successful. We can, however, provide strategies that
could be considered when developing the legislative reauthorization
package.
In our recent mobility report on strategies for enhancing mobility,
we identified the need for using a full range of tools to achieve
desired program outcomes. While new construction may hold some promise
to ease congestion in certain bottlenecks, it is not always a viable
solution due to cost, land, regulatory, or administrative constraints.
Therefore, noncapital alternatives to meet capital investment needs
should also be considered. These alternatives can include improving the
management and operation of the existing system through corrective and
preventative maintenance and rehabilitation and/or managing or reducing
travel demand through pricing incentives. Another alternative we
proposed in our mobility report involves instituting tolls or fees
during peak travel times which may lead people to schedule recreational
trips or move freight during less congested times or be alternate
routes.
Question 4: One way to squeeze more capacity out of existing
infrastructure is through more rapid deployment of Intelligent
Transportation Systems and an increased focus on the operations and
management of regional transportation systems. How much potential do
Intelligent Transportation System initiatives have for improving the
efficiency of freight operations and what can we do to promote the
development of a freight-friendly ITS infrastructure?
Response. We have not done any recent work to evaluate Intelligent
Transportation Systems (ITS) initiatives or to identify strategies for
promoting ``freight-friendly'' ITS infrastructure. As noted in our
response to question 1, however, our recent work on strategies for
addressing mobility provides information about Intelligent
Transportation Systems (ITS). The Department of Transportation's ITS
program applies proven and emerging technologies-drawn from computer
hardware and software systems, telecommunications, navigation, and
other systems-to surface transportation. In fiscal year 2001, nearly 50
percent of FHWA's $387.2 million research and technology budget was
allocated to intelligent transportation systems.\14\ A number of
intelligent transportation systems offer promise for improving the
efficiency of freight transportation. For example, highway-rail
intersection systems are being developed to coordinate traffic signal
operations and train movement and notify drivers of approaching trains
using in-vehicle warning systems. Also, commercial vehicle intelligent
transportation systems are being developed that will apply technologies
to improve the safety and productivity of commercial vehicles and
drivers, reduce commercial vehicles' operations costs, and facilitate
regulatory processes for the trucking industry and government agencies.
---------------------------------------------------------------------------
\14\U.S. General Accounting Office, Highway Research: Systematic
Selection and Evaluation Processes Needed for Research Program, GAO-02-
573 (Washington, DC: May 24, 2002).
Question 5. What can we do to promote better regional freight
planning and how do we ensure that planning agencies take a
comprehensive, intermodal approach to infrastructure planning and
development? In particular, when it comes to freight, how do we bring
the private sector into the public planning process?
Response. GAO has not reviewed the freight planning process. We are
therefore unable to proffer suggestions on how the process can be
improved. At this time, we are planning to undertake work that would
allow us to more fully address this question.
We can provide the following observations based on our recent work
on surface and maritime transportation mobility and expert panels we
convened to discuss major transportation issues:
Planning with a regional focus. Experts participating in
a conference we sponsored on June 14, 2001 to discuss major
transportation issues raised concerns about integrating freight needs
into transportation planning and investment decisions.\15\ Conference
speakers supported more planning with a regional focus-with
participation by Federal, State, and local entities-to make better use
of Federal transportation assistance.
---------------------------------------------------------------------------
\15\U.S. General Accounting Office, Physical Infrastructure:
Crosscutting Issues Planning Conference Report, GAO-02-139,
(Washington, DC: Oct. 1, 2001).
---------------------------------------------------------------------------
Modal limitations. Experts participating in a conference
we sponsored on January 26, 1999 noted that freight stakeholders must
become full partners in making transportation policy so that surface
transportation investments are linked to freight needs.\16\
Facilitating freight users' and suppliers' involvement in
transportation policy will enhance the nation's ability to move freight
seamlessly across different transportation systems. In addition,
manufacturers and freight companies regard the Department of
Transportation's ``stovepipe'' organization as a major obstacle to
working with the Federal Government. They find it difficult to discuss
intermodal projects or emerging issues with a single DOT agency that is
responsible only for highway or maritime issues.
---------------------------------------------------------------------------
\16\U.S. General Accounting Office, Surface Transportation: Moving
into the 21st Century, GAO/RCED-99-176, (Washington, DC: May 1, 1999).
---------------------------------------------------------------------------
Knowledge/expertise. The January 26, 1999 conference
participants also noted that the public sector must better understand
the needs and problems of moving freight nationally and regionally.
State transportation departments and MPOs, however, may not have
sufficient expertise, or in some cases, authority to effectively
identify and implement mobility improvements across modes or types of
travel.\17\
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\17\U.S. General Accounting Office, Surface and Maritime
Transportation: Developing Strategies for Enhancing Mobility: A
National Challenge, GAO-02-775 (Washington, DC: Aug. 30, 2002).
---------------------------------------------------------------------------
Research. The January 26, 1999 participants noted that
Federal policymakers should renew their commitment to funding
nationally important research. While TEA-21 substantially increased
States' research funding, it considerably reduced funds for Federal
research. State research programs focus on short-term practical
problems whereas Federal research focuses on long-term and high-risk
research, intermodal problems, and transportation policies.
Best practices. In our recently issued mobility report,
experts offered the Alameda Corridor as an example of successful
cooperation and coordination of freight needs. The Alameda Corridor is
designed to improve cargo movement from California's ports of Los
Angeles and Long Beach to the rest of the country. Its planning,
financing, and building required cooperation among private railroads,
the local port authorities, the cities of Los Angeles and Long Beach,
community groups along the corridor, the State of California, and the
Federal Government.
Question 6 (from Senator Jeffords). I have a hypothesis that if
more was done to provide strategic investment in rail infrastructure,
we could reduce congestion on our highways and improve the quality air
we breathe. For instance, in Chicago, it is my understanding that a
majority of the truck traffic in the metro area is a result of cargo
being off loaded from one rail line and being shipped to another part
of town to be loaded on another train to continue its journey. If
funding were made available for improving rail-to-rail connections in
the Chicago area, what kind of effect would consolidating rail yards
and rail lines in the Chicago area have on truck traffic on the highway
system?
Response. GAO has not conducted work on rail-to-rail connections in
the Chicago area and therefore, we are unable to comment on the effect
consolidating rail yards and lines in the Chicago area would have on
truck traffic.
__________
Statement of Katie Dusenberry, Chairman, Arizona Department of
Transportation Board
Good morning Mr. Chairman and members of the committee. Thank you
for the opportunity to present to you today the views of the Arizona
Department of Transportation Board regarding the Hoover Dam Bypass
Project and the impact on commercial trucking.
For the record, my name is Katie Dusenberry, and I am the Chairman
of the Arizona Department of Transportation Board. The Board is
responsible for a variety of transportation activities prescribed by
Arizona statute.
Introduction
Over the past 10 years, there has been a significant growth in
freight due to improvements in manufacturing processes and new
technologies. This growth, while important for economic vitality,
stresses our trade gateways and corridors. U.S. DOT has estimated that
freight traffic will double over the next 20 years making the condition
of these trade corridors even more critical. Our economic growth and
ability to maintain a competitive edge in international markets depends
on the condition and capacity of these trade corridors to accommodate
the ever increasing freight traffic.
History
U.S. Highway 93 is part of the major transportation network in the
western United States and is the primary, direct north-south connecting
highway linking two major metropolitan cities, Phoenix, Arizona and Las
Vegas, Nevada, in two of the fastest growing States in the United
States. U.S. 93 is one of the highway segments that makes up the route
from Mexico City, Mexico to Edmonton, Canada known as the CANAMEX
Corridor. This corridor was formally designated as a high-priority
trade corridor by the National Highway System Designation Act of 1995.
The Corridor runs from Mexico City to I-19 in Nogales to Tucson, I-10
from Tucson to Phoenix, US 93 in the vicinity of Phoenix to the Nevada
Border, US 93 from Arizona to Las Vegas and I-15 from Las Vegas through
Montana to Edmonton, Canada.
The CANAMEX Corridor represents an opportunity for economic
development that facilitates trade and encourages economic growth
throughout the region. The interest in developing this Corridor is to
facilitate transportation distribution, commerce and tourism. A
preliminary study of the potential positive economic impact if the
CANAMEX Corridor is fully developed suggests over a 30 year period:
Economic development (value added) of $1.2 billion;
Economic efficiencies of $509 million;
Approximately 1,900 new permanent jobs.
These figures reflect completion of a number of projects within the
Corridor including the Hoover Dam Bypass project.
Prior to the terrorist attacks on 9/11/01, the direct route for all
traffic, including commercial trucks, to reach either Arizona or Nevada
was a road across the top of Hoover Dam consisting of two lanes of
traffic, one in each direction. The approach from Arizona to the Hoover
Dam consists of approximately 1.2 miles of roadway and from Nevada, 2.2
miles of roadway. On the approach to Hoover Dam from both Arizona and
Nevada, steep grades, hairpin turns, and inadequate sight distance are
encountered by freight and passenger traffic reducing speeds to between
8 to 18 MPH. Commercial trucks are often too large to pass each other
on the extreme hairpin curves and must come to a complete stop. On both
the Arizona and Nevada approaches, the grades are greater than 6
percent. The existing 6.3 miles north and south of the Dam requires an
average of 16.5 minutes to cross due to the nature of the road and the
traffic on the Dam itself. To remedy the inadequacy of this route, the
Federal Highway Administration (FHWA) in cooperation with the States of
Arizona and Nevada and other affected Federal and State agencies has
taken a leadership role in developing plans to construct a new bridge
to cross the Colorado River in the vicinity of Hoover Dam. This bridge
is entirely on Federal property and therefore should be largely a
Federal financial responsibility.
Since 9/11/01, the road across the Hoover Dam has been closed to
commercial trucking and over 2,100 trucks per day are now detoured to
other highways. Commercial truck traffic must now route through
Laughlin, an additional 23 miles or I-40 an additional 70 miles, adding
dozens of travel miles to each trip. This creates a negative financial
impact of $30 million per year, based on only the additional mileage,
which is ultimately passed on to the consumer. The detours currently
being used by commercial trucks are not designed to handle this traffic
volume and weight. The Hoover Dam crossing is the only major highway in
the Nation with ongoing restrictions as a result of the terrorist
attack.
Purpose of Project
The purpose of the project, a joint effort among Arizona, Nevada
and the Federal Government is to significantly reduce traffic on the
road atop the Hoover Dam and will accomplish the following objectives:
Remove a major bottleneck to interstate and international
commerce and travel by reducing traffic congestion and accidents in
this segment of the major commercial route.
Separate tourist and commercial traffic to reduce
congestion.
Improve efficiency and reduce cost to the shippers of
freight by reducing travel time.
Replace an inadequate federally owned highway river
crossing, first constructed over 60 years ago, with a new bridge that
meets current roadway design criteria and improves both vehicle and
truck capacity on U.S. 93 in the area of the Dam.
Minimize the potential for pedestrian--vehicle accidents
on the Dam crest and on the Nevada and Arizona approaches.
Protect the Hoover Dam, visitors, employees, equipment,
and power generation capabilities and Colorado River waters while
enhancing the visitors' experience at Hoover Dam.
The FHWA recommended the Sugarloaf alignment as the best location
to construct the bridge. This location is approximately 1,500 feet
downstream from Hoover Dam. This site requires constructing 2.2 miles
of highway approach in Nevada and approximately 1.2 miles of highway
approach in Arizona and a 2,000-foot long bridge.
Travel Times
The current travel time across the top of the Hoover Dam averages
16.5 minutes up to 60 minutes during peak hours. The proposed bypass
bridge and approaches would reduce the travel time to only 6 minutes.
When accidents occur on and near the Dam, significant traffic
backups of over ten to 15 miles result. Since there are no alternative
routes to which traffic can shift, this results in delays ranging from
two to 5 hours for motorists. There have been incidents of up to 18
hours delay.
Accident Statistics
The number of tourists traveling to the Lake Mead Recreational Area
and Hoover Dam was 1.03 million in 1997 and was projected to increase
to 1.6 million in 1999. Since 1964 more than 500 accidents have
occurred in the 3.4 mile stretch of highway on or near the Hoover Dam.
Commercial trucks were involved in 96 of these accidents. Forty-three
accidents between 1985 and 1991 involved one or more personal injuries,
including two fatalities. In each accident, the cause was partially
attributable to sharp curves, narrow highway widths, insufficient
shoulder widths, poor sight distance and slow travel speeds. Especially
in regards to freight traffic, the previous configuration of putting
trucks across the Hoover Dam with two-lane traffic, steep approaches,
sharp curves at the entrances and heavy pedestrian traffic, the Hoover
Dam was a serious accident location.
One mile of the Hoover Dam road reflects a much higher accident
rate than the three-mile adjoining segments. The half-mile segments of
US 93 approaching the Dam have an accident rate of 3.97 per million
vehicle miles traveled. That rate is over three times the Nevada
average of 1.15 per million vehicle miles traveled for rural principal
arterial routes.
Traffic on the road across the Hoover Dam was 5,500 vehicles per
day in 1993 and currently is 11,500 vehicles per day. 18 percent to 20
percent was truck traffic prior to 9/11/01. Future traffic is projected
to be 21,000 in 2017 and 26,000 in 2027. As the average annual daily
traffic across the Dam continues to increase, the number of accidents
is increasing accordingly as congestion on the Dam also increases.
Security
Since Hoover Dam holds the waters of Lake Mead, the largest water
reservoir in the Nation, the U.S. Department of Interior has identified
the Hoover Dam Bypass Project as its No. 1 national security priority.
The massive Dam provides vital flood control for more than a quarter
million people living in the Colorado River region and generates four
billion kilowatt-hours of energy for 1.3 million people in the tri-
State regions of California, Arizona and Nevada.
Project Status
Hoover Dam Bypass Project received its record of decision
for project approval in April 2001. The Environmental Impact Statement
has been finalized.
This project is the No. 1 priority of the States of
Arizona and Nevada. Only an additional $108 million is needed to ensure
full funding for this project.
The design is over 95 percent complete for the Arizona
approach. Nevada's approach is 60 percent complete. The bridge design
is 30 percent complete.
Funding
------------------------------------------------------------------------
Current
------------------------------------------------------------------------
Nevada & Arizona State funds................... $40,000,000
Federal Funds previously committed............. $86,000,000
Additional Federal Funding needed.............. $108,000,000
Total Project Budget....................... $234,000,000
------------------------------------------------------------------------
We are requesting $108 million to complete the Hoover Dam Bypass
Project. Because there are no complex interchanges and only one small
area of roadway on either side of the bridge to construct, we are
confident that the bridge as designed will be completed within the
entire project budget of $234 million dollars. The bridge's design
ensures that it will accommodate anticipated traffic volumes including
increased freight that will be generated due to the north-south trade
from Mexico to Canada well into the future.
GARVEE Bonds/Innovative Financing
Because of the great need to construct the Hoover Dam Bypass, Grant
Anticipation Revenue Vehicles (GARVEEs) are being considered as a
mechanism to provide immediate funds to complete the construction of
the Hoover Dam Bypass through the issuing of bonds. Even though bond
financing incurs interest and other debt-related costs, delaying the
project would create greater costs such as inflation, lost driver time,
freight delays, and wasted fuel. Both Arizona and Nevada are interested
in pursuing this as an option to allow construction to begin
immediately, while allowing Federal funding to occur over time. This
allows for completion of the Hoover Dam Bypass by mid 2007 and thereby,
providing a safe and efficient route for commercial trucking.
Conclusion
Mr. Chairman and members of the committee, we urge you to consider
providing an additional $108 million dollars to fully fund the Hoover
Dam Bypass. The bypass project is vital to the efficient movement of
commercial freight and will substantially reduce the additional miles
and travel times that commercial trucks are currently experiencing.
This project is also a critical part of the development of the CANAMEX
Corridor which runs from Mexico to Canada and will provide economic
growth and safer transportation by increasing commercial freight,
commerce and tourism.
__________
Statement of Michael W. Wickham, Chairman and CEO, Roadway Corporation,
for the American Trucking Associations, Inc.
Chairmen Reid and Breaux, Senators Inhofe and Smith, members of the
Subcommittees, thank you for the opportunity to express the trucking
industry's perspectives regarding freight transportation. I am Michael
Wickham, Chairman of the Board and Chief Executive Officer of Roadway
Corporation. Roadway is headquartered in Akron, OH. The company was
founded in 1930, and today we are one of the Nation's leading providers
of less-than-truckload (LTL) freight transportation services. Roadway
provides seamless service between all 50 States, Canada, Mexico, and
Puerto Rico, with international freight services for 140 countries. We
have subsidiaries in Canada and Mexico, and we operate 379 terminals
throughout North America. Roadway employs more than 26,000 people.
Roadway's Mexican and Canadian operations connect our neighbors with 96
percent of the U.S. population through seamless cross-border operations
and services. In addition, Roadway ships over three billion pounds of
truckload freight annually. Through Roadway Air, our company provides
time-definite air freight delivery services.
I am appearing before the Subcommittees today on behalf of the
American Trucking Associations, Inc. (ATA) and Roadway Corporation. ATA
is the national trade association of the trucking industry. We are a
federation of affiliated State trucking associations, conferences, and
other organizations that together include more than 37,000 motor-
carrier members, representing every type and class of motor carrier in
the country. We represent an industry that employs nearly ten million
people, providing one out of every 14 civilian jobs. While we are a
highly diverse industry, we all agree that a good highway system is
crucial to our Nation's economy, to the safety of all drivers, and to
our bottom line. This includes the more than 3 million truck drivers
who travel over 400 billion miles per year to deliver to Americans 86
percent of their transported food, clothing, finished products, raw
materials, and other items.\1\
---------------------------------------------------------------------------
\1\87.3 percent by revenue. American Trucking Associations, U.S.
Freight Transportation Forecast to 2013, 2002.
---------------------------------------------------------------------------
American industrial and commercial enterprises are able to compete
more effectively in the global marketplace due to the benefits of safe
and efficient trucking. Truck transportation is the most flexible mode
for freight shipment, providing door-to-door service to every city,
manufacturing plant, warehouse, retail store and home in the country.
For many people and businesses located in towns and cities across the
United States, trucking services are the only available means to ship
goods. Trucks are the only providers of goods to 75 percent of American
communities. Five percent of the Nation's GDP is created by truck
transportation. Actions that affect the trucking industry's ability to
move its annual 8.9 billion tons of freight have significant
consequences for the ability of every American to do their job well and
to enjoy a high quality of life.
building on success: making our nation's highways safer for all
motorists
Having spent my entire career in the trucking industry, I am most
proud of the fact that we continue to improve our safety record, year
after year, mile after mile. Safety must be paramount in our
consideration of future reauthorization programs and policies. ATA
takes safety concerns very seriously. Our industry has strongly
promoted many safety improvements that have made trucking safer today
than it has ever been in the past. Between 1985 and 2000, the fatal
accident rate involving trucks has fallen 44 percent. Furthermore,
research by the AAA Foundation, and a study done by the University of
Michigan at the request of the USDOT, found that in about three-
quarters of accidents involving a passenger vehicle and a truck, the
actions of the truck driver were not a factor leading to the
accident.\2\In fact, today's truck driver is the safest driver--
passenger or commercial--in our Nation's recorded history.
---------------------------------------------------------------------------
\2\``Driver-Related Factors in Crashes Between Large Trucks and
Passenger Vehicles,'' Federal Highway Administration, April 1999;
``Identifying Unsafe Driver Actions that Lead to Fatal Car-Truck
Crashes,'' AAA Foundation, April 2002.
---------------------------------------------------------------------------
Even though the trucking industry is taking proactive steps to
improve our safety record, ATA is very concerned about America's
overall highway safety experience. Each year, more than 40,000 people
lose their lives as a result of a traffic accident. This is an
unacceptable loss of life and an economic tragedy. As Secretary of
Transportation Norman Mineta announced earlier this year, the economic
impact of motor vehicle crashes is over $230 billion per year. This
represents an annual economic loss of $820 for every American.
Investing additional resources in projects and programs that improve
highway safety produces more than human benefits; it has positive
economic consequences as well. However, we should also spend our money
wisely, directing precious resources toward those activities that will
produce the greatest safety benefit, based on sound scientific
evaluation of the causes of crashes and appropriate remedies.
It is clear that truck safety has improved over the last 20 years.
An interesting question, however, is ``What has caused the
improvement?'' This is a tough question to answer for both industry and
government officials. It's fairly clear that some programs that have
been implemented in the last 10 to 20 years have contributed to the
overall positive picture. The industry-supported Federal-State truck
safety inspection grant program (known as the Motor Carrier Safety
Assistance Program or MCSAP) has had an impact by improving trucks'
condition; the Commercial Driver's License (CDL) program has
contributed by raising the bar for driver entry into the industry; and
the implementation of voluntary drug testing by the industry and a
mandatory Federal drug and alcohol testing program have also
contributed in a positive way. It is very likely that the increase in
seat belt use by truck drivers and other motorists have also had a
positive impact. Many other industry and government initiatives are
likely to have had some benefit as well. The point here, however, is
that we still need to have a better understanding of what has worked
and why. Additionally, we still do not understand thoroughly how and
why truck crashes occur.
Section 224 of the Motor Carrier Safety Improvement Act of 1999
(MCSIA, P.L. 106-159) required the Secretary of Transportation to
conduct a comprehensive study to determine the causes of, and
contributing factors to, crashes involving large trucks and buses. The
primary purpose of this study requirement was to have a comprehensive
analysis and report that would yield information to help FMCSA and the
States identify activities and safety measures that would likely lead
to significant reductions in the frequency, severity and rate per mile
traveled of crashes involving large trucks and buses. ATA fully
supported this study concept during the truck safety debate in 1999
that resulted in the passage of MCSIA.
FMCSA initiated this study in 2000 with the assistance of the
National Highway Traffic Safety Administration (NHTSA), and the State
agencies involved in commercial vehicle safety efforts. The study will
not be complete until the end of 2003 at the earliest. However, a FMCSA
official recently confirmed that preliminary information suggests that
driver actions--both passenger and commercial--appear to be a more
significant factor in accident causation than previously thought, and
that enforcement resources may have to be redirected to reflect these
findings.\3\
---------------------------------------------------------------------------
\3\``FMCSA Crash Data Analyst Says Study May Alter Inspections,''
Transport Topics, Aug. 26, 2002, p. 2.
---------------------------------------------------------------------------
Other studies and data confirm these preliminary findings.\4\
Congress and the U.S. DOT have traditionally taken different approaches
to improving traffic safety versus truck safety. NHTSA's traffic safety
programs have included education and outreach, traffic enforcement
programs aimed at changing driver behavior, and crash data analysis.
FMCSA's truck safety programs, on the other hand, have focused on
increasing the number of regulatory requirements on drivers and
carriers, enforced through on-road safety inspections and facility
compliance audits. Since so much of truck safety is rooted in overall
traffic safety, Congress should seriously consider much more of a
traffic safety approach to improving truck safety.
---------------------------------------------------------------------------
\4\``Driver-Related Factors in Crashes Between Large Trucks and
Passenger Vehicles,'' Federal Highway Administration, April 1999;
``Identifying Unsafe Driver Actions that Lead to Fatal Car-Truck
Crashes,'' AAA Foundation, April 2002.
---------------------------------------------------------------------------
Earlier this year, ATA's President and CEO, William Canary,
challenged our State and Federal partners to seriously address one of
the most pervasive and dangerous violations of the law that drivers
encounter every day--speeding. FMCSA reports that speeding (exceeding
the speed limit or driving too fast for conditions) was a contributing
factor in 22 percent of fatal crashes involving a truck in 2000. Since
the majority of fatal truck crashes are multi-vehicle crashes involving
one or more passenger vehicles, this 22 percent figure includes
speeding on the part of the truck driver, or speeding on the part of
the other driver, or speeding by both parties. Also, according to a
recent FMCSA study, driving at an unsafe speed was the second most
frequent unsafe driving act committed by passenger vehicles in the
vicinity of large trucks. Following too closely was the most frequently
cited unsafe driving act by motorists.
Additionally, NHTSA reports that speeding was a contributing factor
in 29 percent of all fatal crashes in 2000. This means that more than
12,000 people lost their lives in 2000 in part due to speed-related
crashes. This is simply unacceptable. The time has come to combat
excessive speeding. There are four words that every motorist and every
commercial vehicle driver needs to remember when they buckle up and
take the wheel of their vehicle: Safe Speeds Save Lives!
The Section 402 Highway Safety Grant Program administered by the
NHTSA supports many outreach and enforcement programs, including the
priority programs to encourage the proper use of occupant protection
devices and reduce drug and alcohol impaired driving. While these
programs clearly deserve a high priority for NHTSA, ATA is concerned
that strong, visible speed enforcement may not be getting the focus,
attention and funding it deserves by NHTSA.
Additionally, the Motor Carrier Safety Assistance Program (MCSAP)
administered by FMCSA focuses on priority truck and bus safety
initiatives that, for the most part, do not address speeding truck and
bus drivers, or other motorists. The MCSAP program, a generally
successful truck and bus safety inspection program, is simply not
putting enough emphasis on traffic enforcement activities. Strong speed
enforcement aimed at commercial vehicle drivers, as well as other
motorists with which commercial drivers share the road, needs to take
on a much greater role in the MCSAP program. In fact, there is
currently an artificial constraint that keeps the amount of speed
enforcement activity in the MCSAP program small. FMCSA's regulations
require that all speed enforcement stops (as well as all other types of
traffic enforcement stops) of trucks include an appropriate North
American Standard Inspection of the truck or the driver, or both, for
the activity to be eligible for MCSAP funding. This inspection
requirement, found at 49 C.F.R. 350.111, is unnecessary and
unwarranted. Additionally, since speeding and other unsafe driving
behaviors of non-commercial drivers play an even greater role in truck-
involved crashes than do the actions of the commercial driver, the
MCSAP program must include traffic enforcement efforts aimed at unsafe
motorist behavior.
ATA recommends that Congress authorize additional funding for the
Section 402 Highway Safety Grant Program administered by NHTSA, and the
MCSAP truck safety grant program administered by FMCSA, specifically
for increased traffic and speed enforcement efforts in the upcoming
highway reauthorization. ATA further recommends that Congress make it
clear in legislative language that MCSAP funding may be used for State
speed enforcement efforts aimed at both commercial and non-commercial
drivers, and that speed enforcement activities aimed at commercial
drivers do not have to be linked to a North American Standard
Inspection. Additional funding, additional emphasis, and greater
Federal leadership is needed on this issue to reduce the speed of all
drivers on our highways and to save lives.
ATA is also a firm believer in the life-saving benefits of seat
belts. ATA recommends that Congress continue to support and fully fund
the occupant protection programs of NHTSA, including the ongoing 'Click
It or Ticket' grant program.
improving the safety and efficiency of intermodal equipment
Mr. Chairman, while we try to cooperate with our intermodal
partners in many areas, and will do so during this reauthorization
cycle, there is one area on which we disagree, and I am afraid that the
footdragging by Federal agencies and by many in the rail and ocean
carrier industries to work with us to resolve the ``roadability'' issue
is having serious safety and economic impacts. Since the advent of
containerized shipping in the 1970's, a serious safety loophole has
crept into the Federal Motor Carrier Safety Regulations (F.M.C.S.R.s).
As containerized intermodal freight has evolved over the decades,
the Federal safety regulations have not kept pace. As a result, 750,000
intermodal chassis are operating in a safety loophole. These frame-like
trailers are used exclusively to haul intermodal containers, and are
interchanged between steamship lines, railroads, and motor carriers.
The chassis are also classified as commercial motor vehicles by the
USDOT. However, they evade USDOT safety oversight.
The F.M.C.S.R.s fundamentally assume that motor carriers have daily
management control over all commercial motor vehicles they take onto
public roadways. Based on that assumption, the regulations read,
``Every motor carrier shall systematically inspect, repair, and
maintain . . . all motor vehicles subject to its control.''\5\
---------------------------------------------------------------------------
\5\49 CFR Part 396.3. Inspection, repair, and maintenance
---------------------------------------------------------------------------
USDOT's interpretation of systematic maintenance is,``. . . a
regular or scheduled program to keep vehicles in a safe operating
condition.''\6\It explains that the agency does not specify maintenance
intervals, leaving that decision to motor carriers, based on fleet and
vehicle considerations. So how does USDOT know if a motor carrier is
failing to ``keep vehicles in a safe operating condition?'' When
roadside safety inspections, typically conducted by State police, drive
a motor carrier's SAFESTAT (violation) numbers above a certain
threshold, the agency and State police send an envoy to the motor
carrier's place of business to audit the maintenance and employee
training records, inspect the carrier's equipment, etc.
---------------------------------------------------------------------------
\6\Regulatory Guidance to the Federal Motor Carrier Safety
Regulations, at 49 CFR 396.3; emphasis added.
---------------------------------------------------------------------------
While railroads and foreign-owned steamship lines (collectively
called ``providers'') own or lease the intermodal chassis,\7\ and
control its daily disposition, they claim not to be motor carriers,
thus not technically responsible for the condition of their equipment
under Federal safety regulations. However, they do affix the annual
inspection sticker on their equipment, which constitutes an act of
certification that the equipment was inspected in detail at least once
a year. Providers conduct the annual inspection pursuant to the
F.M.C.S.R.s, but many do not conduct systematic maintenance on the same
equipment, which is likewise mandated by the F.M.C.S.R.s. In fact,
providers are generally unaware of the existence of the Federal
systematic maintenance requirement. This explains the poor condition of
intermodal chassis and points to USDOT's failure to close their own
regulatory loophole to hold the controlling party accountable for the
safety compliance of their own chassis.
---------------------------------------------------------------------------
\7\While this is the general practice, some ports have different
arrangements.
---------------------------------------------------------------------------
SAFESTAT is the USDOT's computer analysis of their data base
containing motor-carriers' accumulated violations. They use it to judge
how safely a motor carrier maintains the commercial vehicles under its
control. By contrast, it is impossible to assess providers' adequacy in
performing systematic maintenance because USDOT resists including them
in the SAFESTAT program. Ironically, USDOT says the reason it has not
moved forward to close the intermodal equipment safety loophole is
because they do not have the data to indicate a problem with the
providers' chassis!
A new study\8\ conducted jointly by the Federal Motor Carrier
Safety Administration and the University of Maryland at College Park
provides support to ATA's position on the Roadability issue. This study
looked at 11 sectors of the trucking industry, one of which was
intermodal operations. Researchers used nine safety performance
measurements and other data managed by the USDOT to analyze the safety
performance of each sector. One significant finding is that intermodal
trucking operations were found to be average or better-than-average in
six of the nine measurements. However, in the two measurements relating
to vehicle condition, and the one relating to accidents, the intermodal
sector ranked poorly. Specifically, among the 11 sectors, intermodal
operations ranked last for vehicle safety condition, second-to-last
(tenth) for accumulating vehicle out-of-service violations, and ninth
for reportable accidents. Thus, the latest research findings from FMCSA
confirm what intermodal trucking executives have been saying for years
( that the equipment controlled by steamship lines and railroads, and
subsequently provided to motor carriers for brief periods of time, are
not maintained by those controlling parties as required by the Federal
Motor Carrier Safety Regulations.
---------------------------------------------------------------------------
\8\Motor-Carrier Industry Profile Study Evaluating Safety
Performance by Motor Carrier Industry Segment: by Thomas P. Keane of
the Federal Motor Carrier Safety Administration (USDOT); Dr. Thomas
Corsi of the University of Maryland, College Park, and Kristine N.
Braaten of Econometrics, inc, April 1, 2002. This study was published
in the Proceedings of the International Truck and Bus Safety Research
and Policy Symposium on April 3-5, 2002 in Knoxville, TN, an event
hosted by the Center for Transportation Research at the University of
Tennessee.
---------------------------------------------------------------------------
In summarizing the roadability issue, providers claim they are not
motor carriers, thus they are not responsible for maintenance of their
chassis. Providers say the motor carriers are responsible. The motor
carriers point out that they do not control the providers' equipment;
they neither own it, lease it, control its maintenance treatment,
conduct annual or periodic inspections on it, nor do they control its
daily disposition. The regulations reasonably require truckers to
maintain only the equipment they actually control. In the meantime,
USDOT has acknowledged that it has jurisdiction over the issue, but has
failed to place safety responsibility. That places the 750,000 chassis
squarely in a safety loophole, which the USDOT has yet to close.
Enforcement needs to be redirected from the motor carriers, who are
powerless to include interchanged intermodal equipment in their
periodic maintenance programs, and placed on the parties who decide
every day whether to repair a chassis, or hand it off to a motor
carrier without the benefit of this USDOT-mandated maintenance benefit.
Therefore, ATA is recommending that Congress pass legislation which
forces the USDOT to equitably enforce laws designed to ensure the safe
condition of all regulated equipment, including intermodal chassis.
the national highway system: the backbone of america's freight
transportation system
Trucks move 67 percent of freight tonnage, 86 percent measured by
value.\9\ This is freight that moves by truck alone; it does not touch
another mode. Truck freight is a vital component of America's economy.
Trucks are the only providers of goods to 75 percent of American
communities. For every $20 spent on freight transportation, $17 will
accrue to trucks.\10\ This pre-eminence is likely to grow. According to
the Federal Highway Administration (FHWA) the demand for freight
transportation services will increase by 87 percent by 2020.\11\ The
trucking industry will be asked to transport nearly 2.7 billion more
tons of freight in 2014 than we carry today.\12\ This increase of 2.7
billion tons alone is more than 500 million tons greater than the total
volume of freight that the railroads will carry in 2014 (See Appendix
A). To accommodate this higher demand level, the number of trucks will
increase over the next 12 years by 31 percent, adding 1.9 million more
trucks to the road, over 157,000 trucks each year. The largest
increase, 58 percent, will be among smaller trucks, which tend to
operate mostly in urban areas and are not subject to competition from
other modes. Overall, truck vehicle miles traveled (VMT) will increase
by 36 percent, or 60 billion miles, by 2013.\13\ Thus, more trucks will
be traveling more miles on a highway system that will see very little
capacity expansion over the next dozen years.
---------------------------------------------------------------------------
\9\American Trucking Associations, U.S. Freight Transportation
Forecast to 2013, 2001.
\10\Ibid.
\11\Federal Highway Administration, National Freight Trends/
Issues, System Flows, and Policy Implications, 2000.
\12\Based on unpublished data from ATA's Economics and Statistics
Group.
\13\American Trucking Associations, U.S. Freight Transportation
Forecast to 2013, 2001.
---------------------------------------------------------------------------
This is not a sustainable trend, and it should not be allowed to
continue. While the growth in truck demand is inevitable, limiting
highway capacity growth is not. Congress has the ability to ensure that
the growth in highway capacity matches the growth in vehicle travel.
The intermodal movement of freight can play an important role and
should be encouraged. Roadway relies heavily on the railroads for a
large portion of our long-distance movements. Last year, one-quarter of
my company's delivery miles were on a train. This saved Roadway nearly
24,000,000 gallons in fuel use. However, we believe that we have
reached the limit of our railroad utilization potential.
The ability of rail intermodal transportation to slow the growth of
truck traffic is limited by market forces beyond the control of
Congress, the States and, to some extent, the modes themselves. Today,
just 1.2 percent of freight moves in a rail intermodal shipment.\14\
Despite anticipated growth in this sector that will exceed trucking
growth, by 2014 rail intermodal shipments will capture just 1.5 percent
of the freight market, while trucking's market share, as measured by
tonnage, will expand to 69 percent.\15\
---------------------------------------------------------------------------
\14\Ibid.
\15\Based on unpublished data from ATA's Economics and Statistics
Group.
---------------------------------------------------------------------------
It is not constructive to assume that the business logistics trends
of the past half-century which have made trucks the dominant mover of
freight will somehow reverse themselves, and that our Nation's reliance
on trucks will subside. Congress should focus its attention and
resources where they are needed most and will pay the greatest
dividends for our country--on improving the efficiency of the highway
system and the productivity of the trucking industry. Although the past
two reauthorization acts developed and promoted by these Subcommittees
have been instrumental in revitalizing Federal surface transportation
policy, there is still a distance to go, with some longstanding
obstacles and some new challenges to face.
One of these challenges is basic highway infrastructure. At a time
when many stakeholders, including those appearing at this hearing, have
legitimate concerns about the future of intermodal connectivity,
alternative transportation, and transportation enhancements, there
often is a loss of focus on the original purpose of Federal involvement
in surface transportation: namely, to help the States build and
maintain a national system of highways. As the Subcommittees consider
their reauthorization proposals, it is imperative to review whether
this goal is still being met. According to the Department of
Transportation's 1999 Conditions and Performance report, even with the
high levels of funding authorized by the Transportation Equity Act for
the 21st Century (TEA-21), there is still a shortfall in Federal
funding of over $25 billion each year just to maintain current
conditions on our highways and bridges. While it is inconceivable under
current economic conditions to consider completely eliminating the
shortfall during this upcoming reauthorization cycle, serious thought
must be given to reducing the shortfall.
As America's economy becomes even more dependent on trucks, so too
will the economy be affected by the impacts of congestion on the
trucking industry's ability to meet shippers' needs. While
manufacturers and distributors demand ever more speed and reliability
from the trucking industry, our ability to meet those demands are being
challenged by growing highway congestion.
For businesses whose livelihoods depend on road transportation,
these costs are particularly heavy. No industry is as negatively
affected by congestion as trucking. It used to be possible for truckers
to schedule their deliveries through congested urban areas at off-peak
times. However, increasingly, such times do not exist. Current
congestion levels are now compelling revisions to the language of
congestion itself. It is no longer proper to discuss the ``rush hour,''
when it lasts for 3 hours, twice a day. On the Interstate System, for
example, more than half of peak-hour travel on urban Interstates occurs
under congested conditions.\16\ Under such circumstances, it is
becoming almost nonsensical to employ terms such as ``peak'' and ``non-
peak.'' In years past, it was possible to schedule deliveries outside
of the rush hour window; increasingly, that is no longer possible.
---------------------------------------------------------------------------
\16\Federal Highway Administration and Federal Transit
Administration, 1999 Status of the Nation's Highways, Bridges, and
Transit: Conditions and Performance, May 2, 2000.
---------------------------------------------------------------------------
Our highway capacity was perhaps adequate for our Nation's economic
and social functioning a generation ago, but today it is increasingly
stressed. Over the past 30 years, the nation's population has risen by
32 percent, truck registrations have risen by 45 percent, truck
vehicle-miles traveled (VMT) has risen by 145 percent, but road mileage
has only increased by 6 percent.\17\ This has led to unprecedented
levels of congestion across the country.
---------------------------------------------------------------------------
\17\Federal Highway Administration, Highway Statistics, 1999.
---------------------------------------------------------------------------
Through new innovations such as just-in-time delivery, the trucking
industry has played a vital role in improving U.S. productivity. This
would have been difficult, if not impossible, to achieve without an
efficient network of good roads that connect markets, centers of
industry, and multi-modal transportation facilities. These productivity
improvements let U.S. industry sell more goods and services at lower
prices, both at home and abroad. As a result, more people can be
employed at higher wages. Since salary increases are firmly tied to the
increase in the amount of goods and services each worker produces,
living standards are improved. In addition, these real wage increases
result in elevated tax revenues. However, if congestion cannot be
effectively managed, it will be difficult for industries to meet these
foreign and domestic challenges. The resulting productivity losses will
take a severe human toll as stiff competition from abroad wipes out
existing jobs and reduces the ability of our economy to create new jobs
for a rapidly expanding population.
The National Highway System (NHS), which carries 75 percent of the
Nation's truck traffic, is the backbone of the trucking industry. Yet
it is also critical to the efficient movement of rail, waterborne and
air freight. No matter how efficient these other modes become on an
individual basis, their speed and reliability will ultimately be
limited by the efficiency of the trucks that they rely on for part of
their intermodal movements.
Unfortunately, the performance of the NHS has deteriorated to the
point where nearly half of urban Interstate miles are congested during
peak periods. Forty percent of travel on urban NHS routes takes place
under such congested conditions that even a minor incident can cause
severe traffic flow disruptions and extensive queuing.\18\ Average
annual investment requirements just to maintain conditions on NHS
highways and bridges were $26.8 billion in 1997.\19\ The actual capital
outlay was $22.5 billion, a $4.3 billion, or 19.1 percent shortfall.
This was despite the fact that the 160,000-mile NHS carries 40 percent
of all traffic and 75 percent of truck traffic.\20\ Continued funding
shortfalls will only harm road and bridge conditions, further
exacerbating congestion levels. We urge Congress to reevaluate the
current distribution of Federal highway funds during the next
reauthorization period and consider whether a greater emphasis should
be placed on the NHS.
---------------------------------------------------------------------------
\18\Federal Highway Administration and Federal Transit
Administration, 1999 Status of the Nation's Highways, Bridges, and
Transit: Conditions and Performance, May 2, 2000.
\19\Ibid.
\20\Ibid.
---------------------------------------------------------------------------
We are also extremely concerned about the condition of the Nation's
bridges. According to a recent study by The Road Information Program
(TRIP), approximately one in four of the country's major, heavily
traveled bridges is deficient and in need of repair or replacement.\21\
However, some States have conditions that are much worse than the
national average indicates. Thirty-four percent of bridges that are 20
feet or longer in Louisiana are either structurally deficient or
functionally obsolete. Oklahoma has the highest percentage of deficient
bridges in the country. Approximately one-third of the State's bridges
20 feet or longer are in need of immediate repair or replacement
because of deterioration or because they no longer meet current design
standards. However, the worst news is reserved for Oregon, where more
than 350 bridges will have to be replaced in the near future and
several major truck routes, including sections of the State's
Interstate Highway System, have been load-posted. Additional Federal
funds must be dedicated to the Bridge Program to prevent this type of
situation from permeating throughout the country.
---------------------------------------------------------------------------
\21\``Showing Their Age: The Nation's Bridges at 40.'' The Road
Information Program, May 2002.
---------------------------------------------------------------------------
Perhaps nowhere are the effects of many years of neglect and under-
funding of the NHS more pronounced than with the situation facing NHS
intermodal connectors. In its report to Congress,\22\ the U.S.
Department of Transportation found that connectors to ports were found
to have twice the percentage of mileage with pavement deficiencies when
compared to non-Interstate NHS routes. Furthermore, DOT found
significant physical and geometric deficiencies that made it difficult
for trucks to move safely and efficiently between the NHS and
intermodal terminals. DOT identified 616 intermodal freight terminals
in the United States. This includes 253 truck-and-port terminals, 203
truck-and-rail terminals, and 99 truck-and-air terminals.
---------------------------------------------------------------------------
\22\NHS Intermodal Freight Connectors, A Report to Congress;
Prepared by the U.S. Department of Transportation, July 2000.
---------------------------------------------------------------------------
It is useful to understand just how important these intermodal
intersections are to the U.S. economy. Any product that is produced in
the United States must access the global marketplace in the most cost-
efficient manner possible. The producer or manufacturer is the party
that decides how to receive or ship freight. They make their decisions
based on many factors, including just-in-time delivery factors,
reliability of delivery times, security, freight value-to-weight
ratios, and cost. Shippers also avail themselves of the inherent
virtues of each mode of freight carriage. The only way they can take
advantage of these efficiencies and values is if the interfacing
mechanisms that join the different freight modes is adequate for the
transfer. Many times, this is not the case.
Improving intermodal connections also benefits communities,
surrounding ports, railheads, and other Intermodal transfer facilities.
In many situations, improving connectors will separate commercial
vehicles from surface traffic that passes through congested
neighborhoods. Often, these neighborhoods are clean-air non-attainment
areas, and improved intermodal connectors would likely produce more
efficient trucking operations, which will in turn result in fewer
emissions.
ATA encourages Congress to set aside funding for improvement of
intermodal connectors and to make innovative financing options more
available for addressing connector deficiencies. This should include
lowering the threshold for TIFIA funding eligibility. We further urge
Congress to make changes to the State and metropolitan planning
processes to ensure that projects which benefit freight on a regional
and national scale receive greater consideration. Project selection
should be determined by the U.S. DOT in cooperation with the freight
community, State DOTs and other stakeholders.
It is important to keep in mind, however, that as critical as
improving intermodal connections is, if the overall highway system is
allowed to deteriorate, investing in connectors will be for nought. The
2,000 miles of connector roads will only be as efficient as the 160,000
miles of NHS highways that bind intermodal terminals and other points
of loading and offloading together.
Congress should also consider more creative ways of financing
highway improvements and adding highway capacity. New innovative
techniques would allow States to leverage existing funds. In addition,
we support the spending down of the current cash balance in the Highway
Trust Fund (HTF) to fiscally responsible levels; crediting the Highway
Account with gasohol tax revenues that currently go into the General
Fund; ending the gasohol subsidy or crediting the HTF from the General
Fund for the cost of the subsidy; crediting interest on HTF balances;
and eliminating fuel tax evasion.
Some have suggested that fuel taxes should be increased to pay for
growing demand. For nearly 50 years, the trucking industry has
supported the concept of a user-supported system. However, the
relationship between those who provide financial support for the system
and those who determine how the money is spent must be a two-way
street. Over our objections, Congress has continuously expanded highway
program eligibility to include projects that provide few or no benefits
to highway users (e.g. bicycle paths, light rail). Therefore, we cannot
and will not invest additional moneys in a highway program whose value
to our industry is slowly diminishing. Furthermore, any discussion
about trucks paying additional fees to meet their full cost
responsibility must be preceded by an acknowledgment that our industry
has been prohibited by the Federal Government from operating our
safest, most pavement-friendly vehicles, and that such prohibition is
an obstacle to the industry's ability to meet our full cost
responsibility.
ATA applauds the efforts of Senators Ernest Hollings and John
McCain to eliminate the TEA 21 toll pilot program. ATA is opposed to
any attempts to toll existing non-toll highways. However, we would not
oppose toll financing that delivered an economic benefit to the
trucking industry and did not restrict our use of existing roads. For
example, we believe that Congress should consider supporting the
construction of truck-only highways. While we will evaluate each
project on its merit, any congressional proposal should include all of
the following constraints:
The project should add capacity;
Use of the lanes should be voluntary;
If the highway is tolled, trucks should receive a rebate
on Federal and State fuel taxes paid for using the facility;
The facility should allow for the use of more productive
trucks; and
The facility should have a safe design.
improving freight productivity
An effective approach to saving lives, relieving congestion and
improving air quality is to reduce the number of trucks on American
roads. Given a fixed amount of freight for America's trucks to move,
the only way to reduce the number of trucks is to improve the
productivity of the trucks themselves, and of their drivers. This is
analogous to carpooling--it increases capacity without increasing the
road lane-miles. To improve truck productivity, Federal size and weight
regulations must be reformed.
Federal law currently limits States' ability to control size and
weight on their own highways. The limits imposed are lower than those
mandated by other nations' governments, including our northern and
southern neighbors, who are major trade partners and business
competitors. This creates an economic disadvantage for American
businesses and it causes additional costs and administrative problems
when it comes to moving international freight, including intermodal
containers.
There has been no legislative relief to these laws in 20 years,
despite considerable improvements in truck safety and better driver
training. Decades of experience and volumes of research indicate that
more productive vehicles can be safely operated without a detrimental
effect on safety or the condition of highways and bridges.\23\
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\23\See for example Transportation Research Board, Truck Weight
Limits--Issues and Options, 1990, and New Trucks for Greater
Productivity and Less Road Wear, 1990.
---------------------------------------------------------------------------
At the request of Congress, the Transportation Research Board (TRB)
recently issued a new report on the impacts of Federal truck size and
weight regulations.\24\ Among the report's conclusions was that the
largely static and inflexible system of Federal regulation that
currently exists``. . . discourages private-and public-sector
innovation aimed at improving highway efficiency and reducing the costs
of truck traffic . . . ,'' including costs related to accidents
involving trucks.\25\
---------------------------------------------------------------------------
\24\Transportation Research Board Special Report 267, Regulation
of Weights, Lengths and Widths of Commercial Vehicles, 2002.
\25\Ibid., p. 5-1.
---------------------------------------------------------------------------
In a nutshell, the TRB report concludes that States should be given
greater authority, with strong Federal oversight, to make decisions
with regard to the size and weight limits of trucks on highways under
their jurisdiction. This reflects ATA's own policy. TRB further
recommends that Federal regulatory oversight of weight limits should
not be extended to the NHS, as H.R. 3132, the Safe Highways and
Infrastructure Preservation Act (SHIPA) seeks to do.\26\
---------------------------------------------------------------------------
\26\Ibid., p. 5-16.
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There is no doubt that continuing or further restricting current
Federal size and weight limits will cost lives. While it would not make
sense from a safety or economic standpoint to allow larger or heavier
trucks to operate on every highway or in every State, Congress cannot
continue to ignore the growing body of evidence that supports the fact
that opportunities to prevent accidents through size and weight reform
are available. Those States that identify these opportunities should be
allowed to take advantage of them.
Allowing the expanded operation of more productive trucks would
have two safety benefits. First, carriers would need fewer trucks to
haul a given amount of freight, reducing accident exposure. Second,
studies have consistently found that certain trucks with greater
carrying capacity have a much better safety record than trucks that are
in common use today. A study sponsored by the Federal Highway
Administration found that the accident rate for longer combination
vehicles (LCVs) is half that of other trucks.\27\
---------------------------------------------------------------------------
\27\Scientex. Accident Rates For Longer Combination Vehicles,
1996.
---------------------------------------------------------------------------
A recent Canadian study found that LCVs have an accident rate that
is five times lower than the rate for tractor-semitrailers.\28\ This
study also found that during the 10-year period after LCVs were
authorized to operate on a large scale in Alberta Province, the number
of registered trucks dropped by 19 percent, even though the economy
grew and non-truck vehicle registrations grew by 23 percent. The report
concluded that increased truck productivity due to expanded LCV use was
the most likely reason for this reduction in truck registrations.
---------------------------------------------------------------------------
\28\Woodrooffe and Assoc. Longer Combination Vehicle Safety
Performance in Alberta 1995 to 1998, March 2001.
---------------------------------------------------------------------------
In Nevada last year, just .02 percent of vehicles involved in an
accident were triples.\29\ Of the more than 36,000 accidents in
Montana, including 1,326 accidents involving trucks, just one accident
involved a triple. The year before, there were two triples accidents in
Montana, in 1999 there was one, and in 1998 there were none.\30\ In
Colorado, of the 4,226 accidents involving trucks in 2000, just nine
involved triples; none of the triples accidents involved a
fatality.\31\
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\29\Nevada Department of Transportation.
\30\Montana Department of Transportation.
\31\Colorado State Patrol.
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This data reflects Roadway Corporation's experience with triple-
trailer trucks. Since 1990, Roadway triples have been involved in
exactly one fatal accident. That is one fatal accident in over 155
million miles of travel. Last year, there were just five accidents
involving Roadway triples, one accident every 2.5 million miles. By
comparison, on average, all vehicles nationwide are involved in an
accident every 430,000 miles.\32\ Triples are by far the safest trucks
in our fleet and among the safest vehicles on the highway.
---------------------------------------------------------------------------
\32\``Traffic Safety Facts 2000,'' National Highway Traffic Safety
Administration.
---------------------------------------------------------------------------
Furthermore, Congress and the States can avoid large investments in
pavement maintenance and rehabilitation, as well as capacity expansion,
by allowing States to make common-sense changes to their size and
weight regulations. Gross weight can increase exponentially and not
cause additional pavement damage so long as axle-weight is controlled.
This is why, for example, a turnpike double that weighs 126,000 pounds
causes half the damage of an 80,000 pound tractor-semitrailer on a ton-
mile basis. In addition, if trucks are able to ship the same amount of
freight in fewer trucks, the need for capacity expansion could be
avoided, fuel use and emissions could be lowered, and costs to American
manufacturers and consumers could come down.
The Federal restrictions on States that limit their ability to
determine what types of trucks are allowed to operate on State-owned--
and controlled highways have no basis in science or logic and can no
longer be justified. Our opponents on this issue continually attempt to
represent the industry's ultimate goal as unfettered access to the
highway system by more productive trucks. Such a position would be
completely illogical, and it thoroughly misrepresents the industry's
position. It would be foolish for the trucking industry to disregard
the infrastructure and safety impacts of putting trucks on highways
that they were not meant to handle or in traffic conditions that are
unsuitable. Ultimately, the trucking industry itself would pay the
price in terms of higher user fees, weight-posted bridges, higher
insurance premiums and tighter government regulation. We are not asking
Congress to increase truck sizes and weights. We are simply asking
Congress to give States the ability to determine the safest and most
cost-effective regulatory regime for their own highway systems.
improving the freight planning process
ATA believes that the current planning process does not effectively
address the movement of freight. The Federal Government has effectively
devolved its responsibility for ensuring a safe and efficient highway
system to State and local governments. While this has allowed planning
agencies to address the unique demands of local transportation needs,
and to respond more effectively to citizens' concerns, it has also
resulted in a parochial system of transportation planning and
programming that essentially ignores freight needs. MPOs, for example,
may ignore a deficient connector road that links a seaport or rail-head
to the Interstate Highway System because the project's benefits are not
believed to be as beneficial as other local projects. However, most of
the benefits of the project may accrue beyond the geographic scope of
the State or local planning agencies' analyses.
We do not blame these agencies for failing to include these far-
reaching benefits in their analyses; they simply do not have the
resources or expertise necessary to do so. The Federal Government is
the only governmental entity with the expertise, resources and standing
to identify freight projects of national significance. We urge Congress
to give FHWA the necessary tools and direction that allow the agency to
ensure that crucial freight bottlenecks are dealt with quickly and
effectively.
freight stakeholders: working together to ensure future economic
competitiveness
ATA has joined with representatives of our modal freight partners
and our customers in promoting a joint agenda designed to facilitate
the efficient movement of freight. A joint statement is attached at
Appendix B. The joint statement may be the most extensive united effort
by the freight transportation community ever at the Federal level, and
this points to both the growing interdependence of freight modes and
the seriousness with which we regard Congress' decisions in the next
reauthorization bill. In brief, the freight community is requesting
additional investment in freight projects, including intermodal
connectors, and in border crossings and corridors with significant
freight traffic; the creation of a national freight industry advisory
group to assist in the freight planning process; additional money for
freight research and professional development; creation of new or
expanded innovative financing options for funding freight projects; and
more emphasis on funding freight projects that reduce congestion and
improve air quality under the Congestion Mitigation and Air Quality
Improvement (CMAQ) program.
We have also joined with our freight partners to secure additional
funding for the Borders and Corridors programs that were created in TEA
21. The Coalition for America's Gateways and Trade Corridors, of which
ATA is a founding member, is calling for a significant increase in
funding for these crucial programs. We are concerned about the
significant earmarking that has undermined the effectiveness of these
programs. However, we believe that the original intent of the
programs--to ensure that the infrastructure necessary to accommodate
current and future freight needs, due in part to massive trade
expansion--is still valid. We strongly urge Congress to extend the
Borders and Corridors programs during TEA-21 reauthorization, and to
make the programmatic and financial changes that are necessary to
ensure the future mobility of America's freight transportation system.
In addition, we urge Congress to refrain from expanding the eligibility
of the program beyond its current parameters.
improving the efficiency of nafta-related freight
Trade volumes between the United States and its two North American
Free Trade Agreement (NAFTA) partners have reached record levels: For
2000, U.S.-Mexico trade reached $248 billion, while U.S-Canada trade
amounted to $408 billion. The growth in NAFTA trade is especially
impressive if one considers that in 1993, the year before NAFTA was
implemented, U.S.-Mexico trade stood at just $81 billion, while trade
with Canada was valued at $211 billion. The movement of imports and
exports across our international land borders depends on an efficient
and effective transportation system.
Unfortunately, the development of physical and human resources at
U.S. international land borders has not kept pace with the growth in
NAFTA trade. Congestion at U.S. ports of entry is the norm, and
considering the heightened security that will continue into the
foreseeable future due to the September 11 attacks, these problems have
been compounded. This creates inefficiencies in the movement of cargo
among the North American trading partners, straining the present-day
capacity of human resources and facilities at U.S. land borders.
Because trucks haul more than 80 percent of the U.S.-Mexico freight
bill and more than 70 percent of the U.S.-Canada freight bill, they are
critical to the success of NAFTA and its attendant economic benefits.
Delays result in additional freight transportation costs, and threaten
to diminish NAFTA's promise.
Data from a Federal Highway Administration (FHWA) analysis of the
seven busiest border crossings (which account for 60 percent of truck
crossings) reveal that congestion at these ports of entry cost the
industry about 2.6 million hours in delay time per year, at a financial
cost of at least $88 million.\33\ In addition, trucks waste about 2.6
million gallons of fuel annually, with a resulting environmental impact
of 23,000 tons of carbon dioxide and more than 300 tons of nitrous
oxides. Congress should ensure that adequate resources are dedicated to
the development of infrastructure and human resources along the U.S.
borders with Canada and Mexico in order to meet the challenges
associated with rapidly increasing trade growth among the three
countries.
---------------------------------------------------------------------------
\33\``Commercial Vehicle Travel Time and Delay at U.S. Border
Crossings,'' Federal Highway Administration, Office of Freight
Management and Operations, June 2002.
---------------------------------------------------------------------------
Some examples of where Federal resources could be applied include:
Funding for the construction of truck inspection
facilities, and for hiring truck inspectors, both at the Federal and
State level, to inspect trucks entering the United States from Mexico.
Construction of ports of entry solely for commercial
traffic on the U.S. northern and southern borders.
Planning and development of quality access roads between
ports of entry and the National Highway System.
In addition, ATA has actively supported the funding and development
of the Automated Commercial Environment (ACE) and the International
Trade Data System (ITDS) to make cross-border movements of cargo,
vehicles and drivers more efficient and secure.
We ask the Subcommittees to look at technologies under development
that can facilitate enforcement efforts while at the same time expedite
the movement of freight across our borders. One such system being
designed presently by U.S. Customs, with input from the trade
community, is the Automated Commercial Environment, or ``ACE.''
In 1993, along with legislation implementing the NAFTA, Congress
passed the Customs Modernization Act, or ``Mod Act,'' establishing a
new operating environment for U.S. Customs and the international trade
community. Concepts such as ``informed compliance,'' ``shared
responsibility,'' and ``reasonable care'' imposed greater obligations
on U.S. Customs to provide improved information concerning the
responsibilities and rights of the trade community. At the same time,
the legislation mandated U.S. Customs to develop a new automated
customs processing system to replace the antiquated and overburdened
Automated Customs System (ACS). Nearly 10 years after the passage of
the Mod Act, ACE is still in its nascent stage, but it is finally under
significant development, and its full deployment is expected within the
next three to 4 years. The present head of U.S. Customs, Commissioner
Robert Bonner, has recognized the importance of developing such a
system to give Customs greater tools to improve its information
collection and improve the efficiency with which it processes millions
of transactions every year.
Mr. Chairman, it is important that Congress continue to provide
adequate funding for the full development and implementation of the ACE
system. In order to defend our Nation from potential future terrorist
attacks, and at the same time process the legitimate commercial goods
so important to our Nation's economy, we must provide our border
enforcement agencies the necessary tools and resources to fulfill their
duties and responsibilities. It is also critical that no new user fees
be imposed for the future development of ACE, especially if the current
Merchandise Processing Fee (MPF), which raises about $900 million each
year and is slated to end in 2003, is earmarked for some other
budgetary purpose. If the MPF is supposed to be for Customs commercial
processing, then this fee should be used for nothing but for improving
Customs commercial operations.
Mr. Chairman, ATA supports the implementation of NAFTA's trucking
provisions in order to improve the efficiency with which cross-border
operations take place between the U.S. and Mexico. ATA is also a strong
advocate for ensuring that all carriers operating in the U.S.--
Canadian, Mexican or U.S. carriers--meet all U.S. safety and
environmental standards, as well as all financial operational
responsibilities.
Furthermore, implementing NAFTA's trucking provisions would enhance
the security of cross-border trucking operations by simplifying the
movement of trailers across our common borders. In a report to Congress
issued in 1997 by the White House on U.S.-Mexico anti-drug cooperation,
the U.S. Customs Service wrote:
The high congestion of truck traffic entering the United States is,
in part, a result of restrictions imposed by both the United States and
Mexico on crossborder motor carrier operation . . . over 50 percent of
commercial trucks enter the United States empty, contributing to border
congestion and increasing the inspection burden for border agencies.
NAFTA's trucking provisions allow for carriers throughout North
America to improve their ability to make cross-border trucking more
efficient, effective, safer, and more secure.
It is also important that we work with our counterparts in Canada
and Mexico to improve harmonization of border operations and
infrastructure development to establish technology and mechanisms to
facilitate and expedite the gathering, sharing, and exchange of
information and data to clear cargo and people crossing our land
borders efficiently and securely. We must continue to find solutions
that improve the processing of the legitimate flows of people and
cargo, while simultaneously improving our security through stronger
relationships between the trade community and law enforcement agencies
at our borders.
ensuring the secure and efficient movement of freight
In our efforts to protect the country from the terrorist threat,
strategic planning for this new type of war must take into account
three critical principles with respect to the trucking industry.
First, the timely communication of threat related information is
the single most important short-term objective that must be met. In
order for trucking companies to properly deploy our security resources
and instruct our drivers on the proper steps needed to protect
themselves, the public and our customers' goods, we need detailed
communications so that we can understand and appreciate the threat,
evaluate our company's exposure and act in time to avoid becoming
victims of terrorism.
Second, our professional drivers, dispatchers, managers and
supervisors are the most critical elements in protecting trucks from
becoming the objects of, or the mechanism for, terrorist attacks.
Drivers have control of our equipment 90 percent of the time, and
therefore they are the most vulnerable to terrorism. We have an
obligation to train our 3.2 million professional drivers to recognize
terrorist operational acts, report these acts to the proper
authorities, and react appropriately. The trucking industry needs
Federal help to complete this effort in no more than 3 years.
Third, productivity is the lynchpin of America's global economic
competitiveness. In our efforts to conduct our war on terrorism, we
must give equal attention to the preservation of our abilities as
transportation enterprises to creatively and efficiently move the goods
and instruments of commerce where needed, when needed. Any new
regulatory framework must adhere to the core principal of ``the green
light is on'' for trucks unless there is a substantial, direct and
immediate threat that would justify slowing or restricting commercial
flows.
Thank you for the opportunity to offer our thoughts regarding the
upcoming reauthorization of the Federal surface transportation
legislation. We look forward to working with the Subcommittees to
improve the safety and mobility of our Nation's freight transportation
system.
______
APPENDIX B
Freight Stakeholders Tea-21 Reauthorization Agenda
1. Protect the integrity of the Highway Trust Fund. Reauthorize the
firewalls provided for in TEA-21 to ensure that the funds collected are
used for their dedicated purpose and not for deficit reduction.
2. Dedicate funds for NHS highway connectors to intermodal freight
facilities. The NHS Intermodal Freight Connectors report that was sent
to Congress documents the fact that these road segments are in worse
condition and receive less funding than other NHS routes. Targeted
investment in these ``last mile'' segments would reap significant
economic benefits compared to the associated costs.
3. Form a national freight industry advisory group pursuant to the
Federal Advisory Committee Act to provide industry input to USDOT. The
advisory group should be funded and staffed, and it should consist of
freight transportation providers from all modes as well as shippers and
State and local planning organizations. Despite the best efforts of the
agency to function as ``One DOT,'' there is still not enough of a
focused voice for freight. An Advisory Group would meet the need for
regular and professional interaction between USDOT and the diverse
freight industry, and could help identify critical freight bottlenecks
in the national freight transportation system.
4. Create a Freight Cooperative Research Program. Increasingly,
industry issues are public issues that would benefit from a dedicated,
funded research effort led by an industry-based steering/oversight
group, such as the one described above, to ensure useful research
results to benefit the freight transportation system as a whole. One
option would be to dedicate a portion of the States SP&R dollars to
freight issues. Freight data issues would fall under this program as
well.
5. Expand freight planning expertise at the State and local levels.
Given the importance of freight mobility to the national economy,
States and MPO's should be provided additional funds for expert staff
positions dedicated to freight issues (commensurate to the volumes of
freight moving in and through their areas).
6. Develop ways to increase available funds without new user fees
and taxes by creating a toolbox of innovative financing options
specifically aimed at freight capacity improvements and enhancements.
Options could include (1) lowering of the threshold for TIFIA funding
eligibility (2) development of tax incentives, and (3) expansion of the
State infrastructure banks (SIBs).
7. Significantly increase funds for an expanded corridor/border and
gateway program. This would build on the highly popular but under-
funded ``Corridors and Borders Program'' (Sections 1118 and 1119), but
adds the important concept of gateways. The funding should be freight
specific, and there should be a qualification threshold (based on
volumes) so that dollars get directed at high volume corridors/borders/
gateways rather than wish-list projects.
8. Streamline environmental permitting for freight projects.
Multiple and often duplicative Federal laws and regulations delay
environmental review of transportation projects. Language in TEA-21
directing Federal agencies to streamline the review process for highway
projects has not been effective and other measures to simplify the
review process for all freight projects should be considered.
9. Increase funding and promote use of the Congestion Mitigation
and Air Quality Improvement Program for freight projects that reduce
congestion and improve air quality. CMAQ was designed to fund projects
that will help reduce transportation-related emissions. Although CMAQ
has supported some freight projects, it has been used primarily to
address passenger needs. CMAQ funding should be dedicated to projects
that can be shown to reduce congestion or improve air quality. Total
funding for CMAQ should be increased and the use of CMAQ funds for
freight projects should be clarified and strongly encouraged.
American Association of Port Authorities
Contact: Mary Beth Long or Jean Godwin 703-684-5700
American Trucking Associations
Contact: Darrin Roth 703-838-1900
Association of American Railroads
Contact: Jennifer Macdonald 202-639-2533
Coalition for America's Gateways and Trade Corridors
Contact: Leslie Blakey 202-828-9100
Intermodal Association of North America
Contact: Joni Casey 301-982-3400
National Association of Manufacturers
Contact: Larry Fineran 202-637-3174
National Industrial Transportation League
Contact: Kathy Luhn 703-524-5011
U.S. Chamber of Commerce
Contact: Ed Mortimer 202-463-5451
World Shipping Council
Contact: Lars Kjaer 202-589-1234
______
Responses by Michael W. Wickham to Additional Questions from Senator
Reid
Question 1. In your testimony you state that the value of the
highway program to your industry is diminishing because of ``expanded
highway program eligibility to include projects that provide few
benefits to highway users.'' I find that statement astonishing. Do you
really believe that highway programs that encourage nontraditional
solutions to traffic congestion like HOV lanes, intelligent
transportation systems, and transit are of no benefit to highway users?
Every person who commutes on transit, takes the train, or shares a ride
with a friend, means one less car clogging our roads. No one benefits
from transit use more than those of us who drive on our roads every
day. Are you saying that because States have the flexibility to spend
highway funds on non-construction programs that you do not believe the
highway program has value to your industry?
Response. ATA believes strongly in a Federal highway program that
is funded by highway users for the benefit of highway users. Highway
maintenance and capacity expansion are critical components of a highway
program that promotes a safe and efficient surface transportation
system. However, as your question suggests, we must also look beyond
these traditional methods and seek out more innovative ways of
improving the condition and performance of our highways.
You mentioned Intelligent Transportation Systems (ITS), for
example. ATA supports eligibility of ITS under the highway program. ITS
can be an effective means of communicating system problems, which
allows traffic agencies to respond more quickly and gives motorists the
information they need to avoid these problems. States, in partnership
with the trucking industry, use ITS to more effectively target their
truck inspections, improving the efficiency of responsible carriers and
enhancing highway safety. In addition, under certain circumstances, HOV
lanes can be an effective tool for relieving congestion and improving
air quality, and ATA does not oppose their eligibility under the
highway program.
However, an increasingly larger share of Federal highway revenues
is being used for projects whose effectiveness at curbing congestion
and saving lives is questionable. For example, while transit can
effectively relieve congestion in some areas, in most of the cities
where rail transit systems have recently been established, it will not
be an effective strategy for addressing the growing traffic that
plagues our urban areas. It is important to recognize that transit
demand is very concentrated. One-half of the national ridership is in
New York and Chicago and 76 percent is in seven metropolitan areas. In
urban areas, transit accounts for just 2-3 percent of all trips. Even
if transit ridership were to double in the next 10 years--an ambitious
goal since ridership actually declined over the previous decade--
because highway use would also rise, transit's share of trips would
only grow to 3-3.5 percent. Transit is largely beneficial for commutes
to and from work. However, commutes now make up less than 20 percent of
all trips, and less than one out of three trips during rush hours are
trips between home and work.
According to a study by the Texas Transportation Institute, areas
that were more active in adding roadway capacity to respond to
increased travel were able to slow the increase of regional traffic
congestion. However, not all highway projects need add more traffic
lanes or new highways to achieve substantial improvements. According to
one study, improving conditions at the 167 worst traffic bottlenecks
around the country would reduce travel times by an average of 38
minutes per day, result in 287,000 fewer accidents, including 1,150
fewer fatalities, reduce carbon monoxide emissions by 45 percent, smog-
forming emissions by 44 percent and carbon dioxide emissions by 71
percent at those sites. Unfortunately, a lack of resources, in part
because of the diversion of highway funds to non-highway projects that
are less effective, is preventing States from making these crucial
investments.
We have concerns with other eligible activities, such as those
under the CMAQ and enhancements programs. While some would argue that
these programs divert relatively few resources from the highway
program, the impact of this diversion is actually quite large. For
example, we find it difficult to understand how it is in the national
interest to invest more than twice as much Federal money on bicycle
paths than on truck safety programs.
ATA does not oppose using highway user fee revenues for
nontraditional programs. We oppose the use of this money on programs
that have been shown to be ineffective at reducing congestion and
improving highway safety. We believe that in the face of limited
resources, the Federal Government should make strategic investments
that deliver the most cost-effective results.
Question 2. In your testimony, you argue for reduced Federal
restrictions on truck size and weight. You make many safety claims that
are refuted by a recent U.S. Department of Transportation study on
truck size and weight, which estimated that multi-trailer trucks have
an 11 percent higher fatality crash rate than single trailer trucks.
While I differ with your conclusions on safety, I will not dwell on
that issue here. However, I will ask you to address the conclusion of
the Department of Transportation study that allowing bigger trucks on
our roads would result in bridge capital costs of over.$50 billion and
well over $200 billion in additional costs due to delay from bridge
construction and repairs.
Response. It should first be noted that the U.S. DOT's
Comprehensive Truck Size and Weight Study to which you refer was
roundly criticized by the academic community, State departments of
transportation, the trucking industry, and others. In fact, AASHTO
passed a resolution (attached) calling on the Department to delay
release of the report until its many deficiencies could be addressed;
unfortunately, the uncorrected report was released anyway. Therefore,
'we would caution Congress against using the Study as a basis for
making policy decisions.
Specifically, to the multi-trailer truck accident rate that
appeared in the Study. Some have used this analysis to argue that
longer combination vehicles (LCVs) are less safe than single-trailer
trucks. In fact, because about 80 percent of the vehicle miles traveled
by multi-trailer trucks are by non-LCVs, the statistic cannot be
applied to this class of vehicle. Nonetheless, we cannot allow DOT's
study to stand unchallenged. Almost all previous evaluations of the
multi-trailer trucks that make up the bulk of vehicles that comprise
DOT's research found that these vehicles were either as safe or safer
than single trailer trucks. The most comprehensive evaluation of the
safety of twin trailer trucks to date is a 1986 study by the
Transportation Research Board (TRB Special Report. 211). That study
concluded that, ``overall, twins clearly appear to be about as safe a
method of hauling freight as the tractor-semitrailers they replace.''
DOT did, in fact, contract with an independent consultant to
complete a study on the safety experience of LCVs versus other, more
common, trucks (Accident Rates for Longer Combination Vehicles. FHWA,
October 1996). This study found that LCVs, including triples and heavy
doubles, had an accident rate which was half that of the trucks they
would replace. The study also concluded that truck configuration, not
highway environment or driver factors, was the reason for this finding.
This statistic is reflected by other research. For example, Alberta
Province found that LCVs had the lowest accident rate of all vehicles
on their highways, including passenger vehicles. In fact, single-
trailer trucks had an accident rate five times higher than LCVs. States
have also found that LCVs are extremely safe. In Nevada, for example,
triples were involved in just .02 percent of all accidents in 2000;
none were fatal.
LCVs have been in operation for more than 50 years. Today, they
operate on rural roads in the west, eastern turnpikes and in large
urban areas, in nearly half the States. No State has ever rescinded
their operating authority, for the simple reason that LCVs contribute
to a much safer and a much more efficient highway system.
Regarding the bridge costs cited in the DOT study. Of all the
criticisms leveled against the study, those regarding bridge costs were
probably the most severe. DOT assumes that any bridge not rated to
carry the loads modeled by the study would automatically be replaced.
This simply does not happen in the real world. In practice, States
would choose to either replace or strengthen the affected bridges, or
to load-post them.
As part of its research, the panel that conducted the most recent
TRB truck size and weight study (TRB Special Report 267) obtained from
DOT a list of highway structures in California identified by the bridge
analysis method used in the study as requiring replacement if a
specified type of larger truck were to come into use. Four were
selected for analysis. Each of the four structures exceeds the
threshold overstress criterion applied in the DOT study under the
assumed loading by just a few percent, and therefore the DOT study
would assume that all four bridges would have to be replaced given the
heavier loads. The four structures were examined by engineers of the
State DOT, who reported to the committee that, following its normal
practices, the State would not replace, strengthen, or restrict the use
of any of the four structures if heavier tractor-semitrailers within
the range analyzed in the DOT 2000 study came into use.
This is not to say that increasing the weight of trucks will not
produce additional bridge costs, or that some interchanges may not have
to be rebuilt to accommodate longer trucks. However, these are one-time
investments whose costs pale in comparison with the tremendous savings
associated with less pavement damage, less pollution, fewer accidents
and greater economic productivity if size and weight laws were
reformed.
Question 3. You argue that allowing longer combination vehicles
will reduce the number of trucks on our roads. Isn't the real impact
likely to be a shift of freight from rails to our already overburdened
road infrastructure?
Response. While evaluations of increases in truck productivity all
predict some shift of freight from rail to truck, the magnitude of this
shift is generally considered to be very low. A 1990 TRB study (TRB
Special Report 225) found that under various scenarios where truck
productivity increased, rail diversion would range from 2.2 to 6.6
percent, and all scenarios resulted in overall truck VMT reductions.
Furthermore, it is very likely that the shift of freight from existing
trucks to other, more productive trucks, will result in a net reduction
in both the number of trucks on the road and truck miles, even when
rail diversion is factored in. For example, the previously referenced
Alberta study found that over the 11-year period following the
introduction of higher weight trucks to the province, the number of
registered trucks dropped by 19 percent, even though non-truck
registrations grew by 23 percent and the economy expanded.
The fact is that trucks and trains compete for very little
business. Even with a productivity increase that makes truck
transportation more attractive to rail shippers, the fact that freight
railroads enjoy very large profit margins on most routes means that the
railroads simply have to lower their rates slightly to keep this
business. Herein lies the real reason for rail opposition to trucking
productivity gains. This competition is a positive factor for shippers,
who will realize lower shipping costs, and consumers, who will see
lower retail prices. The most likely market for truck-rail competition
is in the rail intermodal segment. Rail carload shipments are simply
too price-sensitive for trucks to compete effectively in this market
segment. Even if trucks were somehow able to draw 100 percent of all
rail intermodal business, however, this would increase annual truck
volumes by less than one-fifth of 1 percent nationwide (Freight
Transportation Forecast . . . To 2013, DRI-WEFA, 2001).
According to the FHWA, truck volumes will nearly double by 2020 and
trucks' market share will expand from 71 percent in 1998 to 75 percent
in 2020. This growth is inevitable, but a doubling of the number of
trucks needed to accommodate this growth is not inevitable. Increasing
trucking productivity through sensible size and weight reform will slow
the growth of trucks and reduce their societal impacts.
______
Response by Michael W. Wickham to Additional Question from Senator
Jeffords
Question 1. Mr. Hamberger of the Association of American Railroads
notes that railroads are three or more times more fuel efficient as
trucks. He points out that the :EPA estimates that for every ton-mile,
a typical locomotive emits roughly three times fewer nitrogen oxides
and particulate matter than the typical truck. He also points out that
``rail competitive trucks, which are the heaviest, highest mileage
operators among all trucks, do not come close to fully paying for the
damage they cause to our highway system.''
Response. As noted above, the potential for shifting freight from
truck to rail, or vice versa, is extremely limited, and significant
growth in truck traffic is inevitable. Therefore, any comparison of
modal impacts becomes an academic exercise. Nonetheless, we are pleased
to have the opportunity to respond to Mr. Hamberger's statements.
According to new data produced under contract to the FHWA, in 2000,
trucks' ton-miles were double that of rail. Therefore, if Mr.
Hamberger's statement that trucks produce three times more emissions
per ton-mile than railroads is correct, then trucks would have to emit
six times more total NOx and PM than railroads. In fact, according to
the EPA, trucks' total emissions of NOx and PM were just 2.7 times
greater than the total emissions for rail. Therefore, on a ton-mile
basis, trucks produce only about 1.35 times as much NOx and PM as
locomotives.
However, this does not tell the whole story. When measuring
emissions on a ton-mile basis, what is left out is the fact that the
commodities hauled by trucks are comprised of a far greater proportion
of high-volume, low-weight freight than the commodities hauled by
railroads, which haul mostly low-volume, heavier freight. Therefore,
expressing trucks' volumes in terms of weight instead of area
understates the amount of freight trucks are actually carrying,
resulting in a disproportionately high amount of freight being assigned
to railroads. This produces an emissions level which favors railroads.
Furthermore, rail moves are almost always more circuitous than
truck moves. Therefore, if one considers the environmental impact of
shifting freight from truck to rail, the impact of this longer route
must be considered. If there is an increase in distance of greater than
35 percent, then the environmental benefits of shifting the freight to
rail are wiped out by this factor alone.
Also to be considered is the fact that if there is to be a truck to
rail shift, this will likely occur as an intermodal movement.
Therefore, the environmental impacts of the truck deliveries on both
ends of the rail movement must be considered. These are not
inconsequential impacts. The average truck drayage move is roughly 90
to 120 miles long, typically with a significant urban component. The
trucks involved are generally older--and therefore more polluting--than
the typical trucks involved in long-distance movements.
The issue of whether railroads pollute less than trucks is not that
simple, and it should not be automatically assumed that a rail move
produces less pollution than a truck move. In fact, FHWA has rejected
States' requests for using CMAQ money on freight rail projects because
they found that shifting freight from truck to rail would actually have
a negative environmental impact.
One other point should be made. Trucks contribute approximately $35
billion in Federal and State highway user fees each year, which are
used, in part, to offset the societal costs of the pollution that they
produce. The railroads, on the other hand, pay just $170 million in
user fees, and these revenues are not tied to societal costs produced
by the railroad industry. There is little doubt that these revenues do
not approach the health costs associated with pollution emitted by
locomotives.
This brings us to the second part of the question, which refers to
trucking industry cost allocation. It is interesting that Mr. Hamberger
attacks trucks for paying too little for their infrastructure and
societal costs when his own industry fails to pay a single penny to
compensate for the safety, environmental and congestion societal
impacts of rail operations. (NOTE: While the question refers only to
infrastructure costs, other societal impacts are now included in cost
allocation studies. In addition, while the railroads do pay a tax on
diesel, unlike highway user fees, there is no tie between these fees
and the costs imposed by the railroads which are borne by the public.)
While the FHWA Cost Allocation Study found that certain trucks do
not pay their cost equity, there are several factors that contributed
to this conclusion and that must be examined. First, there were several
problems with the study which produced erroneous results. This is not
to deny that there are trucks in operation which do not pay their fair
share. However, it should also be noted that the study found that
certain classes of trucks paid more than their fair share. It would be
virtually impossible to achieve a perfect balance. While such an effort
should be made, it must be recognized that results will always change
depending on the assumptions and data used, which are constantly
evolving. Therefore, there will always be some vehicles that will be
found to not pay their allocated share of the costs.
Mr. Hamberger complains that ``rail competitive trucks'' do not pay
for the damage they do to highways without defining what a rail
competitive truck is. Since the railroads and the ``safety groups''
they associate themselves with regularly criticize triple-trailer
trucks, we assume that these are among the class to which Mr. Hamberger
refers. However, it is widely recognized that the markets served by
triples are generally not rail-competitive.
When looking at the factors which result in a determination that a
truck is not paying its cost equity, an objective analysis must lead
one to the conclusion that this finding was made because of Federal
restrictions on truck size and weight, not despite the restrictions. As
the recent TRB study (TRB 267) found,. significant opportunities exist
for States to reduce their infrastructure and societal costs if they
are given flexibility to reform their size and weight limits. It is the
Federal regulatory system that prevents carriers from putting trucks on
the road that are more infrastructure-friendly and safer. For example,
many States allow the operation of heavier trucks on non-Interstate
highways, but are prevented from granting these trucks access to the
Interstates by Federal law. If they were to use the Interstates rather
than lower-order roads, the infrastructure, safety, congestion and
environmental costs resulting from these trucks' operation would be
lower, and thus the trucks would come closer to achieving cost equity.
There are two ways to address the cost inequities of certain
trucks. Congress and/or the States can increase the taxes imposed on
these trucks, thus lowering the competitiveness of critical U.S.
industries and increasing consumer prices. Alternatively, Congress can
give the States the opportunity to improve their size and weight
regulations, thus potentially changing the current vehicle fleet to one
that is safer, less polluting, more productive and that produces lower
infrastructure costs. The former choice benefits the railroads at the
expense of the rest of the Nation. The latter would result in slightly
lower railroad profitability, but the overall benefits to the Nation
could be very significant.
__________
Statement of Edward R. Hamberger, President and Chief Executive
Officer, Association of American Railroads
On behalf of the members of the Association of American Railroads
(AAR), thank you for this opportunity to discuss key issues relating to
our nation's freight transportation capabilities as a result of the
remarkable growth of international trade.
Since Colonial times, the growth and vitality of our economy has
been closely tied to the development of trade. The railroads' role in
the settlement and development of the United States is well known, and
yet the efficiency of our ports, international border crossings, and
inland transportation systems is just as critical today. We must take
steps to insure that our freight transportation system will be able to
handle what is certain to be a huge increase in international trade
volume in the years ahead. Today, I will focus on ways that our nation
can combine the advantages of various transportation modes to reduce
costs, save energy, better protect the environment, and increase
transportation efficiency--thereby enhancing our productivity and
international competitiveness.
international trade
International trade is becoming the lifeblood of both the world and
U.S. economy, and has been a major driving force behind world economic
growth over the past decade. From 1990 to 2000, global GDP increased at
an average annual rate of 2.0 percent, but the volume of world
merchandise trade increased during the same period at an average annual
rate of 7 percent--more than three times as much. In the case of the
United States, which is the world's single largest exporting and
importing nation by a significant margin, GDP over the same period
increased at an annual average rate of 3.2 percent, while the volume of
merchandise exports increased at an average annual rate of 6.5 percent
and imports increased at an annual rate of 8.5 percent.\1\
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\1\ World Trade Organization, International Trade Statistics 2001,
Table I.1, p. 19, available at www.wto.org/english/res--e/statis--e/
its2001--e/its01--toc--e.htm).
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The importance of international trade relative to U.S. economic
output has also risen dramatically. In 1975, U.S. exports plus imports
was equal to less than 16 percent of GDP, but by 2000 that figure had
risen to more than 26 percent.\2\ Manufacturers and agricultural
producers in the United States depend upon foreign trade to reach
markets for their products, and consumers have enjoyed both a richer
variety of products and lower prices as a result of trade
opportunities. According to the Office of the U.S. Trade
Representative, U.S. exports alone support more than 12 million
American jobs, including one in five jobs in the manufacturing
sector.\3\
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\2\Economic Report of the President, February 2002, p. 253.
\3\Office of U.S. Trade Representative, Benefits of Trade:
Information on the Globalization Debate, September 19, 2001 available
at www.ustr.gov/new/benefits.html.
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In 2001, the value of U.S. international merchandise trade was $1.9
trillion. According to figures from the Maritime Administration, United
States ports handled over 1.1 billion tons of foreign trade in 2001.
The liner sector, consisting mostly of containerized shipments,
accounted for 68 percent of the value of this trade.\4\ More than 20
million loaded containers were imported or exported through our
nation's ports in 2001, with the ports of Los Angeles and Long Beach
ranked number 1 and 2, respectively--each handling over 3.3 million
loaded containers. Additional intermodal traffic flows across our
borders with Canada and Mexico. Our ports and border crossings also
handle significant volumes of bulk commodities, including grain, coal,
non-metallic minerals, forest products, and petroleum products.
Railroads serve U.S. ports on the Atlantic, Pacific, and Gulf coasts
and the Great Lakes, and provide through service to and from Canada and
Mexico at more than 30 border crossings. Railroads handled
approximately 5.2 million international containers in 2000, which
represented about one-half of their total intermodal traffic.\5\
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\4\ See ``U.S. Foreign Waterborne Transportation Statistics,''
U.S. Maritime Administration press release, March 28, 2002, available
at www.marad.dot.gov/statistics/usfwts/PR2001/PRDEC2001.htm.
\5\Intermodal Association of North America, Year 2002 Industry
Statistics--Overview; American Association of Port Authorities; and
Association of American Railroads data and analysis.
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U.S. trade with Canada (long our largest trading partner) and
Mexico (now our No. 2 trade partner) has grown rapidly following the
lowering of trade barriers under the North American Free Trade
Agreement of 1993. Together, Canada and Mexico account for
approximately one-third of U.S. foreign merchandise trade.\6\ The value
of this North American trade had increased by 85 percent from 1994 to
2000, before declining slightly in 2001 largely following the September
11 terrorist attack. The freight railroads of Canada, Mexico, and the
United States, which form a seamless, integrated network that provides
the world's most efficient, lowest-cost rail service, have achieved
major increases in their trans-border traffic--up 22 percent by value
between Canada and the United States and up 72 percent between Mexico
and the United States just from 1997 to 2000.\7\
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\6\U.S. Department of Transportation, Bureau of Transportation
Statistics, Transportation Statistics Annual Report 2000, BTS01-02,
Washington, DC. 2001, p. 161.
\7\AAR analysis of U.S. Bureau of Transportation Statistics
transborder trade data.
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Our seaports, airports, and land border crossings--the gateways
that connect us to the rest of the world through commerce--are clearly
critical to the economic well being of our Nation. Moreover, more
efficient modern container ships carrying 6,000 or more TEUs\8\ are
increasingly being used, up from the 4,500-TEU standard that has been
dominant up to now. These larger ships will place increasing demands on
port and landside facilities.
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\8\Twenty-foot equivalent units.
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Existing congestion at these facilities must not be permitted to
worsen. Moreover, as the Federal Highway Administration documented in a
recent study,\9\ funding for intermodal connectors--public roads
averaging less than two miles in length that lead to/from major
intermodal terminals--has not been adequate under the Transportation
Equity Act for the 21st Century (TEA-21) and these critical components
of the freight transportation system suffer many deficiencies.
According to the FHWA, ``States and MPOs often see freight as a low
priority when compared with the pressing needs of passenger travel. NHS
connectors are ``orphans'' in the traditional State and MPO planning
processes.'' We must make the investments needed to improve our ability
to handle international traffic efficiently, while limiting impacts on
surrounding communities in terms of congestion, noise, and air
pollution.
---------------------------------------------------------------------------
\9\U.S. Federal Highway Administration, NHS Intermodal Freight
Connectors, July 2000, p. 4.
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growing importance of rail intermodal service
U.S. freight railroads move just about everything--from lumber to
vegetables, from coal to orange juice, from grain to automobiles, from
chemicals to scrap iron--and connect businesses with each other across
the country and with markets overseas. America's freight railroads
carry more than 40 percent of the nation's intercity freight (measured
in ton-miles); about 70 percent of vehicles from domestic
manufacturers; 67 percent of the nation's coal to coal-fired power
plants (coal generates more than half the nation's electricity); and
massive amounts of grain, chemicals, forest products, ores, and other
commodities. They also contribute billions of dollars to the economy
through wages, purchases, and taxes.
Intermodal rail freight transport--the movement of cargo in
trailers or containers by rail in combination with at least one other
mode of transportation--has been the fastest growing major segment of
traffic for the U.S. freight railroad industry over the past decade.
Indeed, while volumes of non-intermodal rail traffic for 2002 to date
are below those of last year for the same period as a result of the
weak economy, U.S. rail intermodal traffic through August 2002 is 5.1
percent above the 2001 level, including increases of between 7.4
percent and 9.4 percent each month from April through August. U.S.
intermodal traffic has grown from 3.1 million trailers and containers
in 1980 to nearly 9.0 million in 2001. It now accounts for
approximately 20 percent of revenue for Class I carriers and is vying
for the No. 1 ranking among all rail commodities. Approximately half of
U.S. intermodal traffic is either U.S. exports and imports, and
intermodal traffic moves throughout the North American rail network.
There are several reasons why intermodal transport has become such
a vital part of the U.S. freight transportation mix:
1. Convenience and lower cost
Intermodal combines the door-to-door convenience of trucks with the
long-haul efficiency and cost-effectiveness of rail. As a result,
railroads, trucking companies, international steamship lines,
intermodal marketing companies, and others engage in productive
partnerships to combine the best characteristics of all modes.
2. Fuel efficiency
Railroads are the mode of choice in terms of fuel efficiency.
According to studies sponsored by the U.S. Department of Transportation
(U.S. DOT) and others, railroads are three or more times as fuel
efficient as trucks. Fuel efficiency means reduced emissions and
reduced dependence on foreign oil.
3. Improved air quality
The Environmental Protection Agency estimates that for every ton-
mile, a typical locomotive emits roughly three times fewer nitrogen
oxides and particulates than a typical truck. Other studies suggest
that locomotives have a much greater environmental advantage relative
to trucks, depending upon the pollutant measured.
4. Reduced traffic congestion
An intermodal train can take approximately 280 trucks from the
highways. Since a single combination truck requires the same highway
capacity as approximately four automobiles, a single intermodal train
can mean the equivalent of more than 1,100 fewer cars on the highway.
According to the Texas Transportation Institute's (TTI) 2002 Urban
Mobility Study, the aggregate cost of highway traffic congestion in
just the 75 urban areas the institute studied is $67.4 billion,
representing the cost of 3.6 billion hours of extra travel time and 5.7
billion gallons of fuel wasted while sitting in traffic. Since 1982,
according to TTI, the cost of congestion has risen by approximately 400
percent in inflation-adjusted terms. Rail intermodal service is a
highly effective way to reduce the staggering costs of highway
congestion and the associated pressure to build costly new highways.
5. Innovative technology, specialized equipment, and tailored services
Doublestack trains--with specialized rail cars that can accommodate
one container atop another--are now in widespread use. RoadRailers look
like conventional trailers, but come equipped with both rubber tires
and detachable steel wheels so they can ride directly on the rails or
on a highway. By using specialized equipment, railroads are targeting
midand short-distance hauls, in addition to traditional long-haul
markets. Rail service offerings include the use of flat cars in
dedicated trains operating on a fixed schedule that are specially
designed to quickly load, unload and carry standard, non-reinforced
highway trailers without damage to the goods or the trailers
themselves.
The market for intermodal freight is extremely competitive, and
U.S. freight railroads must continue to make major investments so that
they can further enhance their cost efficiency and meet customer
service requirements that are continually becoming more stringent.
Railroads are incredibly capital intensive, and each year freight
railroads must invest heavily to maintain and improve their
infrastructure and equipment, that, together, comprise a national
system that is the envy of the world. In 2000, Class I railroads
directed 17.8 percent of their revenue to capital expenditures; the
comparable figure for the U.S. manufacturing sector as a whole was just
3.7 percent. Indeed, since 1980 when the Staggers Rail Act partially
deregulated the rail industry, major U.S. railroads have spent more
than $290 billion for this purpose--an average of more than $13 billion
per year over this extended period. Much of this spending is either
directly attributable to intermodal service (e.g., the construction or
expansion of intermodal hubs, raising underpass clearances to allow for
doublestack trains) or indirectly related to intermodal traffic (e.g.,
capacity expansion and enhanced signaling systems to allow faster, more
frequent trains of all types throughout the rail network).
In addition to making necessary infrastructure improvements,
railroads have responded to customer needs by instituting a series of
operational improvements and service initiatives. Some of these
initiatives involve the improved use of information technology. For
example, most major railroads now offer comprehensive Internet-based
car ordering, car tracing, pricing, and billing capabilities. Railroads
have also increasingly entered into productive partnerships with other
carriers. These alliances expand the focus for a particular railroad
beyond the interchange point, encompassing the total movement and
providing customers with seamless service--giving rail customers more
value for their transportation dollar.
Since the Staggers Act, freight railroads have improved earnings,
but as a group they still do not come close to earning their cost of
capital. In 2001, the rail industry's cost of capital (as determined by
the Surface Transportation Board (STB), an independent regulatory
agency within the U.S. DOT) was 10.2 percent, compared with a return on
investment (ROI) of 6.9 percent, as determined by the STB. Rail
profitability is consistently in the bottom quartile of all industries.
This cannot continue forever, and this fact explains why--
notwithstanding the tremendous gains railroads have made in intermodal
and other service offerings in recent years, and the massive
investments they have made--the future strength and vitality of our
nation's rail system requires that earnings be aligned with investment
needs.
Especially over the past couple of years, freight railroads have
become increasingly constrained in how much capital they can devote to
infrastructure. Rail stockholders and outside capital providers are
becoming ever more focused on the railroad financial performance, and
now increasingly insist that railroads demonstrate a compelling case
for further investments. This financial discipline is necessary and
appropriate in a market economy, but it discourages railroad
investments that would yield significant public benefits (e.g.,
congestion mitigation, emissions relief, enhanced mobility, enhanced
safety, economic efficiency), but only limited direct railroad
benefits. As profit-driven private entities, freight railroads simply
cannot afford to make investments, including investments in intermodal
projects and facilities, that yield primarily public benefits.
Unless this issue is addressed head on, it will worsen in the years
ahead as pressure on our nation's freight rail network intensifies. The
U.S. DOT expects freight traffic to nearly double in the next 20 years.
Rail customers will continue to demand improved service levels. With
highway congestion consuming a growing share of our nation's economic
output, and with the need to reduce emissions, conserve fuel, and
promote safety on the rise, the need for railroads to provide relief
will increase.
Surface Transportation Reauthorization
TEA-21 expanded the reliance on an intermodal approach to
transportation planning that was the focus of the landmark Intermodal
Surface Transportation Efficiency Act of 1991 (ISTEA). Today, we are
seeing the benefits that can be gained by taking this comprehensive
approach.
As planning for the reauthorization of TEA-21 proceeds apace, the
AAR is pleased to be an active participant in the Freight Stakeholders
Coalition, an organization comprised of diverse freight interests that
work cooperatively to promote policies benefiting freight
transportation. Besides the AAR, members of the Freight Stakeholders
Coalition include the American Association of Port Authorities, the
American Trucking Associations, the Coalition for America's Gateways
and Trade Corridors, the Intermodal Association of North America, the
National Association of Manufacturers, the National Industrial
Transportation League, the U.S. Chamber of Commerce, and the World
Shipping Council.
The Freight Stakeholders Coalition has unified behind a nine-point
agenda designed to promote sound, effective transportation solutions.
The agenda includes:
1. Protect the integrity of the Highway Trust Fund
Reauthorization of the firewalls provided for in TEA-21 would
ensure that the funds collected in the HTF would be used for dedicated
transportation purposes and not for deficit reduction or general
government operations.
2. Dedicate funds for National Highway System (NHS) highway connectors
to intermodal freight facilities
NHS intermodal freight connectors provide for a broad array of
intermodal transport services and options. The FHWA has identified 517
NHS freight terminals (253 ocean and river ports, 203 truck/rail
terminals, and 61 pipeline/truck terminals). These 517 freight
terminals, augmented by 99 major freight airports, connect to the
mainline NHS via more than 1,200 miles of NHS connectors. Typically,
connectors are located in older, industrialized and mixed land use
areas that are subject to physical constraints and environmental
considerations.
TEA-21 directed the FHWA to review the condition of connectors and
potential investments to improve their condition. In a June 2000 report
to Congress, FHWA found that the connectors have significantly poorer
physical and operational characteristics, and are underfunded when
compared with all NHS mileage. Such conditions on these ``last mile''
segments can slow freight movement, damage goods in transit, and
decrease efficiency and safety. U.S. DOT estimates show that the cost
of improving connectors to an adequate level of service over the 2002-
2020 timeframe is $3.5 to $4.0 billion.
3. Establish a national freight industry advisory group to provide
input to the U.S. DOT
The advisory group should be funded and staffed, and should consist
of freight transportation providers from all modes as well as shippers
and State and local planning organizations. There is not a sufficiently
focused Federal voice for freight; an advisory group would meet the
need for regular and professional interaction between the department
and the diverse freight industry, and could help identify critical
freight bottlenecks in the national freight transportation system.
4. Create and fund a Freight Cooperative Research Program
More accurate and timely data on freight movements would allow
State and local governments to plan transportation infrastructure
improvements that more closely match actual transportation needs. To
this end, a dedicated, funded research effort led by an industry-based
steering/oversight group would allow for the collection and
dissemination of more timely, complete, and detailed commodity flow and
other types of freight data and better planning tools for freight
planning professionals and others.
5. Expand freight planning expertise at the State and local levels
Unfortunately, transportation planning typically focuses almost
exclusively on highway and transit projects, with scant attention paid
to freight (including freight rail). To address this deficiency,
planning organizations should be strongly encouraged to consider
freight transportation needs, including railroad projects and
intermodal projects, more fully in their planning. Given the importance
of freight mobility to the national economy, States and metropolitan
planning organization (MPOs) should be provided additional funds for
expert staff positions dedicated to freight issues, commensurate to the
volumes of freight moving in and through their areas.
6. Develop ways to increase available funds without new user fees and
taxes by creating a toolbox of innovative financing options
specifically aimed at freight capacity improvements and
enhancements
New capital investment in critical freight transportation
infrastructure leads to major public benefits including higher
productivity, enhanced global competitiveness, and a higher standard of
living for our Nation. With freight traffic now forecast to double
within the next 20 years, the United States must expand its limited
transportation infrastructure dollars by leveraging additional public
and private sources of funding. This will require innovative approaches
to maximize transportation-related investments.
Two financing options in which freight railroads are most
interested are discussed below.
The first option calls for tax incentives and tax exempt financing
to companies that make investments in intermodal freight
infrastructure. This option would provide targeted income tax benefits
(investment tax credits, expensing in lieu of capitalization,
accelerated depreciation, and/or tax-exempt financing) to companies for
investments made in qualifying assets to improve the efficiency or
increase the capacity of the national intermodal freight transportation
system. Qualifying assets would include track and roadbed located on
intermodal corridors, intermodal transfer facilities, freight handling
machinery and equipment at intermodal transfer facilities, and
intermodal information infrastructure. Under this option, the tax
benefits would accrue to any company that made such investments, not
just railroads. Such a program would recognize the huge societal
benefits derived from an expansion of intermodal transportation
solutions.
The second option calls for allowing the funding of rail
infrastructure through the issuance of tax-exempt indebtedness. Under
this option, holders of ``Qualified Railroad Indebtedness (QRI)'' would
qualify for an income tax exclusion for interest earned on the QRI. QRI
would be any type of indebtedness, regardless of the form, issued to
fund the acquisition, construction, improvement, maintenance, or repair
of ``Qualified Railroad Property'' (QRP). QRP, in turn, would be any
expenditure for the acquisition or maintenance of depreciable property,
such as track, bridges, tunnels, grading, wharves and docks, terminal
facilities, signals, computer systems, and public improvements either
used or to be used in the railroad's trade or business. The tax
benefits would flow directly to the holders of the indebtedness in the
form of income tax exclusion for interest earned, and indirectly to
railroads in the form of lower capital costs.
7. Significantly increase funds for an expanded corridor/border and
gateway program
This proposal would build on the highly popular but underfunded
``Corridors and Borders Program,'' but adds the important concept of
gateways. The funding should be freight specific, and there should be a
qualification threshold (based on volumes) so that dollars get directed
at high volume corridors/borders/gateways rather than wish-list
projects. The AAR is a member of the Coalition for America's Gateways
and Trade Corridors, which is leading the effort among freight
interests to expand funding for this important program.
8. Streamline environmental permitting for freight projects
Multiple and often duplicative Federal laws and regulations delay
environmental review of transportation projects. Language in TEA-21
directing Federal agencies to streamline the review process for highway
projects has not been effective. Consequently, other measures to
simplify the review process for all freight projects should be
considered.
9. Increase funding and promote the use of the Congestion Mitigation
and Air Quality Improvement Program (CMAQ) for freight projects
that reduce congestion and improve air quality
CMAQ was designed to fund projects that will help reduce
transportation-related emissions. Although CMAQ has supported some
freight projects, it has been used primarily to address passenger
needs. CMAQ funding should be dedicated to projects that can be shown
to reduce congestion or improve air quality. Total funding for CMAQ
should be increased and the use of CMAQ funds for freight projects
should be clarified and strongly encouraged.
In addition to the Freight Stakeholder Coalition proposals outlined
above, the railroad industry proposes additional measures which we
believe will enhance the ability of our nation's transportation
providers to function effectively. Like the proposals from the Freight
Stakeholder Coalition, the rail proposals expand further the emphasis
on intermodalism that was fundamental to the original TEA-21
legislation. The rail proposals include the following:
1. Increase funding for the Section 130 grade crossing program and
clarify that funds can be spent on maintenance activities
The most critical safety problems faced by railroads are collisions
at highway-rail grade crossings and incidents involving trespassers on
railroad rights-of-way. Both of these problems generally arise from
factors that are largely outside of railroad control. In 2001, these
two categories accounted for 96 percent of rail-related fatalities.
Due largely to railroads' and others' efforts to close grade
crossings and to educate the public about the dangers of grade
crossings, in conjunction with the Section 130 Federal grade crossing
program, the number of collisions, injuries, and fatalities at highway-
rail grade crossings has fallen steadily over the years. From 1980 to
2001, the number of grade crossing collisions was reduced 70 percent,
injuries declined by 70 percent, and fatalities were down 49 percent.
Despite these impressive declines, far too many grade crossing
accidents occur each year.
The Section 130 Program provides Federal funds to States and local
governments to eliminate or reduce hazards at highway-rail grade
crossings on public highways. Current funding, under a set-aside to the
Surface Transportation Program of TEA-21, is approximately $155 million
per year. The vast majority of Section 130 funds have been spent on the
installation of new active warning devices such as lights and gates,
upgrading existing devices, and replacing or improving grade crossing
surfaces.
The high cost of current active warning devices--approximately
$150,000, on average, per installation--has limited the number of
crossings at which they have been installed. Research into improved
low-cost grade crossing warning systems is underway, but increased
Federal funding for highway-rail crossing hazard abatement would permit
additional crossings to be protected immediately.
The Section 130 program is an important element of the HTF. Grade
crossing warning devices are highway traffic control devices, there to
protect the motoring public, not trains.
Increasing Section 130 funding and clarifying that such funds can
be spent on grade crossing maintenance projects would allow additional
crossings to be protected and further enhance highway safety.
2. Expand the Railroad Rehabilitation and Improvement Financing (RRIF)
Program and remove restrictive program requirements
The Railroad Rehabilitation and Improvement Financing (RRIF)
program provides low-interest loans and loan guarantees (not direct
Federal grants) to help finance railroad capital investments. As
authorized by TEA-21, RRIF authorizes up to $3.5 billion in direct
loans and loan guarantees, of which at least $1 billion is reserved for
small railroad projects. It is administered by the Federal Railroad
Administration. Due largely to an exceedingly long delay in the release
of implementing regulations and overly restrictive regulatory
requirements (especially lender of last resort and collateral
requirements), to date very few RRIF loans have been approved.
Railroads seek a major expansion of the RRIF program, and an easing
of regulatory barriers to its use, in order to help railroads of all
sizes--both freight and passenger--to continue to provide safe and
efficient transportation service. Pending legislation (S. 1530--``RAIL-
21'', H.R. 2950--``RIDE-21'', and S. 1991 ``The National Defense Rail
Act'') would increase to $35 billion the amount of loans and loan
guarantees available through the RRIF program. These proposals would
also countermand unnecessary existing regulatory barriers pertaining to
lender of last resort provisions and collateral requirements.
opposition to truck size and weight increases
Notwithstanding the broad agreement detailed above among the
freight railroads and other transportation modes on many issues
relating to our national transportation needs and capabilities, there
are some limited areas of disagreement among the modes. One such area
concerns truck sizes and weights. Recently, proposals to allow larger
and heavier trucks on our nation's highways have been offered. The rail
industry strongly opposes these efforts.
Under current Federal law, trucks operating on the 46,000-mile U.S.
Interstate Highway System can have a gross vehicle weight of no more
than 80,000 pounds, and the use of longer combination vehicles (LCV--a
tractor and two or more trailers or semi-trailers longer than 28 feet
each) is limited to 14 Western States that allowed such trucks before
1991. These limits were frozen by Congress in the 1991 ISTEA
legislation, largely in response to concerns about the safety of longer
and heavier trucks. Since then, various interests have proposed that
the weight limit be increased (for example, to 97,000 pounds) and that
the use of LCVs be permitted on all or parts of the U.S. interstate
highway network. Since 1991, all attempts to thaw the Federal freeze
have been rejected by Congress.
Increased truck size and weight (TS&W) limits would, according to
the U.S. Department of Transportation, have a disastrous effect on
freight railroads. Railroad revenues would decline by $2.9 billion to
as much as $6.7 billion per year. Contribution to railroad fixed and
common costs would fall by $2.1 billion to $3.1 billion per year. As
the contribution to fixed costs declined, less funding would be
available for current and future investments, and so fewer such
investments would be made. The reduction in investment would directly
translate into reduced capacity, lower efficiency, degradation of
service, a reduced ability to handle freight, and, eventually, further
disinvestment. Remaining shippers on the rail network would face higher
rates, reduced service, or both. Social costs associated with diversion
of rail traffic to truck--more highway accidents, pollution, greenhouse
gases, congestion, energy consumption, noise--would rise, and the cycle
would continue in a vicious circle. This outcome is certainly not in
the best interest of our Nation.
A primary basis for the rail industry's opposition to larger and
heavier trucks is the unfair dichotomy between costs paid and costs
incurred among the modes. Rail-competitive trucks, which are the
heaviest, highest mileage operators among all trucks, do not come close
to fully paying for the damage they cause to the highway system. The
U.S. DOT's recent comprehensive Highway Cost Allocation Study concluded
that combination trucks weighing 80,000 to 100,000 pounds pay an
estimated 50 percent of their cost responsibility, and trucks weighing
over 100,000 pounds would pay only 40 percent of their cost
responsibility. Rail-competitive trucks already underpay by billions of
dollars per year, representing an enormous competitive hurdle that
railroads must overcome. Liberalizing TS&W limits would only exacerbate
the existing inequity.
A committee of the Transportation Research Board (TRB), an arm of
the National Research Council, which in turn is part of the National
Academy of Sciences, recently released a report on the truck size and
weight issue. The report was Special Report 267: Regulation of Weights,
Lengths and Widths of Commercial Motor Vehicles. The report recommends
an immediate thaw in the TS&W freeze via the introduction of 90,000-
pound single trailer trucks and a 50 percent increase in the weight of
double trailer combination vehicles (while also boosting the size of
the vehicles). These dramatic changes would be followed by further TS&W
increases and the authorization of LCVs through ``pilot programs''
overseen by a proposed new government agency. The TRB report calls for
much of the regulatory authority associated with TS&W to be transferred
from the Federal Government to the States.
The TRB report has many shortcomings that undermine its usefulness
in the debate over TS&W, as detailed in Dr. Gerard McCullough's August
2002 evaluation of the report, undertaken for the AAR and included here
as Attachment 1. As Professor McCullough\10\ explains, the TRB report
starts with the faulty premise that there is widespread
``dissatisfaction'' with existing TS&W limits, when, in fact, existing
limits represent an equilibrium wherein the needs of truckers and truck
shippers are balanced against the safety concerns of motorists and the
national goal of maintaining a healthy overall freight transportation
system. Professor McCullough notes that the TRB report contains no new
quantitative analysis. For example, the report is critical of the way
previous studies calculated bridge damage costs due to changes in TS&W,
but does not provide an estimate of what it views as the correct costs.
Instead, the report says that the correct analysis has not been done
yet. In other words, the TRB report admits it does not know what the
effect would be of a TS&W thaw on bridge costs, but it nevertheless
recommends a thaw.
---------------------------------------------------------------------------
\10\Dr. McCullough is Associate Professor of Applied Economics,
University of Minnesota, St. Paul, MN, and Senior Consultant, Charles
River Associates, Boston, MA. He is former Director of the Center for
Transportation Studies at Minnesota and former Deputy Director of the
Center for Transportation Studies at the Massachusetts Institute of
Technology (MIT). He has been a consultant on transportation to the
World Bank and the Federal Highway Administration (FHWA) and various
private organizations. He was a Special Assistant at the U.S.
Department of Transportation from 1977-1980. His Ph.D. is from MIT.
---------------------------------------------------------------------------
Professor McCullough stresses that an efficient freight market is
one in which the users absorb the full marginal costs that they impose.
Unfortunately, the TRB offers no specific proposal by which the
substantial current truck underpayment for the pavement damage they
inflict would be ameliorated. These underpayments would sharply
increase as gross vehicle weight increased, making existing inequities
even worse. Finally, as the TRB report admits, serious questions exist
regarding the safety implications of increasing TS&W limits. Yet the
TRB calls for addressing this issue by instituting a ``pilot program''
that would essentially force unknowing and likely unwilling highway
users to participate in an experiment to determine the safety
implications of changes in TS&W.
As noted above, increasing the size of trucks without insuring full
cost recovery would greatly exacerbate the problems caused by large
trucks. It is interesting to note that under a recent proposal by the
Reason Foundation, a Los Angeles ``free market'' think tank, truck-only
tollways would be built on highway median strips. Under Reason's
proposal, LCVs and heavier trucks would be allowed on the truck
tollways, but the roads would be completely user-financed. Railroads
are pleased that the Reason proposal explicitly endorses what the
railroads have long maintained--that heavy trucks should pay their own
way.\11\ Every year that goes by means that motorists pay billions of
dollars in subsidies, while heavy trucks continue to avoid their cost
responsibility.
---------------------------------------------------------------------------
\11\While a detailed analysis of the Reason proposal is beyond the
scope of this testimony, it should be noted that while railroads
support the requirement that trucks fully repay the cost of the damage
they cause to the highway system, care should be taken to insure that
all costs--such as right-of-way acquisition, property taxes, truck
staging areas, etc.--be fully recovered. For example, the publicly
owned median should not just be given to the private sector motor
carrier industry without their having to pay for it. Railroads repaid
the Federal Government several times over for the value of the land
grants they received from the Federal Government. A 1943 study by the
Board of Investigation and Research concluded that the value of
compensation provided by railroads to the Federal Government has
``fully counter-balanced these aids which were conferred many years
ago.'' A 1977 study by the U.S. Department of Transportation concluded
that``. . . the Federal Government has been a net beneficiary of its
railway aid programs,'' having been more than fully reimbursed for its
land, with interest.
---------------------------------------------------------------------------
commuter and intercity passenger access
Another important issue that could significantly affect the freight
railroads' ability to provide the quality of service that today's
freight shippers require to remain competitive in the global
marketplace is the increasing demand for both intercity and commuter
rail service.
Rail passenger service can play an important role in alleviating
highway and airport congestion, decreasing dependence on foreign oil,
reducing pollution, and enhancing mobility and safety. Freight
railroads have demonstrated their willingness to work cooperatively
with Congress, Amtrak, commuter railroads, the States, and local
jurisdictions to insure that the public's transportation needs can be
met in the most efficient possible manner. Currently, freight railroads
host commuter operations in cities around the Nation, operate commuter
trains under contract to local authorities in several cities, and own
97 percent of the mileage over which Amtrak operates. Moreover, at
least 29 cities are proposing to establish new or expanded commuter
rail operations, and the U.S. Department of Transportation has
designated 11 corridors for the introduction of high speed passenger
rail systems across the country.
Freight railroads once provided all of our nation's rail passenger
service, but large and growing deficits following World War II led them
to exit the business. Existing rail passenger service is supported
primarily by the public through Federal, State, or local government
programs. While passenger railroading is important to our country, it
pales in comparison to the importance of freight railroading. Our
privately owned freight railroad system is a vital and strategic
national asset--moving more freight, more efficiently, and at lower
rates than anywhere else in the world, according to Lou Thompson, the
World Bank's Railways Advisor. The safe, efficient, and cost-effective
transportation service that freight railroads provide is critical to
the domestic efficiency and global competitiveness of our Nation.
Therefore, we must find the most effective way to provide the
passenger services that America needs, but without burdening the
freight rail system--operationally, financially, or in any other way.
Congress should resist calls to legislate mandated passenger access to
freight-owned track, as proposed in H.R. 2654 in the current Congress.
Access by passenger railroads to facilities owned by private freight
railroads must be negotiated on a case-by-case basis by the parties,
without government interference.
Freight railroads have developed a series of principles regarding
the future of intercity passenger rail service. Our principles call for
future rail passenger public policy to acknowledge the extreme capital
intensity of railroading and to ensure that railroads' investment needs
can be met. Policies which add to freight railroads' already enormous
investment burden, such as further saddling them with the support of
passenger rail infrastructure needs, or which reduce their ability to
provide the quality of service needed by their freight customers, must
be avoided. To do otherwise would undercut our nation's freight rail
capabilities and be counterproductive in addressing our country's
congestion, environmental, safety, and economic concerns.
security of our nation's rail network
Finally, I would like to touch on the issue of security. This issue
is relevant to this hearing because of the tension between the free
flow of commerce and the assurance that our transportation systems are
adequately protected from terrorist threats. Congress should strike a
proper balance between protecting our country's transportation assets
and its citizens, and providing for the free flow of goods and
promoting our international competitiveness.
Following the terrorist attacks on September 11, 2001, railroads
took numerous proactive steps to increase the security of our nation's
rail network. Railroads immediately began developing a comprehensive
Terrorism Risk Analysis and Security Management Plan. The industry
formed a security task force composed of railroad representatives with
expertise in areas such as operations, legal issues, railroad police
activities, hazardous materials transportation, and information
technology. Outside consultants with expertise in intelligence and
counter-terrorism were retained to provide advice on best practices.
The task force created five Critical Action Teams addressing
hazardous materials, operations security, infrastructure, information
technology and communications, and military liaison. The task force
undertook a comprehensive risk analysis which identified critical
assets, vulnerabilities, and threats, and assessed the overall risk to
people, national security, and the nation's economy. The task force
then identified more than 50 countermeasures. The Terrorism Risk
Analysis and Security Management Plan, which is now in effect, utilizes
all this information and establishes four different alert levels, with
implementation of specific countermeasures dependent on the alert level
in effect.
The plan also provides for the establishment of a Railway Alert
Network (RAN), a 24-hours-aday, 7-days-a-week communications center
operated by the AAR. Through the RAN, railroads share information with
the intelligence community. In addition, the RAN provides a means for
instituting appropriate alert levels and beginning to take the
appropriate countermeasures.
The AAR also operates the Surface Transportation Information
Sharing and Analysis Center (ST-ISAC). Presidential Decision Directive
63 called for the creation of private sector ISACs to protect the
nation's critical infrastructure from attack. The ST-ISAC, formed at
the request of the U.S. DOT, collects, analyzes, and distributes
security information from worldwide resources to protect vital
information technology systems from attack. The ST-ISAC also operates
24-hours-a-day, 7-days-a-week.
conclusion
Our nation's global economic supremacy is derived in large part
from a transportation system that is second-to-none. Freight railroads
are an indispensable element of that system. Going forward, we must
ensure that our freight transportation capabilities will meet the
increasing demands placed upon it. We are confident that the rail
industry can play a major role in meeting this challenge. However, our
nation's ability to provide transportation alternatives that promote
mobility, economic efficiency, and environmental responsibility depends
critically on the further development of the intermodal approach
initiated by ISTEA and TEA-21 in which the full capabilities of each
mode can be fully realized. No less important to freight railroads is
the rejection of public policies that would unnecessarily and unfairly
restrict their capability to deliver their maximum value to the U.S.
economy.
Attachment 1
[August 2002]
Evaluation of Transportation Research Board Special Report 267:
Regulation of Weights, Lengths and Widths of Commercial Motor Vehicles
(By Gerard J. McCullough, Ph.D.)
Dr. McCullough is Associate Professor of Applied Economics,
University of Minnesota, St. Paul, MN, and Senior Consultant, Charles
River Associates, Boston, MA. He is former Director of the Center for
Transportation Studies at Minnesota and former Deputy Director of the
Center for Transportation Studies at the Massachusetts Institute of
Technology (MIT). He has been a consultant on transportation to the
World Bank and the Federal Highway Administration (FHWA) and various
private organizations. He was a Special Assistant at the U.S.
Department of Transportation from 1977-1980. His Ph.D. is from MIT.
executive summary
The purpose of this memorandum is to provide an evaluation of the
Transportation Research Board's (TRB) Special Report 267: Regulation of
Weights, Lengths and Widths of Commercial Motor Vehicles (hereafter,
``the Report''), which was released on May 16, 2002. The Report was
produced by the TRB Committee for the Study of the Regulation of
Weights, Lengths and Widths of Commercial Motor Vehicles (``the
Committee'').
The Report contains a series of conclusions and recommendations
regarding TS&W regulation in the United States. It concludes that
``opportunities exist for improving the efficiency of the highway
system through reform of Federal truck size and weight regulations''
(p. ES-1) and finds that ``changes in truck size and weight regulations
. . . offer the greatest potential to improve the functioning of the
[highway] system'' (p. ES-2). The Report recognizes that ``it is
essential to examine the safety consequences of size and weight
regulation'' (p. ES-3), but cautions ``it is not possible to predict
the outcomes of regulatory changes with high confidence'' (p. ES-3).
To facilitate the liberalization of TS&W limits, the Report
recommends a revised regulatory regime that would involve Federal
supervision of State-set limits with evaluation provided by an
independent Commercial Traffic Effects Institute (CTEI). The Committee
calls for pilot studies to evaluate the consequences of changes in TS&W
regulations, and recommends that States be allowed to issue permits for
the operation of longer and heavier trucks once the CTEI is established
and able to monitor and evaluate their performance.
The Report adopts a too-narrow analytical perspective that
significantly limits its usefulness in establishing national
transportation policy. The report starts with the questionable
assumption that there is widespread dissatisfaction with existing
Federal truck size and weight regulations, when, in fact, the current
system represents a balancing of the needs of truckers and truck
shippers against the needs of motorists and the national goal of
maintaining a healthy overall freight transportation system. In
addition, it also fails to recognize:
The need for an analysis of total freight supply and
demand, including the role of shipper logistics costs.
That changes in TS&W limits affect the capacity of the
highway freight network and this in turn affects the performance of
railroad and other freight networks (and their shippers).
That the goal of TS&W regulation--after safety--should be
to improve the overall efficiency of the national freight market, not
just to reduce direct trucking costs.
That an efficient freight market is one in which the
users absorb the full marginal costs that they impose.
There is no analytical basis, either in the Report or in earlier
TS&W studies evaluated by the Committee, for many of the Report's most
important conclusions and recommendations. For example, the Committee's
recommendations for immediate changes in TS&W (subject to the creation
of a CTEI) are not consistent with its own finding that the effects of
such changes are uncertain. Nor is there any legal or economic analysis
of why an independent CTEI would be more effective, or more
appropriate, than the Federal DOT in determining the need for, and
evaluating the performance of, TS&W regulations. There is also no
analysis from an experimental design perspective of how the committee's
pilot studies would demonstrate the effects of changes in TS&W limits,
or an explanation of the potentially serious ethical issues a pilot
program might entail.
Perhaps most importantly, the Report does not evaluate the effects
of changes in TS&W limits on the overall freight transportation market.
Unfortunately, this decision causes it to omit certain points which are
essential to a thorough evaluation of TS&W regulations. These include:
Significant diversion of freight tonnage off the rail and
barge networks and onto the highway network.
Significant increases in the social cost--accidents,
pollution, greenhouse gases, congestion, energy consumption, and
noise--of moving this freight.
Potential increases in the rates paid by freight shippers
who remain on the rail network.
Potential disinvestment by railroads, reduced intermodal
and other service offerings by railroads, and secondary diversion of
more freight onto the highway system.
The Report has some strengths. It recognizes the uncertainty that
exists regarding the benefits and full costs of changes in TS&W limits;
the need to better understand nuisance-related and stress-related costs
from mixed auto and truck traffic, and the potential benefit of
separating auto and truck.; the potential role of cost-based user fees
in managing infrastructure and mitigating negative effects of trucks;
and the importance of regulatory institutions and enforcement
mechanisms.
Overall, because of its shortcomings, the Report provides extremely
limited usefulness to policymakers interested in evaluating TS&W
regulations. Previous studies relating to TS&W issues, produced by the
U.S. Department of Transportation and other TRB Committees, do a more
satisfactory job of including all pertinent factors in their analyses.
i. background
The current U.S. truck fleet comprises about 8 million vehicles,
about a fourth of which are combination trucks. Most combination trucks
are large, with about 70 percent having registered maximum gross
vehicle weights (GVW) over 75,000 pounds. The number of trucks on the
road is small by comparison to private passenger vehicles, but because
on average trucks are driven more frequently, their share of vehicle
miles traveled (VMT) is disproportionate to their numbers. However,
combination trucks still make up only about 5 percent of total VMT, as
shown in Table 1.
Table 1. Total Vehicles and Vehicle Miles Traveled by Vehicle Class (2000)
----------------------------------------------------------------------------------------------------------------
Percent of
Total VMT Total Percent of
(millions) Vehicles Total VMT
----------------------------------------------------------------------------------------------------------------
Autos................................................ 137,967,488 1,612,393 61.1 58.6
percent percent
Pickups/Vans.......................................... 79,084,979 924,018 35.0 33.6
percent percent
Buses................................................. 746,125 7,601 0.3 percent 0.3 percent
Single Unit Trucks.................................... 5,926,030 70,583 2.6 percent 2.6 percent
Combination Trucks.................................... 2,096,619 135,208 0.9 percent 4.9 percent
Total............................................. 225,821,241 2,749,803 100.0 100.0
----------------------------------------------------------------------------------------------------------------
Note: Autos category includes motorcycles.
Source: Federal Highway Administration, Highway Statistics 2000, Table VM-1.
Despite their relatively small numbers, trucks have an important
and significant impact on the U.S. highway system. Trucks are
disproportionately involved in fatal traffic accidents\1\ and are a
major factor in urban traffic congestion and noise pollution.\2\ Trucks
also produce significant emissions and because of the their weight,
produce much greater wear on pavement than do private passenger
vehicles.\3\
---------------------------------------------------------------------------
\1\According to the Federal Motor Carrier Safety Administration,
large trucks are involved in 9 percent of fatal accidents and 78
percent the victims in truck-related fatal accidents are occupants of
the other vehicles. See Large Truck Crash Profile: The 1998 National
Picture, Tables 1 and 4.
\2\The Federal Highway Administration has found that a combination
truck imposes the congestion costs equivalent to 2.5 to 15 automobiles,
depending upon the highway's grade and speed, the weight-to-power ratio
of the truck, and the vehicle length, and that the most common semi-
trailer trucks impose more than 30 times as much noise pollution costs
as autos. See Federal Highway Administration, 1997 Federal Highway Cost
Allocation Study Final Report, August 1997, Table V-26.
\3\Pavement wear increases exponentially with vehicle weight, such
that 80,000-pound trucks on urban interstates impose marginal pavement
costs per mile that are more than 400 times greater than automobiles.
See Federal Highway Administration, 1997 Federal Highway Cost
Allocation Study Final Report, August 1997, Table ES-6.
---------------------------------------------------------------------------
Since the creation of the Interstate Highway System, trucking has
become an increasingly important component of the U.S. freight market.
Trucks now carry about 29 percent of total intercity freight volume in
terms of ton-miles in the United States versus the 41 percent carried
by railroads. In terms of revenue, trucking is even more significant--
intercity trucking now represents 81 percent of all intercity
expenditures for freight transportation in the United States, as shown
in Table 2
Table 2. Freight Transportation Outlays by Type of Transport--2000
------------------------------------------------------------------------
Millions of
Mode dollars Percent of total
------------------------------------------------------------------------
Rail.............................. 36,454 9.0 percent
Truck-intercity................... 328,632 80.7 percent
Water............................. 3,501 0.9 percent
Oil pipeline...................... 9,467 2.3 percent
Air carrier....................... 19,800 4.9 percent
Other............................. 9,111 2.2 percent
Total............................. 407,119 100.0 percent
------------------------------------------------------------------------
Source: Eno Transportation Foundation, Inc., Transportation in America
2001.
Existing TS&W Regulation
The dimensions and weights of commercial vehicles are regulated at
both the Federal and State levels. Federal laws regulate both maximum
permissible gross vehicle weights and maximum axle weights, and the
width, length, and number of trailers. A summary of current Federal
TS&W regulations is provided in Table 3.
All States have laws governing the weights and dimensions of
trucks. All but seven States apply some modification of the Federal
regulations on a limited basis through permits, exemptions, and
``grandfather rights.'' Altogether, regulations in the 50 States and
the District of Columbia represent over 40 different combinations of
single axle, tandem axle, bridge formula, gross vehicle weight, and
interstate/non-interstate specifications.\4\
---------------------------------------------------------------------------
\4\ A complete inventory of current State size and weight limits,
as well as a thorough discussion of the nature, extent, and present
status of grandfather rights is provided in U.S. Department of
Transportation, Comprehensive Truck Size and Weight Study, Volume II
Issues and Background, 2000, pp II-8--II-24.
Table 3. Summary of Current Federal Truck Size and Weight Regulations
----------------------------------------------------------------------------------------------------------------
Criteria Applicability Limit
----------------------------------------------------------------------------------------------------------------
Weight............................. Single Axle limit on Interstate System..... 20,000 lbs.
Interstate System.
Tandem Axle limit on Interstate System..... 34,000 lbs.
Interstate System.
Total gross vehicle weight. Interstate System..... 80,000 lbs.
Gross weight on any group Interstate System..... 500(LN/(N-1)+12N+36)
of two or more consecutive
axles (bridge formula).
Size............................... Vehicle width.............. National Network...... 102 inches
Semi-trailer length........ National Network...... 48 feet (minimum)
Twin trailer length........ National Network...... 28 feet (minimum)
----------------------------------------------------------------------------------------------------------------
Notes: National Network refers to a network of roads designated by the Secretary of Transportation pursuant to
the Surface Transportation Assistance Act of 1982. It includes virtually all Interstates and some other
highways and totals more than 200,000 miles. For Bridge Formula W = overall gross weight on any group of two
or more consecutive axles to the nearest 500 lbs., LN = distance in feet between the extreme of any two or
more consecutive axles, and N = number of axles in the group.
Source: U.S. DOT, Comprehensive Truck Size and Weight Study, Volume I Summary Report, p. 3.
Federal TS&W regulation has its origin in the creation of the
Interstate Highway System in 1956. The passage of the regulations was
motivated by the significant role of the Federal Government in funding
90percent of the construction of the system. The Federal weight limits
were originally set at 73,280 pounds, 18,000 pounds, and 32,000 pounds
for gross vehicle weight, single axle weight, and tandem axle weight,
respectively, but were increased to those shown in Table 3 in 1975.
In 1982, the Federal role in TS&W regulation was increased through
the passage of the Surface Transportation Assistance Act (STAA), which
required States to adopt Federal weight limits on Interstate highways
and allow single 48-foot trailers and twin 28-foot trailers on a
``National Network'' designated by the Secretary of Transportation in
consultation with the States. This network consists of virtually the
entire Interstate system plus another 156,000 miles of highways.
The Intermodal Surface Transportation Efficiency Act of 1991
(ISTEA) prohibited the States from expanding either the number of
routes on which Longer Combination Vehicles (LCVs) could be operated or
the maximum weights and dimensions allowed for these vehicles.\5\ This
regulation has come to be known as the ``LCV freeze'' and in 1998 it
was extended by the Transportation Equity Act for the 21st Century.
---------------------------------------------------------------------------
\5\Longer combination vehicles (LCVs) refers to multi-trailer
combinations longer than the standard twin 28-foot trailer combination
vehicle (the so-called STAA double). The LCVs include seven-axle
``Rocky Mountain'' doubles, eight-axle ``B-Train'' doubles, nine-axle
``turnpike doubles'', and seven-axle tripletrailer combinations.
---------------------------------------------------------------------------
The study of TS&W issues by the Federal Government predates its
involvement in funding of the highway system. The first major study was
completed in 1941 by the Interstate Commerce Commission.\6\ A major
impetus for these studies has been the claim that higher size and
weight limits increase the efficiency of the freight markets. The main
findings of previous TS&W studies, especially those that are relevant
to conclusions and recommendations in TRB Special Report 267, are
reviewed in Appendix A1.
---------------------------------------------------------------------------
\6\ Interstate Commerce Commission, Federal Regulation of the
Sizes and Weight of Motor Vehicles; Letter from the Chairman,
Interstate Commerce Commission, 77th Congress, 1st Session, House
Document No. 354, August 14, 1941.
---------------------------------------------------------------------------
ii. overview of trb special report 267
The Transportation Equity Act for the 21st Century (TEA-21)
contained a provision specifically requiring the Secretary of
Transportation to request that TRB conduct a TS&W study. The charge
given in the act is quite general in scope, specifying only``. . . a
study regarding the weights, lengths, and widths of commercial motor
vehicles operating on Federal-aid highways . . .'' and that the study
provide policy recommendations.\7\
---------------------------------------------------------------------------
\7\P.L. 105-178, Section 1213, Subsection (i).
---------------------------------------------------------------------------
The law requires TRB to consult with the U.S. Department of
Transportation, States, the motor carrier industry, freight shippers,
highway safety groups, air quality and natural resource management
groups, and commercial motor vehicle driver representatives. It
requires TRB to consult with ``other appropriate entities,'' although
it does not specify what these entities might be. It also requires TRB
to consider and evaluate the impact of its recommendations on the
economy, the environment, safety, and service to communities.
The Committee for the Study of the Regulation of Weights, Lengths
and Widths of Commercial Motor Vehicles was formed in 1998, and its
original purpose was to review certain aspects of the U.S. DOT's TS&W
study. As it happens, TRB had already begun planning for a TS&W study
before TEA-21, and so the Committee was reassigned to this task when
the law was passed. The committee consisted of 13 members representing
State transportation officials, professional researchers, and
academics, overwhelmingly in the field of civil engineering, with a
small representation from economics. A summary list of the members and
their respective affiliations is provided in Appendix A2.
As part of the process of conducting the study, the Committee
solicited comments from outside parties on the issue of changes to TS&W
regulations. Of the 46 organizations receiving letters, 25 provided
comments in response. The full list of organizations contacted is shown
in Appendix A3.
The Committee's request for comments included the following three
specific questions:
1. What revisions to Federal law and regulations regarding
commercial vehicle weights, lengths, and widths should the committee
consider?
2. What factors should it take into account in evaluating possible
revisions?
3. Should the committee recommend revisions to Federal law and
regulations?
Responses to the three questions were quite varied. In response to
Question 2, four respondents explicitly stated that the Committee
should not consider the issue of modal competitiveness or the diversion
of freight from the railroads in evaluating possible TS&W revisions.
Three of these were trucking industry interests.\8\ The other was the
National Industrial Transportation League.
---------------------------------------------------------------------------
\8\The American Trucking Associations, the Distribution & LTL
Carriers Association, and the National Automobile Transporters
Association.
---------------------------------------------------------------------------
The basic conclusion in Special Report 267 is that increased TS&W
limits have the ``greatest potential'' to improve highway freight
efficiency, but that their full effects (including safety effects) are
uncertain and that there is a ``substantial probability'' that there
will be safety ramifications. To facilitate the liberalization of TS&W
limits, the Report proposes a revised regulatory regime that would
involve Federal supervision of State-set limits with evaluation
provided by an independent Commercial Traffic Effects Institute (CTEI).
The Report suggests that the States should not be able to begin
liberalizing the regulations until the CTEI is established and is able
to conduct careful assessments. A full list of the Report's conclusions
and recommendations is in Table 4.
Table 4. Conclusions and Recommendations of TRB Special Report 267
------------------------------------------------------------------------
Conclusions Recommendations
------------------------------------------------------------------------
1. Opportunities exist for 1. Create a Commercial Traffic
improving the efficiency of the Effects Institute
highway system through reform of
Federal truck size and weight
regulations. Such reform may
entail allowing larger trucks to
operate.
2. Appropriate objectives for 2. Evaluate the consequences of
Federal truck size and weight changes in truck size and weight
regulations are to facilitate safe regulations through pilot studies
and efficient freight
transportation and interstate
commerce, to establish highway
design parameters, and to manage
consumption of public
infrastructure assets.
3. Changes in truck size and weight 3. Allow certain immediate changes
regulations made in coordination in Federal regulations
with complimentary changes in the
management of the highway system
offer the greatest potential to
improve the functioning system.
4. The methods used in past studies 4. Allow certain Longer Combination
have not produced satisfactory Vehicles (LCVs)
estimates of the effect of changes
in truck weights on bridge costs.
5. It is not possible to predict 5. Routes and roads to which
the outcomes of regulatory changes Federal standards should apply
with high confidence.
6. It is essential to examine the 6. Conduct research on enforcement,
safety consequences of size and environment and safety effects,
weight regulation. Research and bridge costs, freight markets,
monitoring needed to understand driver stress, and dedicated truck
the relationship of truck infrastructure.
characteristics and truck
regulations to safety and other
highway costs are not being
conducted today.
7. Although violations of size and
weight regulations may be an
expensive problem, monitoring of
compliance with the regulations is
too unsystematic to allow the
costs involved to be estimated.
------------------------------------------------------------------------
iii. evaluation of trb special report 267 general observations
The most detailed analysis in the Report (pp. 2-17 to 2-29) focuses
on new probabilistic techniques for assessing bridge costs. The actual
analysis of freight market efficiencies--the raison d'Etre for the
Report--is limited to a few bullet-points on pages 2-12 and 2-13. There
is some discussion on pages 2-36 to 2-39 of the relationship between
freight markets and land use--a topic some would regard as very
important--but the Report elects not to weigh these effects:
``Predicting and evaluating the effect of changes in size and weight
regulation on land use would be extremely difficult'' (p.2-39).
The Report does recognize the uncertainty that exists regarding
TS&W issues. The Executive Summary cautions: ``Throughout its work, the
Committee found that a lack of information about the costs and benefits
of truck transportation and the impacts of the size and weight
regulations hindered its effort to provide useful policy advice'' (p.
ES-1). In a more detailed summary of these uncertainties (p. 2-11), the
Report concludes that pavement impacts and traffic impacts are well
enough understood to facilitate regulatory change, but that there is
inadequate knowledge of safety effects, bridge costs, changes in the
volume of truck traffic, motorist stress and discomfort, and
administrative feasibility. Not all would accept the claim that the
infrastructure and traffic effects are well known.\9\
---------------------------------------------------------------------------
\9\The Committee appears to be less than certain about its
knowledge of traffic effects. It recognizes (pp. 236) that the methods
used to estimate congestion and pollution costs involve
``oversimplified treatment on the complex interactions between trucks
and other vehicles in the traffic stream. Changing the traffic volume,
dimensions, and acceleration abilities of trucks will change how
motorists drive around them, affecting other vehicles' patterns of
acceleration and braking.'' The Committee also acknowledges (pp. 233 to
2-34) that the predicted effects on traffic flow depend critically on
freight diversion forecasts, (which the Report discounts).
---------------------------------------------------------------------------
The Report also acknowledges the potential importance of motorist
comfort and distress to TS&W. The Report does not devote an extensive
amount of time to discussing the issue, but it does acknowledge that
research should be conducted to determine whether these effects are
``real costs that should be considered in evaluations of highway
regulations'' (p. 5-18).\10\ The Report also mentions the potential
benefits to be gained from separating truck and auto traffic by
constructing separate highway and bridge facilities for trucks. Road
Work, the 1989 Brookings Institution study of the U.S. highway system
by Small, Winston, and Evans developed this idea that there may be
``diseconomies of scope'' that result from combining cars and trucks on
the same system.''\11\ The Report acknowledges that separate truck
facilities could help to accommodate the growth in freight demand,
though it does not discuss the financing of these facilities.\12\
---------------------------------------------------------------------------
\10\The Report makes the methodological suggestion that the only
way to evaluate the economic value of driver stress is to observe
changes in traveler behavior where automobile drivers chose different
routes to avoid big trucks. To see the limitations of this method,
consider a case with which the Committee members might be familiar-the
installation of Traveler Information Systems on public transportation
systems. The economic value of these systems, which let travelers know
in real time when the next bus or train is arriving, is not measured
solely by the number of travelers who divert from highway to transit.
The valuation should include some measure of the usefulness of
information provided existing users.
\11\Small, K., Winston, W., and Evans, C., Road Work: A New
Highway Pricing & Investment Policy, Washington DC: The Brookings
Institution, p. 102.
\12\The Report also acknowledges here that ``other modes'' (p.5-
18) will be part of the solution.
---------------------------------------------------------------------------
Finally, the TRB Report recognizes the potential role that cost-
based user fees could play in managing the utilization of highways and
bridges and mitigating the negative effects of trucks. Though the
Report's discussion is mostly limited to cases where the imposition of
fees would facilitate the implementation of higher TS&W limits (p. 3-
28), the general endorsement of highway pricing is a policy advance.
This is coupled with the important recognition that the design of
regulatory institutions and enforcement mechanisms as well as standards
are important elements of the regulatory process.
A major shortcoming of the Report is that it fails to provide any
real analysis of supply and demand in the freight market, even though
the explicit aim of the Report is to increase the efficiency of this
market. The economic theory upon which the Report is based is
uncomplicated: ``The regulations have important economic consequences
because trucking accounts for four-fifths of expenditures on freight
transportation in the United States, and trucking costs are influenced
by truck size and weight.''
The DOT Comprehensive Truck Size and Weight Study does not
necessarily contradict this theory, but it does provide a more thorough
picture of the freight market to provide a basis for careful policy
decisions. For example, the U.S. DOT study points out in Chapter IV
that overall logistics costs--not truck or rail rates--are the factors
that determine freight market decisions. It notes that savings in
inventory carrying costs are about equally important as reductions in
(truck and rail) transportation costs in increasing the efficiency of
freight markets. The U.S. DOT study also spends a considerable amount
of time analyzing the impact of TS&W regulations on the freight
railroad industry (Volume III, Chapters II, III, IV, XI). These impacts
are important because they have direct bearing on the overall
efficiency of the freight market.
The notion of freight market efficiency developed in Special Report
267 is too narrow to be useful in a discussion of national
transportation policy. The sole focus of the Report is on the movement
by truck from Point A to Point B at the lowest direct expense to some
motor carriers and shippers. An efficient national freight market is an
intermodal system of air, water, highway, rail and shipper activities
which take full advantage of linked networks of transport assets.
Moreover, (as the TRB itself recognized in Special Report 246\13\) an
efficient freight market is one in which the users absorb the full
marginal costs that they impose.
---------------------------------------------------------------------------
\13\ TRB Special Report 246, Paying Our Way: Estimating Marginal
Social Costs of Freight Transportation, 1996, Table ES-1, p. 8.
---------------------------------------------------------------------------
Using this metric, Special Report 246 found rail operations to be
two-to-five times more efficient than truck operations on a corridor-
by-corridor basis. This suggests that higher TS&W limits, which would
divert freight from the rail network onto the highway network, would
increase social costs and decrease efficiency. One could argue that the
reduction in private costs to truckers and truck shippers could
partially offset this effect, but a national policy report should make
that argument explicitly.
point-by-point evaluation of report conclusions and recommendations
This section provides a point-by-point evaluation of the TRB
Report's conclusions and recommendations. A serious shortcoming of the
Report is its failure to establish an analytical basis for the
recommendations which it makes. There is no analytical justification,
for example, either in earlier TS&W studies or the Report itself, for
its novel regulatory proposal--Federal ``supervision'' of State TS&W
permitting with oversight provided by an independent Commercial Traffic
Effects Institute (CTEI). Nor is there an analysis from an experimental
design perspective of how the Report's pilot studies would demonstrate
the effects of changes in TS&W. Other recommendations for immediate
change that the Report makes appear to be inconsistent with its own
finding that the effects of increased TS&W limits are uncertain. The
Report does suggest that States should not be able to begin
liberalizing the regulations until the CTEI is established and is able
to conduct careful assessments.
A. Conclusions of the TRB Report
Conclusion 1: Opportunities exist for improving the efficiency of
the highway system through reform of Federal TS&W regulations. Such
reform may entail allowing larger trucks to operate.
The proper focus of TS&W policy should not be solely on lowering
the private costs of trucking firms and/or some freight shippers, but
on minimizing the public costs (infrastructure, safety, pollution,
energy consumption, congestion) of truck transportation and ensuring
the overall efficiency of the national freight market. An efficient
market is one in which the users absorb the full marginal costs that
they impose.
It is wrong for the Report to conclude--without a more careful
analysis--that there is a direct relationship between increases in TS&W
limits and increases in freight market efficiency. The data for such
analyses were available to the Committee in TRB Special Report 246, in
a 1998 DOT-sponsored study by David J. Forkenbrock of the University
of Iowa entitled External Costs of Truck and Rail Freight
Transportation, in the DOT's 2000 Comprehensive Truck Size and Weight
Study, and in the 2000 Addendum to the 1997 Federal Highway Cost
Allocation Study.
According to the 2000 Addendum to the 1997 Federal Highway Cost
Allocation Study, heavy trucks in the 75,000-80,000 pound range cover
only 80 percent of the infrastructure costs they impose, and heavy
trucks in the 80,000-100,000 pound range cover 50 percent.\14\ The full
marginal social cost of bigger trucks--much of it not recovered--is on
the order of $0.20 to $0.70 per mile.\15\
---------------------------------------------------------------------------
\14\ Federal Highway Administration, 2000 Addendum to the 1997
Federal Highway Cost Allocation Study Final Report, Table 7.
\15\ Ibid., Table 13.
---------------------------------------------------------------------------
Table 5 summarizes the relevant results of the TRB's own Special
Report 246, comparing the efficiency of two representative freight
movements by rail and by 5-axle tractor semitrailer:
Case 1 compares the full costs of a grain movement from
Walnut Grove, MN to Winona, MN, a distance of about 200 miles. Case 1A
summarizes the full costs of a direct truck move using local roads.
Case 1B analyzes the truck costs by Interstate. Case 1C is a combined
truck/rail movement.
Case 3 compares the full costs of a container movement
from Los Angeles, CA to Chicago, IL, a distance of about 2,000 miles.
Case 3A is a truck movement by Interstate. Case 3B involves truck and
container railcar.
In both corridors, the rail movements are more energy-efficient and
labor-efficient and impose lower social costs. The modes are
competitive largely because of public subsidies to trucking and the
high valuation that shippers place on the flexibility and speed of the
truck mode.
Table 5. Efficiency Comparisons: Truck versus Rail ($)
----------------------------------------------------------------------------------------------------------------
Case 1A Case 1B Case 1C Case 3A Case 3B
----------------------------------------------------------------------------------------------------------------
Marginal External Cost
Congestion................................................... 8.94 6.25 0.00 295.81 0.75
Accidents.................................................... 46.04 26.11 9.19 89.43 77.72
Air Pollution................................................ 6.54 6.75 1.43 63.65 34.83
Energy Security.............................................. 3.10 3.63 0.39 16.64 5.36
Noise........................................................ 2.31 0.00 0.78 20.68 12.65
Marginal cost of public infrastructure....................... 38.63 61.02 0.00 141.47 1.81
--------------------------------------------------
Total.................................................... 105.57 103.77 11.78 627.67 133.12
Less: User fees ($/truckload)................................ 51.16 59.90 0.65 285.14 10.50
Equals: Net subsidy ($/truckload)............................ 54.41 43.87 11.13 342.53 122.62
Carrier's average cost ($/truckload)......................... 454.16 442.73 124.87 2469.06 1049.44
----------------------------------------------------------------------------------------------------------------
Source: TRB Special Report 246, Tables 4-2, 4-3, and 4-4.
The implication is that the liberalization of TS&W might improve
the efficiency of the highway system, but in so doing it would also add
external costs (negative impacts on other transportation modes, and
increased costs to some transport users) that would not be recovered.
Thus, total freight transport efficiency would be harmed.
Conclusion 2: Appropriate objectives for Federal TS&W regulations
are to facilitate safe and efficient freight transportation and
interstate commerce, to establish highway design parameters, and to
manage consumption of public infrastructure assets.
The Report recognizes here that the goal of TS&W regulation is not
to improve the efficiency of the ``highway system,'' but to balance the
public costs of truck travel against the efficiency of the freight
transportation market. However, the Committee does not follow its own
admonition, because the focus throughout the Report is overwhelmingly
on lowering the private costs of trucking.
A more balanced statement of goals is in the DOT's National Freight
Transportation Policy Statement (January 1997), which guided the
Comprehensive Truck Size and Weight Study. These goals include:
Ensure a safe transportation system;
Promote economic growth by removing unwise or unnecessary
regulation and through the efficient pricing of publicly financed
transportation infrastructure;
Protect the environment and conserve energy;
Provide funding and a planning framework that establishes
priorities for allocation of Federal resources to cost-effective
infrastructure investments that support broad National goals;
Promote effective and equitable joint utilization of
transportation infrastructure for freight and passenger service.
Notice the emphasis on safety, transportation infrastructure (not
just highways), environment, and effective and fair use of all of the
nation's transportation assets. It is worth noting, also, that when the
DOT conducted its Comprehensive Truck Size and Weight Study, direction
was provided by a Policy Oversight Group which included officials from
FHWA, the Federal Railroad Administration, and the Maritime
Administration. In addition, a Multimodal Advisory Group was
established to provide technical assistance.
It is surprising that a national panel of transportation experts
would view this broad set of goals and multimodal working structure as
a ``shortcoming'' (p. 2-1), and yet that is the conclusion of the TRB
Special Report 267. The Report claims that a fundamental problem with
the 2000 study and earlier studies is that ``analyses have not started
with clear definitions of the objective of regulation'' (p. 2-1) which
should be ``asking how the size and weight regulations can be used as a
part of a strategy for increasing the benefits of the highway system''
(p. 2-3). What the Report means by ``increasing the benefits'' is
liberalizing the TS&W limits.
Conclusion 3: Changes in TS&W regulations made in coordination with
complimentary changes in the management of the highway system offer the
greatest potential to improve the functioning of the system.
The Report provides no analytic basis for its conclusion that
changes in TS&W have ``the greatest potential'' to improve the
functioning of the freight market or the efficiency of the highway
system. There is no analysis of the role of logistics costs, for
example, or of the impact of deregulation, computerization,
containerization, and advanced communications on freight productivity.
Nor is there a complete analysis of the role that prices could play in
making highways more efficient.
The Report's failure to consider logistics contrasts with the U.S.
DOT's Comprehensive Truck Size and Weight Study, which recognizes that
the freight market properly understood is a $600 billion activity (p.
IV-12). The DOT study estimates that business logistics costs declined
by about $65 billion during the 1980's, but that a large portion of
that savings ($30 billion) was attributable to reductions in inventory
carrying costs. The other $35 billion of savings was attributed to
reductions in transportation costs for all modes including truck, rail,
water, pipeline and air.
With respect to the highway system, Special Report 246 concludes
that the best way to guarantee improvement for all users of the system
would be to charge the right prices. Quoting the earlier Committee:
It is desirable that shippers and carriers pay the full social cost
of their freight operations--that is, that the special taxes and fees
paid by the shipper or carrier for each shipment of freight be enough
to offset the cost to the government of the shipment and the external
costs that the shipment imposes on others. If the shipper and carrier
do pay the full cost of each freight shipment, then they will be more
likely to use transportation services responsibly and efficiently.\16\
---------------------------------------------------------------------------
\16\TRB Special Report 246, Paying Our Way: Estimating Marginal
Social Costs of Freight Transportation, 1996, p. 1.
---------------------------------------------------------------------------
TRB Special Report 267 also recognizes the potential role that
cost-based user fees could play in managing the utilization of the
highway system, but the focus is on applying these fees to larger-
permit trucks in order to ``facilitate'' the implementation of higher
TS&W limits (p. 3-28). There are technical problems with such a fee
scheme that are discussed below under Recommendation 3. The more
general problem is that the pricing described in this Report would do
little to reduce the truck-related stresses that motorists feel, the
safety risks they face, or the cross-subsidies they pay for
infrastructure.
Conclusion 4: The methods used in past studies have not produced
satisfactory estimates of the effect of changes in truck weights on
bridge costs.
In its Comprehensive Truck Size and Weight Study, the U.S. DOT
estimates that nationwide legalization of six-axle 97,000-pound single
trucks would reduce shipper costs by 5.1 percent, but increase bridge
costs by 33.1 percent. Similarly, nationwide operation of LCVs would
decrease shipper costs by 11.4 percent, but increase bridge costs by
34.4 percent. Large expenditures for bridges--$53 billion in capital
costs and $266 billion in user delay costs--would offset the efficiency
gain to truckers and truck shippers.
The reason for this large estimate is that heavier singles and LCVs
would overstress bridges beyond their design limits and force them to
be replaced. The DOT recognizes that it probably overestimates bridge
costs since ``some bridges could be strengthened and replacement of
bridges on highways with low volumes of the damaging vehicles would not
have to be improved at all.''\17\
---------------------------------------------------------------------------
\17\U.S. Department of Transportation, Comprehensive Truck Size
and Weight Study, Volume I Summary Report, 2000, p. ES-20.
---------------------------------------------------------------------------
The TRB Report puts considerable emphasis on the fact that a risk-
based analysis would reduce the projected cost of bridge replacement.
Very high estimates of bridge costs from liberalized regulations
are inconsistent with the experience of jurisdictions--in particular
Michigan and Ontario--that have opened their roads to use by trucks
much heavier than the Federal weight limits without experiencing costs
of the magnitude estimated. Most important, the DOT estimates ignore
the great potential for lower-cost methods of maintaining bridge safety
that the States are increasingly capable of applying because of the
widespread adoption of bridge management systems (p. 2-29).
The Report recognizes that a proper, risk-based analysis has not
yet been conducted. It does not fully acknowledge the difficulties that
might be involved in such an analysis or the possibilities for upward
revision of the DOT estimates. The Report is skeptical of the DOT's
ability to predict regulatory outcomes in markets governed by supply
and demand (see Conclusion 5 below), but confident of its ability to
predict the behavior of State highway agencies and the legislative
committees that fund these agencies.
Also, as the Report notes on p. 2-19, the U.S. DOT study omits
fatigue costs attributed to larger vehicles markets which State
engineers feel are underestimated. And, as the Report notes on p. 2-21,
there are alternative rating systems for judging how much a bridge can
be loaded and the choice of the higher rating system would revise the
DOT estimate upward. The methods used in the past may not have produced
satisfactory estimates, but they have not necessarily produced
exaggerated estimates, as the Report claims.
Conclusion 5: It is not possible to predict the outcomes of
regulatory changes with high confidence.
It is true that there is uncertainty involved in the prediction of
regulatory outcomes. However, economists have made considerable
progress in the empirical analysis of various network industries, and
these results have been used extensively to improve the regulatory
framework and the functioning of the economy. An example which a TRB
panel should have been aware of is railroad deregulation in 1980. The
regulatory changes accompanying rail deregulation were supported by
extensive economic studies before the fact, and have been validated by
subsequent analyses. One might point to similar work in most other
network industries--airlines, electricity, telecom, gas, water,
etc.\18\
---------------------------------------------------------------------------
\18\Economists involved in these reforms are aware of the mistakes
that have been made and of the limitations of such analyses, but no one
has concluded that the analysis efforts are irrelevant. For a critical
overview of these developments see Michael A. Crew and Paul R.
Kleindorfer, ``Regulatory Economics: Twenty years of Progress?'' pp. 5-
22, in a special issue of the Journal of Regulatory Economics, 21(1),
January 2002.
---------------------------------------------------------------------------
It is one thing to conclude, as the Report does (p. 2-6), that a
1986 TRB committee was not able to predict the exact length (53 ft) of
the trailers that the trucking industry would adopt in response to a
change in statutory language, or (p. 2-6) that a 1970's Canadian study
did not anticipate the variety of specialized trucks that would evolve
as a result of new provincial weight limits. It is another thing to
decide--as the Committee apparently does--that it could disregard the
work in the Comprehensive Truck Size and Weight Study aimed at
forecasting the effects of TS&W changes on the intercity freight
markets.
Those effects can be quite striking. The illustrative TS&W
scenarios analyzed in the DOT study show that bigger trucks would
divert between 4.0 percent and 19.6 percent of annual rail traffic
(measured in car-miles) onto the highway system (Table ES-12). This
means between 1.02 billion car-miles and 5.0 billion car-miles would be
converted into highway trailer-miles each year. It also means a
projected loss of railroad contribution to fixed costs ranging from
38.2 percent to 55.8 percent. This is money that would no longer be
available to the railroads to cover the fixed costs of their operations
and sustain investment.
The problem that the DOT report recognizes is that railroad fixed
costs are high, so the losses would have to be recovered (to some
extent) in the form of higher prices to remaining rail shippers. In
other words, a reduction in costs to some highway shippers must lead to
an increase in rates for some rail shippers. In response to trucks
cutting rates, railroads in many cases would have to lower their rates
to stay competitive or else lose the traffic. Losing traffic means that
remaining shippers must bear the burden of providing fixed costs, and
so on, and you get a vicious circle. The TRB Committee, with a mandate
to consider overall economic efficiency, should have recognized this.
Conclusion 6: It is essential to examine the safety consequences of
TS&W regulation.
In its Comprehensive Truck Size and Weight Study, the U.S. DOT
concludes that safety must be the primary goal of TS&W policy along
with ``the considerable public concern about mixing larger trucks with
passenger cars on our highways.''\19\
---------------------------------------------------------------------------
\19\ US Department of Transportation, Comprehensive Truck Size and
Weight Study, p. V-1.
---------------------------------------------------------------------------
Collisions between medium to heavy trucks and other, smaller
vehicles (principally passenger cars and light trucks and minivans) can
be particularly lethal to the occupants of the smaller vehicles,
principally because of the difference in weight (mass) between the two
vehicles, and for head-on collisions, the high vehicle closing speeds
typically involved. In total, collisions with medium to heavy trucks
account for 22 percent of all passenger car and light truck/van
occupant fatalities sustained in collisions with other motor vehicles.
(p. V-2)
The DOT study acknowledges that it is difficult to use statistical
inference to establish a relationship between TS&W limits and highway
safety. Longer combination vehicles account for less than 2 percent of
annual truck VMT, while 5-axle single trailers comprise 65.4 percent.
It is difficult to develop robust estimates for vehicles larger than
the typical vehicle in use. Also, the crash rates for larger vehicles
now operating in highly controlled situations may not be transferable
to other operating situations. The DOT's approach, therefore, is to
focus on the systematic components of truck safety, comparing physical
differences in vehicles and equipment, driver performance, and
operating environment in standard versus larger trucks.
The TRB Report recognizes the lack of conclusive information about
the relationship between truck size and weight and truck safety. It
also recognizes that this kind of information is critically important
in formulating potential changes to TS&W regulation. The approach that
the Report proposes is different from the DOT's and raises serious
questions. According to the Report, pilot studies would solve the
information problem by facilitating ``direct observation of the primary
impact of interest'' (p. 5-9) which would be frequency and severity of
accidents. This amounts to the use of unknowing or unwilling human
subjects (motorists) in large-scale (or lengthy) safety experiments.
The most successful past studies of the relative accident rates of
trucks of differing dimensions have used data obtained from truck
operators that include records of large numbers of trips made by
different kinds of trucks operating between the same origins and
destinations . . . In pilot studies involving a small number of
vehicles, it would not be possible within a reasonable time span to
measure small differences in relative accident risks. (pp. 5-9, 5-20)
The pilot studies are endorsed despite the DOT's findings that
combination trucks are more susceptible to rollover than conventional
trucks and induce greater driver fatigue, as well as repeated
substantiation that the public is strongly opposed to longer, heavier
trucks and, therefore, would likely not wish to be party to a ``pilot
study'' to examine the safety effects of TS&W changes.\20\
---------------------------------------------------------------------------
\20\Ibid., p. I-22 and V-11.
---------------------------------------------------------------------------
Conclusion 7: Monitoring of compliance with TS&W regulations is too
unsystematic to allow the costs (of violations) to be estimated.
This is an important observation, and the report rightly points out
the need to better quantify the nature and extent of violations in
order to inform the process of TS&W regulation. The Report identifies a
number of techniques as being promising for improving enforcement,
especially more widespread use of automated, information technology
based systems.
B. TRB Report Recommendations
Recommendation 1: Establish an independent Commercial Traffic Effects
Institute to monitor and evaluate TS&W changes
The Report stresses that the design of regulatory institutions and
enforcement mechanisms, as well as performance standards, are important
elements of the TS&W regulatory process. This is an important
contribution, but the Report offers no legal, economic or
administrative analysis of why a Commercial Traffic Effects Institute
(CTEI) would provide more effective regulation than the DOT--especially
in an area where there are significant public concerns.
The primary justification for CTEI is that ``under present
practices Federal size and weight policy has been deadlocked for more
than a decade, in spite of general dissatisfaction with the
regulation'' (p. 5-5). In fact, it is debatable that there is
widespread dissatisfaction with the existing TS&W regulations, at least
as far as it concerns liberalization, among the general driving public.
The Report recognizes that the DOT's recent analysis of TS&W issues was
``comprehensive'' (p. 5-6), and that the DOT has the authority to
regulate truck safety (p. 3-4), but it concludes that the way to end
the ``deadlock'' is to establish a separate agency (p. 5-6).
The CTEI would be an ``independent public organization,'' financed
from the Highway Trust Fund, and governed by a congressionally
appointed board of Federal, State and industry representatives. The
CTEI's professional staff of engineers, statisticians and economists
would work on pilot studies and other research funded by government or
the private sector. Here is how it might work, according to the Report:
For example, a group of carriers in one industry segment or one
region might have a particular interest in having research or a pilot
study conducted on a vehicle or operating practice they believed would
be of value to them. In such a circumstance, the carriers should be
expected to contribute a major portion of the costs of the evaluations.
Legislation would be needed to provide the proper legal form for such
contributions. (p. 3-5)
The Report predicts that under such arrangements the Institute
``would come to be seen by industry, State governments, and others as a
means to implement ideas about more efficient highway management and
truck regulation'' (p. 3-4). This seems accurate, but it is not clear
that the public interest would be protected.
Recommendation 2: Evaluate the Consequences of Changes in TS&W
Regulations Through Pilot Studies
While the concept of pilot studies is, in principle, not
inappropriate for research of this nature, the specific proposal put
forth in the TRB report is problematic at best. As described by the
Report, the pilot program would expose ordinary travelers to bigger/
heavier experimental trucks in traffic if the CTEI determined, based on
all available information, that the pilot could be conducted without
harm to safety (p. 5-10).
One might consider pharmaceuticals as a model for the evaluation of
innovations with the potential to both produce public harm and benefit,
but what is proposed here is not really analogous to pharmaceutical
regulation. In that industry, it takes about 13 years to develop one
new drug, and the process is characterized by systematic, sequential
incremental testing of the product for 7-8 years before it is tried on
any humans. When human testing begins, extensive tests are initially
conducted on healthy human volunteers just to ensure the product does
no harm. Critical to the process is extensive monitoring in a
controlled environment. Moreover, safety is always first--before a new
drug is even tested for efficacy it is tested to ensure that it does no
harm to human beings. Clearly, any public policy innovation that could
potentially harm the public needs should be examined in a similar risk-
averse, safety-based framework.
Nor is it clear that the pilot studies recommended by the Committee
would establish the ``consequences'' of TS&W changes. The DOT study
recognizes how difficult it is to use statistical inference to
establish a relationship between TS&W limits and highway safety. One
reason is that the current use of such vehicles is highly controlled so
that the results would not generalize to different operating
conditions. The same caveat would apply to pilot studies.
Another troublesome aspect of this recommendation is that it gives
individual States responsibilities for making decisions that affect the
overall efficiency of the national freight network. Increases in TS&W
limits lower the per-ton operating costs of long-haul trucks and this
has an immediate effect on rail traffic-about one-third of which (on a
ton-mile basis) is competitive with long-haul trucks. Because the rail
and highway networks are interrelated--and because the rail network has
high fixed costs-all shippers are affected.
The Report fails to recognize that there is a difference between
the optimal management of highway pavement and bridge structures and
optimal regulation of a complex national freight network. It may make
sense for the United States to further ``devolve'' responsibility for
the management of pavement and bridge assets to State highway agencies
(or regional agencies, or regulated private firms), but it is wrong to
confuse the management of infrastructure with the regulation of
national freight operations.
Recommendation 3: Authorize the States to participate in a federally
supervised permit program allowing for a) six-axle tractor
semi-trailers with maximum weight of 90,000 pounds, and b)
double-trailer configurations with each trailer up to 33 feet
long
The Committee has been careful in its recommendations regarding
changes to existing TS&W limits. The maximum gross vehicle weight of
90,000 pounds for six axle semitrailers, for example, is just below the
threshold estimated to cause negative bridge impacts, according to the
DOT study.\21\ Because axle weights are not increased, such a limit
would (according to the DOT study) not necessarily cause increased
pavement damage. However, the current bridge formula would allow 33-
foot double-trailer configurations with weights up to 120,000 pounds on
a nine-axle vehicle, 115,000 pounds on eight axles, or 110,000 pounds
on only seven axles. A seven-axle vehicle at 110,000 pounds may not be
as damaging to bridges as a 120,000-lb. nine-axle vehicle of the same
length, but it certainly does more pavement damage. Notwithstanding the
issue of infrastructure impacts, questions still exist regarding the
safety implications of increasing TS&W limits, even in this limited
fashion. The TRB report describes the lack of statistically reliable
evidence both concerning the relationship between truck weight and
accident involvement, and regarding the relationship between truck
weight and the probability that an accident will result in a fatality
(pp. 2-44 to 2-45).
---------------------------------------------------------------------------
\21\The 90,000-pound GVW six-axle semitrailer is examined as part
of ``North American Trade scenario.'' See U.S. DOT, op. cit., Volume
III, Table VI-I.
---------------------------------------------------------------------------
In addition, the Report recognizes that nuisance-related and
stress-related costs from mixed auto and truck traffic should be
considered in the evaluation of any TS&W policy. In focus groups
conducted as part of the U.S. DOT study, a vast majority of automobile
drivers said they opposed changes in TS&W regulations.\22\ Truck
drivers in the survey groups also questioned the need for change. Truck
sizes and weights are a serious issue for the public, and this must be
an important consideration in any public policy decision.
---------------------------------------------------------------------------
\22\ U.S. DOT, Volume II, pp. V-17-V-18.
---------------------------------------------------------------------------
The Report recommends that ``fees related to costs be adopted to
accompany the proposed new size and weight limits'' (p. 3-27), but it
does not appear that these would cover the marginal costs of pilot
programs. The Report does not explicitly endorse the pricing of all
truck traffic (which would be logical) but only the pricing of
experimental permit trucks to cover their ``added costs''. The report
recognizes (p. 3-28) that the ``added costs might be proportional to
the volume of permit traffic up to some traffic level but increase at
an accelerating rate at higher volumes.'' As truck traffic increases,
in other words, the marginal cost of the permit trucks would be
increasing. But this implies that increases in conventional truck
traffic would also increase the marginal cost of permit trucks, and
vice versa. Under the plan that the report describes, increase in
marginal costs of existing trucks would not be covered.
Recommendation 4: Allow the States to conduct pilot studies involving
any longer combination vehicles as long as the pilot study is
judged safe by the CTEI
In addition to proposing the allowance of the 33-foot doubles
described in Recommendation 3, this recommendation suggests that States
be allowed to conduct pilot studies with any configuration of LCVs, so
long as they are judged safe by CTEI.
The open-ended nature of this aspect of this recommendation raises
two important questions:
1. What types of LCVs are likely to be proposed for pilot studies?
2. How broad would the scope of these pilots be?
With regard to the first question, the DOT study indicates that the
economics of the industry are such that if longer combination vehicles
were allowed to operate nationwide, they would become the dominant
configuration, eventually constituting the majority of US truck
VMT.\23\ In this context, the second question becomes critical.
---------------------------------------------------------------------------
\23\U.S. DOT, Comprehensive Truck Size and Weight Study, Volume
III Scenario Analysis, 2000, pp. IV 32--IV-33.
---------------------------------------------------------------------------
Here the DOT study concludes that ``(e)ven if Federal law did not
require States to allow larger or heavier vehicles, some States fear
that if neighboring States allow LCVs, they will face irresistible
pressure to also allow LCVs to keep their businesses competitive.''\24\
This raises the possibility that, even within the carefully designed
pilot studies advocated by the Committee, larger LCVs could eventually
dominate the intercity freight market.
---------------------------------------------------------------------------
\24\U.S. DOT, op. cit., Volume I Summary Report, p. 40.
---------------------------------------------------------------------------
A majority of automobile drivers oppose these vehicles. LCVs are
less stable than conventional tractor-trailers, and the effects they
would have on congestion and pollution are uncertain. LCVs would have a
significant effect on the overall viability of railroad operations
across their service offerings as described in the discussion under
Conclusion 5.
Recommendation 5: Do not extend Federal TS&W regulations to the non-
Interstate portion of the National Highway System
The Committee reports a recommendation that there is no
justification for extending Federal weight regulation to the non-
Interstate portion of the National Highway System. There is no
discussion of this issue in the body of the Report and the Committee's
congressional mandate is to analyze the regulations ``on Federal-aid
highways to which Federal regulations apply on the date of enactment of
this Act.''\25\ The recommendation appears to be aimed at HR3132, the
``Safe Highway and Infrastructure Preservation Act'', which would
extend the current Federal TS&W limits beyond the 44,000 miles
Interstate system to the entire National Highway System of nearly
157,000 miles.
---------------------------------------------------------------------------
\25\PL 105-178, Section 1213.
---------------------------------------------------------------------------
The recommendation is not inconsistent with the idea proposed in
the Report that there should be a ``redefinition'' of Federal and State
TS&W regulatory responsibilities. The Report describes that
redefinition as follows:
The Federal Government would have diminished involvement in
defining numerical dimensional limits on the Interstates and other
Federal-aid highways, since the States would have more discretion with
respect to limits on these roads. However, the Federal Government would
take on greater responsibility for ensuring that State rules governing
the use of vehicles on Federal-aid highways were contributing to
meeting national objectives. (p. 3-21)
The Institute (Recommendation 1) would play a key role here,
providing ``monitoring, oversight and research'' (p. 3-21), and the
Federal Government would focus on performance standards: ``States could
propose solutions to problems, and the Federal Government would have to
assess whether the proposals met qualitative objectives'' (p. 322).
The Report does not identify these qualitative objectives. It also
does not recognize that changes in TS&W limits change the capacity of
the highway freight network, and this affects the overall efficiency of
the national freight network. Because the rail and highway networks are
interrelated, all shippers (and all motorists) are affected. State
agencies may well provide optimal management of highway and bridge
assets but this does not mean that they can optimally regulate the
performance of the national freight network.
Recommendation 6: Specific TS&W topics requiring research include
enforcement effectiveness, air quality effects, truck
characteristics and crash involvement, risk-based bridge costs,
freight market behavior, driver stress, and truck-only
facilities
The report makes a good case that there are several key areas in
which more information would improve TS&W policy.
The recommendation for more freight transportation market research
should consider not only the relationship between truck costs and truck
traffic, but should examine the broader context of total logistics
costs and shipper preferences across modes. Advanced and well-accepted
market research techniques now exist that would, within a carefully
designed program of research, allow the estimation of models that
quantify shippers' relative valuation of the most important freight
service characteristics. These models could then be used to forecast
the likely impacts of service changes across the freight industry. This
work could build on the DOT (2000) study.
The proposed research into the nuisance costs of mixed auto and
truck traffic is also an important recommendation, particularly given
that the report rightly points out that these costs may be independent
of actual accident rates. But the conclusion that such costs should
only be considered in policymaking if they lead to observable changes
in driver behavior is wrong. The stress or anxiety associated with
driving with large trucks may impose costs on drivers that are real,
but for a variety of reasons do not cause changes in behavior. Research
into the adoption of advanced information technology in the public
transit sector, for example, has demonstrated that travelers may
value useful information for its ability to reduce stress and
uncertainty, but may not necessarily change their travel patterns as a
result of having access to it. Modern market research techniques could
similarly be used to estimate and clarify drivers' valuations
concerning the stress associated with truck traffic.
Appendix A1. Previous TS&W Studies
DOT (1981) An Investigation of Truck Size and Weight Limits
This study was conducted in response to a congressional directive
that the U.S. DOT examine the appropriateness of uniform TS&W standards
throughout the United States. It examined the range of benefits and
costs to the U.S. economy and society, as well as to specific groups,
that would result from alternative changes in TS&W regulations. Five
categories of changes were considered, including grandfather clause
elimination, barrier elimination, uniformity, rollback to pre-1974
limits, and increases in limits.
The study found that transport cost savings from increased truck
productivity could exceed the increase in highway and bridge
maintenance costs and increased accident costs that would accompany the
introduction of higher TS&W limits. At the same time, however, it found
that additional infrastructure investments would be required to
accommodate such increases, and that it was uncertain as to whether or
not funding would be available for these investments. If these
investments were not made, the study found that the negative impacts of
TS&W changes could be much greater. The study estimated that diversion
from rail would be small under the specific scenarios examined, but did
not attempt to estimate the resulting effect on the railroad industry.
TRB (1986) Special Report 211: Twin Trailer Trucks
The purpose of this study was to examine the potential impact of
new rules adopted in the 1982 STAA, with a particular focus on safety.
It found that twins were probably less safe than semis, but that little
change in accidents should be expected because it was assumed that
truck VMT would decline overall. On the other hand, it concluded that
twins were expected to produce 90 percent more wear on asphalt pavement
and 20 percent more wear on concrete pavement than the semis they would
replace. This study did not independently estimate the diversion of
freight traffic from rail to trucks using twin trailers, but traffic
forecasts used in the study assumed that any such diversion would be
very small. This assumption was based on the prediction that LTL
carriers would be the primary users of twins, and that rail was not a
good substitute for LTL truck service.
TRB (1990) Special Report 227: New Trucks for Greater Productivity and
Less Road Wear: An Evaluation of the Turner Proposal
The purpose of this study was to evaluate a proposal to reduce road
wear and increase truck productivity. Known as the Turner Proposal, the
concept was to increase allowable truck lengths and gross vehicle
weights but at the same time decrease allowable axle weights. The study
evaluated the impact of ``Turner Trucks'' in terms of productivity,
safety, traffic, bridges and pavement. It examined both nationwide and
less-thannationwide adoption scenarios.
For nationwide adoption, it found that that savings to carriers or
shippers switching to Turner trucks would average 12 percent of
linehaul operating costs, and the aggregate cost savings would be
1.4percent of total truck freight shipping. Approximately 4percent of
rail ton-miles would be diverted, causing rail to lose 5percent of its
gross revenue. Some of the designs proposed were predicted to have
negative safety or traffic effects, but the study predicted that total
truck VMT would decrease. The study found that bridge costs would be
increased markedly, but that pavement wear would be reduced, such that
under nationwide adoption the net effect would be a savings in total
infrastructure costs. Under less than nationwide adoption, however, the
study found that bridge costs could exceed reductions in pavement
costs. Overall, the study found that the Turner proposal would produce
benefits and recommended that States consider its adoption under
certain circumstances.
DOT (1997) Federal Highway Cost Allocation Study
As part of its role in administering the Federal-aid highway
system, the Federal Highway Administration has from time to time
undertaken analyses aimed at estimating the costs imposed on the
various parts of the system by different classes of vehicles. The total
costs of building and maintaining the system are generally known, but
the purpose of these studies is to allocate the costs among users.
Known as Highway Cost Allocation Studies (HCAS), these analyses are
major efforts requiring significant data collection and analysis, and
have therefore been relatively infrequent. The most recent was
conducted in 1997, the first HCAS since 1982.
The 1997 HCAS provides the most up-to-date estimates available of
the relative costs imposed on the system by cars and trucks. A specific
objective of the study was to determine how changes in the Federal
highway program and the user fees that support it have affected the
equity of the user fee structure. The study also estimated the
responsibility of different vehicle classes for the external costs
associated with highway use, an important addition not included in the
1982 report. In addition to estimating marginal pavement and bridge
costs imposed by each class of vehicle, therefore, the study estimated
per mile congestion and noise costs. An addendum to the report
published in 2000 provided estimates of per mile air pollution costs by
vehicle class. The study found that combination trucks with registered
weights over 75,000 pounds (about 70 percent of all combination trucks
as shown in Table A-1) are not paying their fair share of highway
costs. Trucks with registered weights of over 80,000 pounds are on
average paying only 50 percent or less of the infrastructure costs they
impose.\26\
---------------------------------------------------------------------------
\26\Federal Highway Administration, 1997 Federal Highway Cost
Allocation Study Summary Report, Table 7.
---------------------------------------------------------------------------
The study was closely coordinated with the Comprehensive Truck Size
and Weight Study then being conducted by the U.S. DOT, in order to
provide a consistent set of assumptions and methods for estimating the
differential impacts on the highway system by vehicle class. The DOT
study is described below.
DOT (2000) Comprehensive Truck Size and Weight Study
This study was intended to be a comprehensive examination of the
issues related to TS&W regulations and the potential impacts of
changing them. The aim of the study was not to promote a specific
policy objective, which is noted in the TRB Report.\27\ Rather the aim
of the study was``. . . to develop an information base and set of
analytical tools upon which to evaluate alternative TS&W options.''\28\
The study is comprehensive in many respects. For example, it attempts
to make``. . . a significant improvement in the analysis of diversion
from other modes by explicitly considering inventory and other
logistics costs that shippers evaluate in making real-world
transportation decisions.''\29\ The study recognizes the role of TRB in
evaluating changes to TS&W regulations, with the assumption being that
the TRB Committee charged with examining TS&W issues would internalize
the results of the DOT study.\30\
---------------------------------------------------------------------------
\27\Transportation Research Board, TRB Special Report 267, pp. 2-
3.
\28\U.S. Department of Transportation, Comprehensive Truck Size
and Weight Study, Volume I Summary Report, 2000, p.4.
\29\U.S. DOT, op. cit., p. 6.
\30\U.S. DOT, op. cit., p. ES-11.
---------------------------------------------------------------------------
Appendix A2. List of Committee Members and Affiliations
----------------------------------------------------------------------------------------------------------------
Member Affiliation
----------------------------------------------------------------------------------------------------------------
James W. Poirot, Chair......................... Chairman Emeritus CH2M HILL, Mukilteo, WA
Kenneth D. Boyer............................... Professor, Department of Economics, Michigan State University
Robert G. Dulla................................ Senior Partner, Sierra Research Inc., Sacramento, CA
Nicholas J. Garber............................. Professor and Chairman, Department of Civil Engineering,
University of Virginia
Thomas D. Gillespie............................ Research Scientist and Adjunct Professor, University of
Michigan
Ezra Hauer..................................... Professor, Department of Civil Engineering, University of
Toronto
James H. Kopf.................................. Deputy Executive Director and Chief Engineer, Mississippi
Department of Transportation
Sue McNeil..................................... Director, Urban Transportation Center, University of Illinois,
Chicago
Eugene E. Ofstead.............................. Assistant Commissioner of Transportation Research and
Investment Management, Minnesota Department of Transportation
(Retired)
John R. Pearson................................ Program Director, Council of Deputy Ministers Responsible for
Transportation and Highway Safety, Ottawa, Ontario
F. Gerald Rawling.............................. Director of Operations Analysis, Chicago Area Transportation
Study
James E. Roberts............................... Chief Deputy Director, California Department of Transportation,
(Retired)
John S. Strong................................. Professor of Finance and Economics, School of Business
Administration, College of William and Mary
C. Michael Walton.............................. Ernest H. Cockrell Centennial Chair in Engineering, Department
of Civil Engineering, University of Texas at Austin
----------------------------------------------------------------------------------------------------------------
Source: Transportation Research Board, TRB Special Report 267.
Appendix A3. Organizations Contacted by the Committee for Comments
------------------------------------------------------------------------
Responded Did Not Respond
------------------------------------------------------------------------
American Bus Association........... Association of Waste Hazardous
Materials Transportation
American Trucking Associations..... National Private Truck Council
Distribution & LTL Carriers American Road and Transportation
Association. Builders Association
Motor Freight Carriers Association. Associated General Contractors of
America
National Automobile Transporters International Brotherhood of
Association. Teamsters, AFL-CIO
National Solid Wastes Management JB Hunt Transport
Association.
Western Highway Institute.......... Schneider National Carriers
Owner-Operator Independent Drivers United Parcel Service
Association, Inc.
Truck Manufacturers Association.... Freightliner Corporation
Truck Trailer Manufacturers Intermodal Association of North
Association. America
Federal Express Company............ National Small Shipments Traffic
Conference
Motor Coach Industries, Inc........ Advocates for Highway and Auto
Safety
National Industrial Transportation Surface Transportation Policy
League. Project
Association of American Railroads.. Minnesota Department of
Transportation
American Automobile Association.... New Jersey Department of
Transportation
Coalition Against Bigger Trucks.... New York State Department of
Transportation
Insurance Institute for Highway American Association of Port
Safety. Authorities
Connecticut Department of American Assoc. of State Highway
Transportation. and Trans. Officials
Florida Department of Commercial Vehicle Safety Alliance
Transportation.
Georgia Department of International Bridge, Tunnel and
Transportation. Turnpike Association
Idaho Department of Transportation. National Governors Association
Indiana Department of
Transportation.
Michigan Department of
Transportation.
New York Department of
Transportation.
Texas Department of Transportation.
------------------------------------------------------------------------
Source: Transportation Research Board, TRB Special Report 267, pp. C-21
and C-22.
______
Responses of Edward R. Hamberger to Additional Questions from Senator
Reid
Question. Some of the figures we have seen indicate that much of
the growth in freight will be carried on trucks. However, as you
mention in your statement, one way to reduce wear and tear and
congestion on our roads is to move more people and freight by rail.
Since our road infrastructure will be hard pressed to accommodate the
expected increase in truck traffic, how can we make rail more
competitive and ensure the most efficient division between freight
carried by trucks and freight on our rails? Keep in mind that we also
will need to move more people by rail in the future, not just freight.
Response. If freight railroads are to continue to provide safe and
efficient transportation service that enhances our nation's economic
health and global competitiveness, and if they are to play a meaningful
future role in relieving congestion, reducing emissions and energy
consumption, and improving safety, a number of steps should be taken
that remove public policy obstacles and focus public policy choices on
rail infrastructure.
First, there should be a more pronounced reliance on public-private
financing partnerships for railroad infrastructure improvement
projects, especially for projects that provide significant public
benefits or meet public needs, such as congestion mitigation, emissions
relief, enhanced mobility, and enhanced safety. As outlined in my
September 9th testimony, the TEA-21 reauthorization process should
include modifications to several transportation infrastructure programs
and Federal tax policies to allow freight railroads and other
transportation providers to meet vital public transportation needs more
efficiently and effectively.
Second, Congress and rail regulators should resist calls to
reregulate the rail industry. While it is beyond the scope here to
explain in detail why railroad reregulation is such a counterproductive
notion, the essential point is that regulatory restrictions that impede
railroads' ability to generate sufficient returns would severely
compromise their ability both to generate investment funds internally
and to attract the outside capital needed to sustain--much less
increase--their operations over the long term. Ultimately, if railroads
are reregulated, the only realistic alternative to wholesale
disinvestment of our nation's rail network would be for the government
to step in and subsidize railroads on a massive scale.
Third, a number of Federal laws and regulations that inhibit
railroads by treating them less favorably than other modes should be
addressed.
For example, under existing truck size and weight limits, rail-
competitive trucks cover far less than the costs of the damage they
cause to our highways. The shortfall is made up through billions of
dollars in subsidies from other highway users to truckers. Equity
demands that truckers bear this expense themselves. To make matters
worse, various interests have proposed that the existing truck weight
limit be increased (for example, to 97,000 pounds) and the use of
longer combination vehicles be expanded. Attempts to expand existing
truck size and weight limits should be resisted because such expansion
would exacerbate existing inequities while severely harming the rail
industry. A recent U.S. DOT study found that, depending on the
scenario, increased truck sizes and weights would result in a decline
in rail revenue of between $2.9 billion and $6.7 billion, a decline in
the contribution to railroad fixed costs of between $2.1 billion and
$3.1 billion, and a decline in railroad return on equity of 32 to 46
percent. Such declines would decimate the rail industry's ability to
invest in its infrastructure, add significantly to highway wear and
tear, increase highway congestion, and diminish highway safety.
Another example of a modal inequity concerns Federal research and
development. The ``21st Century Truck Initiative'' is a public-private
research partnership involving many of the nation's largest heavy-duty
engine and truck companies and several Federal agencies designed to
lead to prototype engines that double existing fuel economy for long-
haul trucks and significantly reduce truck emissions. Currently, there
is no similar program for locomotives. To correct this inequity,
Congress should establish a public-private partnership involving
Federal agencies, railroads, and rail suppliers designed to increase
the fuel efficiency of, and reduce emissions from, locomotives.
Taxes constitute a third area in which modal inequities hinder
railroads. Public policy should ensure that tax laws do not distort
market forces by giving one mode a distinct competitive advantage over
other modes. Thus, existing tax laws which disadvantage railroads
relative to trucks and other modes should be modified.
For example, the 4.3 cents per gallon ``deficit reduction'' fuel
tax paid by railroads but not paid by trucks should be repealed.
Likewise, railroad disadvantages created by existing capital recovery
provisions should be addressed. Currently, for income tax purposes
railroads must capitalize and depreciate, over a period of years, the
costs incurred in building their infrastructure. In addition, railroads
must capitalize many of the costs of repairing and maintaining their
infrastructure. In contrast, the fuel taxes paid by trucking companies
(used for both new capital expenditures and highway repair and
maintenance) are expenses which can be deducted immediately. This
disparity in treatment of infrastructure spending for income tax
purposes results in a 9 percentage point penalty for railroads on their
capitalized infrastructure investments. It is a significant issue for
freight railroads because railroads are enormously capital intensive:
in 2000, railroad capital spending was equal to 17.8 percent of
revenue, compared with 3.7 percent for U.S. manufacturing as a whole.
Railroads also pay hundreds of millions of dollars per year in property
taxes on their right-of-way, an expense their trucking competitors do
not pay.
Finally, as your question reminds us, freight railroads also face
significant and increasing demands for use of their infrastructure for
passenger operations. Freight railroads agree that passenger rail can,
under the right circumstances, play a role in alleviating highway and
airport congestion, decreasing dependence on foreign oil, reducing
pollution, and enhancing mobility and safety. However, the importance
of passenger railroading to our country pales in comparison to the
importance of freight railroading. Therefore, we must find the most
effective way to provide the passenger services that America needs, but
without burdening the freight rail system--operationally, financially,
or in any other way. The goals of reducing pollution and highway
congestion can be realized only if we ensure that passenger trains
don't interfere with freight service.
To this end, Congress should resist calls to legislate mandated
passenger access to freight-owned track. Access by passenger railroads
to facilities owned by private freight railroads must be negotiated on
a case-by-case basis by the parties, without government interference.
For their part, freight railroads will continue to work cooperatively
to help passenger railroading succeed where it is practicable, but it
is not the responsibility of our nation's privately owned freight
railroads to subsidize passenger service. Once policymakers agree on
the nature and scope of passenger railroading in this country, they
must be willing to commit public funds on a long-term basis
commensurate with that determination. To do otherwise would undercut
our nation's freight rail capabilities and be counterproductive in
addressing our country's congestion, environmental, safety, and
economic concerns.
______
Response of Edward R. Hamberger to Additional Question from Senator
Jeffords
Question. Mr. Hamberger, I appreciate your detailed and thorough
recommendations regarding TEA21 reauthorization. Would you please
expand upon the legislative changes-as opposed to the regulatory
changes-you are seeking to the Railroad Rehabilitation and Improvement
Financing Program?
Response. AAR is seeking legislative changes to the Railroad
Rehabilitation and Improvement Financing (RRIF) program that would
ensure that the applicant for a loan or loan guarantee would not have
to (1) provide collateral; or (2) demonstrate that it has sought other
financial assistance under the program (i.e., lender of last resort
provision). S. 1530, the ``Railroad Advancement and Infrastructure Law
of the 21st Century,'' or RAIL-21, and a related House measure both
include these important legislative changes. S. 1530, which has ten
Senate cosponsors, is pending in the Senate Committee on Commerce,
Science, and Transportation.
__________
Statement of Rick Larabee, Director of Port Commerce, Port Authority of
New York and New Jersey
Chairman Reid and Chairman Breaux, thank you for the invitation to
appear before this panel on the matter of intermodal transportation and
port access. I am pleased that you chose to conduct a joint hearing of
your two committees. After all, the subject is intermodal
transportation. Your collective effort demonstrates that it is
important to consider how separate modes of transportation operate as a
part of a total system. Congress showed great wisdom in acknowledging
the role of intermodalism in modern transportation and commerce with
the enactment of ISTEA and then TEA-21. Federal policy and support
should continue to evolve to foster the productivity and efficiencies
that can be achieved through addressing national transportation needs
as a system of connecting and complimentary modes.
As a region that has major port facilities and the nation's largest
consumer market we especially feel the impact of the economic
globalization on a major gateway and its infrastructure. My hope is
that this hearing will heighten your interest in the subject, further
your understanding of how the efficient movement of intermodal cargo is
a matter of national interest, and convince you that improvements in
Federal policy and the level of assistance are warranted.
For the record, the Port Authority of New York & New Jersey is a
bistate public authority created in 1921 by our States with the consent
of Congress. The Port Authority's mission on behalf of the States is to
identify and meet the critical transportation infrastructure needs of
the bistate region and provide access to the rest of the Nation and to
the world. The Port Authority's jurisdiction includes the region's
major aviation and marine terminal facilities as well as the PATH
commuter transit system, ferry and bus terminals, the interstate
tunnels and bridges and other facilities. And appropriate to the
subject of this hearing, intermodal transportation was born at Port
Newark and, soon after, the first U.S. container port was developed on
Newark Bay.
Our operations and projects help move people on air, land and water
to the workplace, home and distant places. The region is the most
densely populated in the United States and the largest international
gateway on the Atlantic. As such, people and freight heavily populate
the highways, rail systems and marine terminals as foreign commerce and
domestic markets are served in just-in-time fashion. And while you have
asked me to focus my remarks on port access I should observe that our
region and gateway is as modally diverse as can be, making access and
mobility issues that much more complex. Within a one mile radius of our
busiest marine terminals is one of the nation's largest air cargo
facilities, the northeast corridor rail line serving passengers and
freight, interstate highways, and other roads and rail lines in
addition to the warehouses, rail yards and businesses that support
national and regional commerce. Similar multi-modal views can be seen
elsewhere in the bistate area.
Our airports are responsible for roughly 22 percent of all US
international cargo, which, combined with domestic cargo, totaled
nearly 2.95 million tons in 2000 at a value of $150 billion. The
seaport serves 35 percent of the U.S. population and 200 nations. The
terminals in New York and New Jersey handled over 3 million container
units (as measured in Twenty-foot Equivalent Units) last year and $80
billion of general, bulk and breakbulk cargo moved through the port in
2001. At one container terminal alone over 5,000 trucks go through the
gates every day. Our on-dock rail terminal handled 200,000 containers
per year and is near capacity. And lest you think that our port is the
exclusive gateway for our region's consumers and manufacturers, another
750,000 TEUs arrive in our region via rail from the West Coast.
Meanwhile, traveling annually over our bridges and through our tunnels
are approximately 250 million vehicles while 2.5 million buses use our
two terminals in New York City.
Those statistics attest to the vitality of the trade and economic
activity that is at work every day. But it also hints at a major
challenge we and other regions face.
That challenge is to make sure that American gateways and freight
corridors have the capacity to keep up with the growth in trade and the
larger economy. To be clear, this is not a case of build it and they
will come. It is a matter of . . . build it because the cargo is
coming. In fact it is already here resulting in ever-greater congestion
7 days a week. And whether you are talking about commuter routes, air
cargo or port access finding new capacity is a present day issue that
will only worsen unless actions are taken on a Federal, State and local
level to improve efficiencies and expand capacity.
To help you better understand the challenge we face, I would like
to paint a present-day intermodal picture for you:
The New York/New Jersey metropolitan region is a severe
nonattainment area for ozone (NOx and VOCs).
Approximately 87 percent of ocean borne cargo leaves or
arrives at the Port of New York-New Jersey in a truck. Almost all of
the remainder travel on rail.
At a growth rate of 4 percent a year, estimates show
trade in all types of cargo doubling in our port in little over 10
years. Nationally, trade will double by 2020.
Demand for consumer goods is driving continued growth in
intermodal trade, which is expected to rise at rates exceeding 4
percent annually. In the past recent years actual growth in general
cargo at the port has averaged 6 percent. Container traffic is expected
to quadruple by 2020.
Five thousand commercial cargo ships called in the port
in 2001.
While regional population totals are expected to advance
slowly at about 0.3 percent per year to 2020, even this modest growth
rate will result in an absolute increase of nearly one million people
to the population base creating a greater demand for consumer goods and
placing further strains on an aging transportation infrastructure.
Commercial and retail development initiatives along with
growing public demand for access to limited waterfront areas are
increasing traffic and land pressure on marine terminals, rail yards,
and air cargo operations.
Distribution facilities are migrating to more affordable
locations on the region's periphery and in other States further
straining our roadway systems and degrading our air quality as trucks
must travel greater distances to deliver commodities to consumers in
our urban center.
Our region's highways are at or near capacity. Shortfalls
in the rail freight line and yard capacity necessary to accommodate
commodity flows are increasing. Competition for capacity on the road
and rail systems between commuters and goods movement is fierce.
Trucks move 90 percent of the region's freight (and 87
percent of the port's intermodal cargo), though they represent about 10
percent of the vehicles on the region's highways and about 7 percent at
the Port Authority tunnel and bridge crossings. Freight trains comprise
an even smaller proportion of the region's railroad activity, often
confined to limited operating times in deference to extensive commuter
rail schedules.
The eight active intermodal rail yards that serve the
entire region handle more than 1,000,000 lifts per year and are close
to capacity.
In addition to being among the busiest in the Nation, our
airports contend with freight access problems, especially J.F.K.
International where trucks and passenger vehicles vie for space on the
main access route.
Addressing these challenges will require investing in
infrastructure and adjusting policies to foster logistically and
environmentally smart solutions for the long term. Partnerships are
coming together locally and regionally to support projects and we need
a strong Federal partner to accelerate these activities. Such
partnerships have proven to be successful, exemplified best by the
Alameda Corridor project undertaken by our West Coast friends. The
public and private sectors, including Federal and State governments,
joined in planning and building the Alameda Corridor. And Federal
support was crucial to the project being financially feasible.
It is heartening that the U.S. Department of Transportation-the
Federal Highway Administration, Maritime Administration and the
Secretary's intermodal staff, in particular-and the freight community
have devoted recent years to studying freight and intermodal
transportation issues. FHWA maps vividly illustrate what the future
holds for our country as international and domestic freight volumes
grow at the gateways, borders and along trade corridors. The Maritime
Administration's survey of port access problems and recent report of
its findings is important work as was the discovery that port access
and other intermodal linkages are among the lowest federally funded
transportation projects.
The Port Authority, in coordination with the States of New York and
New Jersey, is in the process of developing specific recommendations
for future legislation. Therefore I will devote the remainder of this
statement to some general observations for your consideration. These
are in no particular order.
First, we and other ports greatly appreciate the attention that
your committees are giving to the maritime transportation system (MTS).
For a country that from its earliest days has depended upon maritime
transportation to build and sustain a Nation the MTS is the least
visible and federally supported transportation system in the country.
That is why we are grateful that that the Bush Administration continued
the MTS initiative. Consideration is now being given to identifying MTS
infrastructure requirements and it is our hope that the Federal
Government will act affirmatively on that information.
Second, congestion and other bottlenecks to efficient
transportation can be found throughout the country, but it is
especially severe in major gateways and metropolitan areas that are
essential elements of the nation's economic infrastructure and
security. As such, those areas, including the New York-New Jersey
region, deserve special attention. An older and densely developed area
like ours, with roadways, ramps and bridges designed for early 20th
century conditions have a special challenge to upgrade facilities to
standardized lane widths and weight limits that can accommodate the
larger and heavier containerized freight movements.
Third, the significant growth in freight movement that is projected
for this country will have to be accommodated efficiently or the Nation
will suffer the consequences. However, in the Northeast and other
heavily traveled areas building new capacity to meet the needs of
commerce should not mean that trucking will alone have to bear the
brunt of that growth. Clearly trucking will be an essential part of the
transport strategy in the decades to come, carrying more and more
freight. But in our region trucking and the highways on which they
depend are not expected to have the capacity to handle a growing
population and the anticipated doubling and tripling of domestic and
international cargo. Can many more lanes be added to the region's
interstates or to major corridors like I-95, even in the Washington
area? And can that be done while maintaining Federal and State clean
air objectives? It is evident to us that if we are to avoid
debilitating congestion at the port and on the region's highways
adjustments will be needed in the modal sharing of intermodal cargo.
That leads me to my fourth point.
Even as Congress continues to support the enhancement of highway
capacity in the United States your committees should consider how to
foster the development of other modes to accommodate increasing demand.
Rail certainly is one part of the answer. We are building three new
intermodal rail yards at our marine terminals in order to dramatically
expand our capacity to move containers on rail. In addition, the Port
Authority is working with the railroads and public agencies to identify
specific regional rail projects that will improve line and terminal
capacity.
Another answer can be found off our shores. We are undertaking a
program to encourage intermodal cargo to move by water where possible.
That is made possible in part by the costs of congestion, which have
made traditionally long distance modes more competitive over shorter
hauls. There is tremendous underutilized capacity on the water. And
while moving containers on barges can satisfy the market in the
Northeast I think that Congress can look into the future and see how
fast vessel technology can bring new capacity to intermodal
transportation along major corridors. It is not the solution but if
examined for its associated capital, energy and environmental costs it
can be part of the solution with Federal support.
Fifth, innovations approved by Congress in TEA-21, such as the
Congestion Mitigation Air Quality (CMAQ) and National Corridor Planning
and Development programs, were very worthwhile policy steps to take.
CMAQ helps regions such as ours make sound transportation choices that
are consistent with clean air objectives. The corridor program
recognized that special conditions in need of special attention exist
at the borders and elsewhere. Those innovations were worthwhile
directions to take and they could be improved and expanded even
further, especially to add to the capacity of major gateways and
corridors.
Sixth, while this hearing is concerned with the movement of
freight, it is important to note how attention to freight can achieve
improvements for passengers. I think especially of projects intended to
divert freight from heavily traveled automobile routes to dedicated
freight corridors, whether on land or water. Area transportation
agencies have intermodal corridor projects in varying stages. Some were
authorized for study in TEA-21, such as the New Jersey intermodal
corridor and the cross-harbor rail freight tunnel projects. Port
Authority staff have undertaken a comprehensive look at how intermodal
freight improvements, primarily linkages between existing roads and
rail lines, can be strategically planned and implemented to stitch
together freight corridors. Already underway is a Port Authority
project to link the Howland Hook Marine Terminal on Staten Island to
the Chemical Coast Line in New Jersey. That, combined with the
improvements that we have made with the State and City at Howland Hook,
will bring intermodal rail access to a fast growing area of the port.
It is a significant step in improving direct rail service to New York
City. Another project, referred to earlier, is the Port Authority's
Port Inland Distribution Network (PIDN), which is in the early stages
of implementation. PIDN is intended to mitigate against growing
congestion at the marine terminals and on the highways by transshipping
via railroads and barges those inbound containers destined for
Northeastern locations. The strong level of interest that Northeastern
State departments of transportation are showing in PIDN is an indicator
of how transportation planners are eager to find alternatives to
congested corridors like I-95. An equally strong level of interest on
the part of the Federal Government could help such initiatives
demonstrate how water transportation can manage part of the freight
growth. Flexibility in Federal programs can be a way to support such
initiatives.
Lastly, the use of intelligent technology has proven very
worthwhile in our region for managing the flow of our busy highways and
crossings. Continuing and enhanced Federal support in this area would
be welcome including expanding the integrated use of technology to
expedite, track and more efficiently manage freight movements in
congested metropolitan areas. It could also provide a double benefit of
added security for cargo shipments.
Senators, the Port Authority of New York and New Jersey and other
agencies of the region know we must dramatically strengthen intermodal
service options. My department's twenty-year goal is to reduce port
reliance on trucking from 87 percent of modal market share to 57
percent by strongly growing water borne and rail market shares. Our
capital plan reflects this with its support for dock and near dock rail
extensions, port terminal highway improvements and PIDN developments.
To do so we need to improve connections to local intermodal service
facilities at or near the port with connector highway improvements as
contemplated by the NJDOT International Intermodal Corridor Program and
its portway element. New York City and New York State are taking a
similar tact with plans for rail access, car float and intermodal rail
improvements in the City and Long Island.
In closing I should note that a lot of good work is being done by
organizations represented at this hearing and others who are not here.
The American Association of Port Authorities, the American Trucking
Association, the Association of American Railroads, and the Coalition
for America's Gateways and Corridors have joined with others in the
freight community to develop a common platform to address freight
mobility in future Federal policy. The Coastwise Coalition has worked
to identify the potential for the maritime sector to accommodate some
of the future demand for freight transportation. I think your
committees can benefit greatly by the thoughtful attention that has
been given to these issues by my counterparts in government and the
private sector. Federal freight transportation policy is still in its
adolescent stage, which means there is great opportunity for
improvement to meet the challenges I have described.
Thank you again for inviting the Port Authority to participate in
this hearing. I welcome any questions you may have.
______
Responses by Rick Larrabee to Additional Written Questions from Senator
Reid
Question 1.Mr. Larrabee, you argue in your testimony that at the
same time Congress continues to support the enhancement of highway
capacity, we should consider how to foster the development of other
modes to accommodate increasing demand. What specific steps do you
recommend Congress take to lighten the load on our highways and ensure
that other modes share more equally in moving freight through our
nation?
Response. The points below will suggest ways that Federal programs
can enhance the ability of waterborne systems to serve as an
alternative to highway use recognizing that water transportation is the
nation's least used mode. One of the reasons why water (and rail) modes
do not handle larger volumes of domestic freight is that Federal policy
has done such a good job in developing and expanding our interstate
road system--understandably so--but it has not paid enough attention to
the contributions that non-highway modes can make. The highway focus
has worked well over the years but costly capacity constraints,
resulting from the strong and continuing growth in commercial truck
vehicle miles traveled (VMT), have become a glaring issue. Other modes
should be examined for their potential to relieve truck volume related
pressures. Federal policy has not been focused on the overall benefits
to the highway program that could result from greater Federal support
to alternative modal development such as less highway congestion, less
wear and tear on the infrastructure, less pressure to add new highway
capacity, as well as the general quality of life improvements (i.e.--
safety, security, and environmental). ISTEA, through the creation of
the Congestion Mitigation Air Quality (CMAQ) program, allowed funding
of intermodal freight programs that advanced its ``clean air'' policy
purpose. CMAQ funding for non-highway projects, such as the locally
successful Red Hook, Brooklyn to Port Newark Barge, has demonstrated
that waterborne services can help reduce truck VMT in congested areas
and mitigate negative environmental impacts. By encouraging additional
programs that support multi-modal systems development, the Committee
can broaden the means available to simultaneously create freight system
efficiency and provide highway congestion relief.
Here in the Northeast, Interstate 95 is not just a vital highway
route to North--South travel between some of the nation's largest urban
areas; it is the spine of a multimodal transportation corridor. Air,
rail and waterborne systems join this essential highway element to
create a network for personal and commercial mobility. Just as
Northeast rail corridor operations provide relief and alternatives to
highway and aviation systems, waterborne improvements can bring
increased mobility and shipper choice in the freight realm. Congress
should not wait for congestion to build to the point where gridlock
finally occurs and forces a change to other modes--only then
discovering that the alternative modes are not fully prepared to
respond. Federal policy should begin now to support a transition toward
modal equilibrium that our economy and society will require in the not
so distant future. That equilibrium will certainly have trucking as its
most essential element, but the increased cargo burden that growth will
bring should be shared by the others.
Following are proposals that I recommend:
Harbor Maintenance Tax Application Reform
Obstacles to the expansion of domestic barge and short sea
operations should be removed. One such obstacle is a provision within
the Harbor Maintenance Tax (HMT) that creates an economic penalty on
inherently domestic freight movements. If a container of imported cargo
enters the US at the Port of New York and New Jersey, for example, it
is assessed a fee for the maintenance of Federal channels. If that same
cargo is off-loaded to a barge and now moves between two US ports
(i.e.--Port Newark--Elizabeth and the Port of Boston), the HMT requires
that the fee by paid again by the shipper after the goods are
discharged in Boston.
Recommendation:
Eliminate the provision in the HMT that allows for double
collection of the tax on domestic moves--especially the transshipped
cargo. This change will provide a modest but important cost reduction
that will make the waterborne alternative more attractive as a service
choice. It would also eliminate an unfair ``double hit'' tax policy
that puts the ad valorem tax on the same cargo twice. Based on fiscal
year 1999 figures (the latest we have), the tax on all domestic cargo
accounts (bulk and non-bulk) raised less than $50 million of the over
$500 million that was collected that year. And the portion paid by
containerized general cargo likely is a small fraction of the total
domestic collection. Voiding the tax application on that cargo seems to
be a cost-effective way to encourage consideration of the waterborne
mode.
Freight Congestion Relief Grants And Corridor Improvement Funding
Targeted To Non-Highway Modes
The startup costs associated with new services are a barrier to the
introduction of waterborne alternatives to the truck-only movement of
freight. The carriers who could provide such services need to be given
the opportunity to demonstrate their effectiveness if we are ever to
create congestion relief in critical multi-modal freight corridors.
There are major but not insurmountable challenges to the initiation of
domestic movements of containerized freight by water. Water carriers
(like railroads) have to absorb additional costs of transferring
containers at points where transfers to local truck pick up and
delivery take place. Economies of scale advantages can only be realized
by these intermodal services once they have operated long enough to
build a market presence which attracts substantial volumes of general
freight. Historically, shippers and ocean carriers have been slow to
change their domestic transfer service patterns even when there is good
reason to do so. Without some type of external funding assistance to
give alternative modes, especially domestic water service operators, a
chance to prove themselves, little progress can be made in shifting
freight movements.
The Port Authority is developing a barge and rail Port Inland
Distribution Network (PIDN) as an alternative to truck-only container
distribution in an eight-State market area 75 miles or more distant
from Port of New York and New Jersey facilities. Our analysis shows
that most of the potential routes can be operationally self-sustaining
within 5 or 10 years and that there are substantial public benefits
from reduced congestion, air quality improvements and increased
economic development opportunities at feeder port locations from such a
system. Moreover, the cost of operational support on a per route basis
over this time is generally modest (i.e.--less than ten million
dollars). PIDN barge service between the Port of New York and New
Jersey and the Port of Albany may begin as early as this December. Some
Federal funds, notably CMAQ moneys, will be utilized to help give the
barge service its start. Unfortunately, CMAQ grants for waterborne
programs compete with other worthwhile CMAQ programs and this puts a
practical limit on dollars available. Moreover, CMAQ has a narrow focus
on air quality improvements in non-attainment areas and only allows for
2 years of operational support. It does not fully recognize the impact
modal alternatives can have on general highway system congestion
relief, safety, security or public investment cost effectiveness in
multi-modal corridor service and development.
A major barrier to new modal development, even where it enjoys
strong local and State support, is the fact that intermodal service
development requires multi-State support. Oftentimes, the benefits
cross State lines while the major development costs are centered at the
service hub and regional port. Thus benefits can reach well beyond
these few locations but the sharing of the costs does not. Federal
assistance supporting the delivery of broadly distributed benefits
would seem ideal to overcome developmental barriers created by MPO
boundaries and State lines. The Federal aid would, however, require
expeditious Federal approval, based on State and local support, rather
than the bottom's up MPO-through-the-State process that makes CMAQ and
many other Federal programs difficult to apply even where it may be the
intent of Congress to do so.
Recommendation:
New programs, more focused on congestion relief and other public
benefits that would occur from the introduction of new intermodal or
multi-modal services in congested corridors, are needed. One way to
meet this need would be to set criteria to measure the contribution
that the waterborne alternatives can make to multi-modal freight
corridor congestion relief. If those criteria were satisfied, highway
funds could be made available to introduce and sustain regional efforts
to establish new systems. To deal with startup challenges, multi-year
operational and capital assistance should be included. A greater
Federal role to facilitate the application and funding review process
for multi-State/multi-MPO applications is essential. An expanded CMAQ
program is one way to support such projects in their initial years. A
better approach is to create a freight specific CMAQ-like congestion
relief program, open to alternative intermodal systems that can
demonstrate highway congestion relief.
Question 2. We hear a lot of positive feedback about the Alameda
Corridor project and how Federal funds were able to leverage private
sector, State and local funds for a project that benefited the port,
the trucking companies, and the railroads. How useful is the Alameda
Corridor model and can it be replicated elsewhere with some Federal
assistance?
Response. The Alameda Corridor project is an ideal model for
strategically planning, coordinating, and funding the development of
multi-jurisdictional corridors which optimize the movement of freight
between and among key maritime, highway, rail and aviation gateways.
The Port Authority of New York & New Jersey has already begun to
expand upon the Alameda ``model'' in our development of a multi-State
``Northeast Intermodal Transportation Corridor'' (NITC) program. While
still in its infancy, the basic tenet of NITC is that it will, with
Federal assistance, encourage States from Maine to Maryland to approach
the planning and development of their respective freight infrastructure
programs in a coordinated, systematic manner consistent with TEA-21's
``National Corridor Planning and Development Program'' requirements for
the development of corridors of national significance.
Corridor programs such as Alameda offer the potential for: 1)
removing cargo from the general passenger traffic flows thereby
simultaneously reducing the cost to move those goods and enhancing
public safety; 2) rationalizing container distribution; 3) improving
air quality; 4) enhancing security; 5) fostering the utilization of
``brownfields'' for warehousing and goods distribution activity; and 6)
stimulating local economies. Given the potential benefits, it is clear
that Federal policy needs to do more to promote logistically and
environmentally sound long-term solutions to the movement of the
nations freight.
__________
Statement of Michael P. Huerta, Senior Vice President and Managing
Director, ACS State & Local Solutions, on Behalf of the Coalition for
America's Gateways and Trade Corridors
The Coalition
The Coalition for America's Gateways and Trade Corridors is an
intermodal organization comprised of more than 22 groups. The
Coalition's sole interest is to encourage adequate Federal investment
in our nation's intermodal freight infrastructure and technology to
ensure safe, efficient and cost effective goods movement.
Borders and Corridors Programs Overview
Recognizing the unprecedented demands international trade is
placing on our nation's transportation infrastructure, and bringing a
clearer focus on needed freight transportation and intermodal connector
projects, Congress established the National Corridor Planning and
Development Program (NCPD) and the Coordinated Border Infrastructure
Program (CBI) often referred to as the Borders and Corridors Program.
Section 1118 and 1119 of the Transportation Equity Act for the 21st
Century (TEA-21) provided $140 million annually through a discretionary
grant program administered by the Federal Highway Administration's
(FHWA) Office of Freight Management & Operations to fund planning,
development, construction and operation of projects that serve border
regions near Mexico and Canada and high priority corridors throughout
the United States.
The Coalition believes that current Borders and Corridors Programs
have fallen short of the intended goals when these programs were
established for two reasons.
First, the programs included in the TEA-21 Conference Report were
funded at levels far less than necessary to meet freight transportation
and intermodal connector needs. As witness to that, since the beginning
of the programs, funding requests from States and Metropolitan Planning
Organizations (MPOs) have exceeded available funds by a ratio of 15:1.
Second, programs were extensively earmarked in the annual
appropriations process. In fact, in the transportation appropriations
bill for fiscal year 1902 these programs were earmarked for specific
projects at more than twice the authorized funding level, causing the
FHWA to decline taking grant applications for that year. As a result,
funds have not always been allocated to projects with the greatest
national significance to the movement of freight.
Reauthorization
With respect to the reauthorization of TEA-21, the Coalition
strongly recommends the programs be continued, but bolstered to ensure
the original goals are met. With respect to modification, the Coalition
respectfully commends several recommendations to the Committee for
consideration.
To meet the high level of demand, funding for the Borders
and Corridors Program must be increased to not less than $ 2 billion
annually.
The distribution of funds should be freight specific, and
there should be a qualification threshold based on freight volumes and
freight-related congestion to ensure limited dollars reach high-volume
corridors/borders/gateways.
Under current law, only States or MPOs are eligible to
apply for funding under the Borders and Corridors Programs. It is
recommended that the designation of entities eligible to apply for
Program funding be expanded to include other public and quasi-public
organizations.
The programs should be redefined to address the needs of
all trade gateways, not only land borders, and gateway connected trade
corridors. Many gateways that handle high volumes of freight are not
eligible for funding because they may not be ``borders.'' For example,
while Illinois is not a ``border State,'' one-third of the nation's
freight passes through Chicago and it is the largest intermodal hub in
the Nation. Similarly, inland ports are also important gateways that
enable the efficient movement of goods throughout the country.
The designated ``high priority'' corridors eligible for
funding under the Corridors Program need to be reexamined to ensure
freight intensive areas can apply for funding. Currently, there are
many important projects in need of funding that do not fall in one of
the 43 priority corridors designated under TEA-21. Highest priority
should be given to corridors that move goods to and from trade
gateways.
Overall Needs
International trade is the key to America's economic future.
Imports and exports, which fuel our economy, are doubling every 10
years. At the same time, freight traffic within the United States'
borders will increase 100 percent by 2020. In 1970, foreign trade was
10.8 percent of U.S. gross domestic product (GDP). By 2000, it grew to
more than 26 percent of the GDP.
This growth trend is expected to continue in all modes of
transportation. In the next 20 years, foreign trade moving through
American ports is expected to increase by 187 percent, while
containerized cargo will experience an explosive 350 percent increase.
In response to the overwhelming growth in trade, truck traffic will
increase by 200 billion vehicle miles and rail freight shipments are
projected to grow by 1 billion tons.
Rapidly accelerating trade combined with domestic growth have
created a $10 trillion U.S. commodity flow that produced millions of
new job opportunities and a higher standard of living for Americans.
These benefits will only last as long as we keep the freight
moving.
While so far freight carriers have done a good job keeping goods
moving, in coming years, better, smarter and more truck, rail and
intermodal gateway infrastructure will be needed to keep the traffic
from stalling in gridlock. Even today, congestion and heavy volume
often impede access to major freight terminals. Near dock rail capacity
requires significant expansion and capital investment.
Unfortunately, too small a portion of TEA-21 is devoted to freight-
related intermodal projects. Meanwhile, intermodal connectors currently
have up to twice as many engineering deficiencies and pavement
deteriorations as National Highway System non-Interstate routes. While
the current port and trade corridor system is pressed to accommodate
the current traffic levels, demands on it are expected to double by
2020.
The large burden placed on our freight transportation system has
only been exacerbated by increased security concerns since September
11. Intermodal freight infrastructure is critical to national defense.
Thirty-eight thousand miles of the interconnected civilian rail
system--vital for carrying heavy, oversized equipment and weapons
systems--links some 170 strategic defense installations to seaports for
military deployment.
Ports and their connectors have always been the point of
embarkation for defense materiel, and this role is even more important
as our global strategy emphasizes flexible response. Highway connectors
play a vital role in the rapid mobilization of personnel and materiel
toward points of deployment.
Value of Investment/Cost of Neglect
Investing in transportation yields economic paybacks for all
corners of the country. Every dollar invested in the highway system
yields $5.70 in economic benefits to the Nation. U.S. freight railroads
contribute over $14 billion a year to the economy in wages and benefits
to about 200,000 employees and billions in purchases from supplies.
And, U.S. ports generate 13 million jobs, contribute $743 billion to
the GDP and supply $200 billion in Federal, State and local taxes.
Ignoring these problems will cost our Nation in numerous ways.
Growing freight congestion puts our economic growth in peril by
creating costly delays for manufacturing, putting a drag on job
creation and undermining our ability to compete in the increasingly
important global market. Highway congestion alone costs the U.S economy
$78 billion annually, while also contributing to air pollution and
other environmental concerns. In addition, delays at canal locks
nationwide totally some 550,000 hours annually, representing an
estimated $385 million in increased operating cost borne by shippers,
carriers and, ultimately, consumers.
As you are all probably aware, the Alameda Corridor recently opened
in Southern California. We believe this public-private project
exemplifies the type needed throughout the country. While at first
glance this may seem to be only a rail project, it will also facilitate
more efficient truck, ship and rail movement. The benefits from moving
freight in and out of our nation's busiest ports faster will not only
be felt in Southern California, but will stretch across the rest of the
country. The goods that move through the ports of Long Beach and Los
Angeles represent $97.3 billion in U.S. trade, support 2,121,500 jobs
nationwide and deliver $4.51 billion in State and local taxes
throughout the country.
There are many other projects, similar to the Alameda Corridor that
still need funding. Here are a few of examples drawn from our members:
The Port of Pittsburgh will need up to $30 million for
rail, road and port improvements.
To facilitate goods movement San Bernardino County,
California needs $383.3 million and Riverside County, California needs
$926.7 million.
For infrastructure improvements Washington State needs
$183.8 million.
The Gateways Cities Council of Governments in California
alone needs $4 billion for improvements for goods movement and freight
related congestion.
These are just a few examples of tremendous need for intermodal
infrastructure improvements.
Recommendation Detail
In response to these problems, the Coalition for America's Gateways
and Trade Corridors is asking Congress to:
1. Increase Funding for Freight Mobility
Funding needs for freight mobility are large, and will be met in a
variety of ways. It is estimated that some 25 percent of the general
highway expenditures go to the benefit of freight movement. Special
programs to encourage public-private partnerships will be a key element
as well. Given the need for major, targeted investments that meet
national needs, but are built by regional, State and local entities,
there needs to be a targeted program to encourage and support these
projects.
A minimum of $2 billion per year for the Borders and Corridors
Programs is required immediately to support designated programs for
freight technology and infrastructure, such as intermodal connectors.
This amount could productively be doubled as projects move out of
design and into construction in the next reauthorization period.
Since the beginning of the program, funding requests from States
and MPOs have exceeded available funds by a ratio of 15:1. Much of this
funding has gone to the planning, design and engineering of future
projects. There is clearly large unmet demand for funding and a growing
backlog of projects that are ``ready to go.'' The U.S. Department of
Transportation projects that the volume of freight movements in the
U.S. will double over the next 20 years. As a result, demands for
infrastructure project funding will increase ever further.
2. Utilize Creative Funding Approaches
To provide the level of funding required, Congress should actively
explore a variety of funding approaches including the possibility of
utilizing general funds. Available funds under the current Borders and
Corridors Programs should be increased to support freight-related
intermodal projects, especially projects that aim to reduce greenhouse
gases.
Attention should also be focused on restructuring and expanding
Federal loan and loan guarantee mechanisms to provide grants and long-
term credit for intermodal and intermodal connector projects. The
program should create incentives for State and local actions taken in
support of freight movement projects that are designated under a
national program.
3. Establish Freight Mobility as a Central Element in National
Transportation Policy and a Key Factor in State and Local
Planning
Establishing and maintaining freight mobility as a high national
priority must be articulated and reinforced in a variety of ways.
Through public pronouncements and policy documents both Congress and
the Administration need continually to underscore the importance of
freight transportation and the urgency of increasing the capacity and
efficiency of our national system.
The Coalition is a member of the Freight Stakeholders Coalition and
supports the principles outlined in testimony presented by that
organization, which not only call for greater funding but also better
freight data and planning.
Freight mobility needs to be given higher priority as an element in
State and local transportation planning. Strong relationships exist
between the Departments of Transportation and Defense, but these
relationships need updating to align them with today's priorities.
Congress should create a National Council on Freight Mobility
(including community mitigation) with strong representation from both
shippers and carriers, as well as affected communities and other
stakeholders, to advise the Secretary of Transportation.
The Council would provide advice and counsel on:
Overall freight infrastructure expansion strategy
Developing trends and technology in freight movement
Determining public interest in freight infrastructure
projects
__________
Responses of Michael Huerta to Additional Questions from Senator Reid
Question 1. Mr. Larrabee argues in his testimony that at the same
time Congress continues to support the enhancement of highway capacity,
we should consider how to foster the development of other modes to
accommodate increasing demand. What specific steps do you recommend
Congress take to lighten the load on our highways and ensure that other
modes share more equally in moving freight through our nation?
Response. The Coalition believes competition in the marketplace is
the best way to decide questions regarding the distribution of freight
among modes to be decided. However, much can be done to improve the
overall efficiency of our nation's transportation system.
For example, the Coalition believes too small a portion of TEA-21
is devoted to freight-related intermodal projects. Intermodal
connectors currently have up to twice the engineering deficiencies and
pavement deterioration than National Highway System non-Interstates
routes. Also, while the current gateway and trade corridor system is
pressed to accommodate the current traffic levels, demands on them are
expected to double by 2020. Seamless transfer of goods between the
modes will help meet that demand.
The large burden placed on our freight transportation system has
only been exacerbated by increased security concerns since September
11. Intermodal freight infrastructure is critical to national defense.
Thirty-eight thousand-miles of the interconnected civilian rail
system--vital for carrying heavy, oversized equipment and weapons
systems--links some 170 strategic defense installations to seaports for
military deployment.
Ports and their connectors have always been the point of
embarkation for defense materiel, and this role is even more important
as our global strategy emphasizes flexible response. Connectors play a
vital role in the rapid mobilization of personnel and materiel toward
points of deployment.
Accordingly, The Coalition recommends that a larger portion of
Federal transportation efforts target intermodal connectors and other
infrastructure that improve our nations ability to move goods to and
from our international gateways.
Question 2. We hear a lot of positive feedback about the Alameda
Corridor project and how Federal funds were able to leverage private
sector, State and local funds for a project that benefited the port,
the trucking companies, and the railroads. How useful is the Alameda
Corridor model and can it be replicated elsewhere with some Federal
assistance?
Response. The Alameda Corridor is a great example of how focused
Federal funds can leverage the involvement of other governments and the
private sector in transportation improvement projects.
We believe this public-private project exemplifies the type needed
throughout the country. While at first glance this may seem to be only
a rail project, it will also facilitate more efficient truck, ship and
rail movement. The benefits from moving freight in and out of our
nation's busiest ports faster will not only be felt in Southern
California, but will stretch across the rest of the country. The goods
that move through the ports of Long Beach and Los Angeles represent
$97.3 billion in U.S. trade, support 2,121,500 jobs nationwide and
deliver $4.51 billion in State and local taxes throughout the country.
There are many other projects, similar to the Alameda Corridor that
still need funding. Here are a few of examples drawn from our members:
The Port of Pittsburgh will need up to $30 million for
rail, road and port improvements.
The Alameda Corridor East, San Gabriel Valley, and OnTrac
Corridors in California need $2.5 billion for infrastructure
improvements.
To facilitate goods movement San Bernardino County needs
$383.3 million and Riverside County needs $926.7 million.
For infrastructure improvements Washington State needs
$183.8 million.
The Gateways Cities Council of Governments alone needs $4
billion for improvements for goods movement and freight related
congestion.
In each of these projects, Federal funds will galvanize together
the assets of local governments with private sector transportation
providers in a manner similar to that which occurred with the Alameda
Corridor project. I should note, however, that the Federal assistance
the Alameda Corridor project received was primarily in the form of a
loan. While this worked for that specific project, it will not work in
every case and Congress should look at both grant and loan funds to
facilitate projects such as those described above.
Question 3. Many people believe that the Borders and Corridors
Programs has not been able to successfully address many key freight
issues. One improvement I believe we should consider is to revise this
program to encourage public-private partnerships through a greater
emphasis on innovative finance and other creative incentives. How else
can we improve the Borders and Corridors Programs to target the highest
priority freight corridors and intermodal facilities?
Response. One significant step that can be taken is to establish
freight mobility as a central element in national transportation policy
and a key factor in State and local planning.
Establishing and maintaining freight mobility as a high national
priority must be articulated and reinforced in a variety of ways.
Through public pronouncements and policy documents both Congress and
the Administration need continually to underscore the importance of
freight transportation and the urgency of increasing the capacity and
efficiency of our national system.
The Coalition is a member of the Freight Stakeholder Coalition and
supports the principles outlined in testimony presented by that
organization which not only calls for greater funding but also better
freight data and planning.
Freight mobility needs to be given higher priority as an element in
State and local transportation planning. Strong relationships exist
between the Departments of Transportation and Defense, but these
relationships need updating to align them with today's priorities.
To advise the Secretary of Transportation, Congress should create a
National Council on Freight Mobility (including community mitigation)
with strong representation from both shippers and carriers, as well as
affected communities and other stakeholders.
The Council would provide advice and counsel on:
Overall freight infrastructure expansion strategy;
Developing trends and technology in freight movement;
Determining public interest in freight infrastructure
projects;
With respect to the Borders and Corridors program funds:
The distribution of funds should be freight specific, and
there should be a qualification threshold based on freight volumes and
freight-related congestion to ensure limited dollars reach high-volume
corridors/borders/gateways.
Entity eligibility should be clarified and broadened to
other public and quasi-public organization, such as multi-
jurisdictional authorities.
The programs should be redefined to address the needs of
all trade gateways, not only land borders, and gateway connected trade
corridors. Many gateways that handle high volumes of freight are not
eligible for funding because they may not be ``borders.'' For example,
while Illinois is not a ``border State,'' one-third of the nation's
freight passes through Chicago and it is the largest intermodal hub in
the Nation. Similarly, inland ports are also important gateways that
enable the efficient movement of goods throughout the country.
The designated ``high priority'' corridors eligible for
funding under the Corridors Program need to be reexamined to ensure
freight intensive areas can apply for funding. Currently, there are
many important projects in need of funding that do not fall in one of
the 43 priority corridors designated under TEA-21. Highest priority
should be given to corridors that move goods to and from trade
gateways.
______
Responses of Michael Huerta to Additional Question from Senator
Jeffords
Question 1. Mr. Huerta, you recommend that a minimum of $2 billion
per year be provided for the Borders and Corridors Programs, and that
the $2 billion should be doubled in future years. You also recommend
that the Congress expand Federal loan and loan guarantee mechanisms for
such projects. Would you please expand upon how this $4 billion in
annual funding could be used to meet your estimated demand for funding.
Response. The Coalition's recommendation is that funding for the
Borders and Corridors Program must be increased to not less than $ 2
billion annually. With respect to how funds can be most productively
used the Coalition offers the following recommendations:
The distribution of funds should be freight specific, and
there should be a qualification threshold based on freight volumes and
freight-related congestion to ensure limited dollars reach high-volume
corridors/borders/gateways.
Entity eligibility should be clarified and broadened to
other public and quasi-public organization, such as multi-
jurisdictional authorities.
The programs should be redefined to address the needs of
all trade gateways, not only land borders, and gateway connected trade
corridors. Many gateways that handle high volumes of freight are not
eligible for funding because they may not be ``borders.'' For example,
while Illinois is not a ``border State,'' one-third of the nation's
freight passes through Chicago and it is the largest intermodal hub in
the Nation. Similarly, inland ports are also important gateways that
enable the efficient movement of goods throughout the country.
The designated ``high priority'' corridors eligible for
funding under the Corridors Program need to be reexamined to ensure
freight intensive areas can apply for funding. Currently, there are
many important projects in need of funding that do not fall in one of
the 43 priority corridors designated under TEA-21. Highest priority
should be given to corridors that move goods to and from trade
gateways.
__________
Statement of John D. Caruthers, Jr., Chairman, I-69 Mid-Continent
Highway Coalition
Messrs. Chairmen and Members of the Subcommittees, it is a pleasure
to come before you today to discuss the importance of the completion of
Interstate I-69 to the efficient movement of the nation's freight.
When completed, I-69 will span the nation's heartland, connecting
Canada and Mexico through the States of Michigan, Illinois, Indiana,
Kentucky, Tennessee, Mississippi, Arkansas, Louisiana and Texas.
Designated as congressional High Priority Corridors 18 and 20 in the
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and as
Interstate Route I-69 in the Transportation Equity Act for the 21st
Century (TEA-21), the I-69 Corridor traverses over 150 counties and
hundreds of municipalities, directly serving over 25 million people.
The I-69 Mid-Continent Highway Coalition is comprised of cities,
counties, States, business, labor and civic organizations all along the
I-69 Corridor. It reflects the economic diversity of this vast region,
including the agriculture, mining, timber, energy, transportation,
chemical, electronic and industrial sectors-current and future users of
the I-69 Corridor.
Two sections of the Corridor 18 system--Interstate 69 from Port
Huron, Michigan at the Canadian border to Indianapolis, Indiana and
Interstate 94 from Port Huron southwest to the Ambassador Bridge in
Detroit and west to Chicago, Illinois--are existing-open-to-traffic
Interstates. The rest of Corridor 18, as well as Corridor 20, is under
development. From Indianapolis south I-69 connects Evansville, Indiana,
Memphis, Tennessee, Mississippi, Arkansas, Shreveport/Bossier City,
Louisiana and Houston, Texas to the Lower Rio Grande Valley at the
Mexican border. Corridor 20 extends along US 59 from Laredo, Texas at
the Mexican border through Houston to Texarkana, Texas. A portion of
Corridor 20 overlaps Corridor 18. Together, Corridors 18 and 20
comprise I-69.
The I-69 Corridor 18 and 20 system spans over 2600 miles. About
2000 miles from Indianapolis to the Mexican border remain to be
completed. Completion of I-69 will not require an entirely new facility
from Indianapolis to the Mexican border. In some areas it will link
existing Interstates or highways at Interstate standards. In other
areas it will require upgrading and linking existing non-Interstate
highways and, in others, new construction.
Work is underway along the entire I-69 corridor. Feasibility
studies have been completed and have shown that both Corridors 18 and
20 have positive cost benefit ratios returning $1.57 and $1.68
respectively for every dollar invested. Location and environmental
studies are in progress and some sections are in design, preliminary
engineering and construction. The entire corridor will be ready to go
to construction and, in fact, much of it can be completed in the
upcoming TEA-21 reauthorization, if funds are available.
While I-69 traverses nine States, it is important to the Nation as
a whole; for efficient movement of freight, for trade, intermodal
connectivity and economic development. Trade has shifted, particularly
after the passage of the North American Free Trade Agreement (NAFTA),
from east-west to north-south. Canada and Mexico are now the United
States' major trading partners. U.S. Mexican trade has more than
doubled since the passage of NAFTA in 1993. U.S. imports from Mexico
were up 175 percent from 1993 to 1999. U.S. exports to Mexico rose 109
percent over the same period and trade with Canada increased 73
percent. In 2001, 80 percent of U.S. trade with Mexico and 67 percent
of U.S. trade with Canada went by truck. The I-69 Corridor accounts for
over 63 percent of the nation's truckborne trade with Canada and
Mexico. It has the nation's busiest border crossings on both the
Canadian and Mexican borders. The Michigan border points of Detroit and
Port Huron account for 48 percent of the nation's truckborne trade with
Canada and the Texas border between Laredo and the Lower Rio Grande
Valley accounts for over 49 percent of the nation's truckborne trade
with Mexico.
Examining the impact of NAFTA trade on just the I-69 States
represented at this joint Subcommittee hearing, in my own State of
Louisiana truckborne exports and imports to Canada and Mexico grew 47
percent from 1995 to 2000, from $856 million to $1.26 billion. The
largest increase in freight traffic has been in truckborne exports to
Mexico which have tripled since 1995. Truckborne exports from
Mississippi to Mexico have grown 105 percent since 1995 and truckborne
imports have grown 74 percent. Total truckborne trade between
Mississippi and Canada and Mexico increased from $984 million to $1.415
billion, or 44 percent between 1995 and 2002. Truckborne trade between
Illinois and Canada rose 49 percent from $10.76 billion to $16 billion.
Truckborne trade between Illinois and Mexico rose 138 percent from $1.9
billion to $4.6 billion. The value of truckborne trade between Texas
and Mexico and Canada has increased from $35.6 billion to $72.2 billion
since 1995, 103 percent over 5 years. The largest increase has been in
truckborne exports from Texas to Mexico. Michigan and Texas are our
nation's two largest trading partners with other countries in North
America, accounting for $175 billion in value carried by all modes of
surface transportation in 2000. Texas' North American trade is the
equivalent of the combined North American trade activity of California,
Pennsylvania and North Carolina.
ooking at freight flows nationwide, not just with Canada and
Mexico, approximately half of the total freight shipped in the United
States in 1997--over five billion tons--passed through, originated or
terminated in the I-69 Corridor States. Freight is entering and leaving
the I-69 Corridor by truck, rail, air and water. Seventeen of the
nation's top 25 seaports are directly connected to I-69 and 13 inland
waterway ports serve I-69 cities. Fifteen of the nation's top 25 air
cargo airports are readily accessible to I-69. There are 96 rail
terminals within 150 miles of the Interstate 69 Corridor. Every major
eastern and western rail carrier and both Canadian carriers have
terminal operations on the I-69 Corridor. There are truck rail
intermodal facilities in every major city along the I-69 Corridor.
The I-69 Port of Houston leads the Nation in foreign waterborne
tonnage. The Port of Houston handled 128.8 million tons of foreign
cargo volume in 2000, 23 percent more than the foreign freight traffic
handled at any other port in the United States. The foreign trade cargo
volume handled at the Port of Houston in 2000 was the equivalent of the
foreign cargo volume at the Ports of Long Beach, Los Angeles, Portland
and Seattle combined. It was also the equivalent of the 2000 foreign
cargo volume at the Ports of New York/New Jersey, Hampton Roads,
Charleston, and Miami combined. With the exception of the Port of South
Louisiana, which is also directly accessible to I-69, the Port of
Houston handled more total trade tonnage (imports and exports) in 2000
than any other port in the United States. The Port of Houston has 150
trucking lines and two railroads operating intermodal service.
While the Port of Louisiana is ranked third in the world in total
tonnage, with 194 million metric tons of cargo volume, and the Port of
Houston is ranked eighth in the world in tonnage with 144 million
metric tons, container traffic is also growing. Container traffic in
Gulf of Mexico ports served by I-69 is growing faster than the national
average or than traffic at Atlantic or Pacific ports. Between 1990 and
2000 Gulf port container traffic increased by 105 percent as compared
to the national average of 99 percent. Container traffic in the Port of
Houston grew 113 percent.
The I-69 freight corridor also serves the nation's inland
waterways. The I-69 Port of Memphis is the second largest inland port
in the country. The location of a foreign trade zone, it generates $1.5
billion in economic activity annually. The Port handled 18.3 million
tons of domestic trade cargo volume in 2000. More than 275 trucking
lines operate regular intermodal services in the Port of Memphis. In
the city of Memphis, one of the top ten distribution centers in the
United States, all modes of transportation converge and link to I-69.
Federal Express operates its main hub in Memphis. The company's
delivery of nine million packages a day includes a high percentage of
intermodal movements between truck and air. Every major eastern and
western rail carrier has a terminal in this I-69 gateway.
Trade entering I-69 from all modes of transportation is growing
faster than in the rest of the Nation. The trade tonnage moving through
the U.S.' top 50 entry points--including land, sea and air--grew 8.3
percent from 1990 to 1999. Trade tonnage moving through I-69 points of
entry grew 18.3 percent, or more than twice as fast as the national
average.
A Federal Highway Administration (FHWA) study, ``Freight Analysis
Framework'' 2000, suggests that the recent growth in freight traffic
will continue through the year 2020. The study estimates that total
domestic freight traffic will increase by approximately 87 percent over
the next 20 years and that international trade will increase over 107
percent. The vast majority of the new growth will be in the trucking
industry with trucks expected to handle 68 percent of the increased
tonnage, 82 percent of the increased value and 62 percent of the
increased ton-miles. The FHWA Freight Analysis shows that the majority
of the expected growth in truck shipments will continue to be in the
central, eastern and southern United States, with a dominant movement
in the southwest to northeast direction--a movement ideally suited for
the I-69 Corridor.
Yet the I-69 Corridor has not been completed and there is no direct
Interstate level highway from Indianapolis to the Mexican border.
Completion of I-69 will significantly enhance safety and efficiency
along this key international trade route. I-69 will reduce travel time,
fuel consumption and costs over the existing circuitous route. It is an
essential intermodal link for trade and commodity flow. Completion of
the Corridor 18 portion of I-69 alone is also projected to save 3100
lives, avoid 158,000 injuries and 409,000 property damage accidents.
In addition to its national and international trade benefits, I-69
will stimulate economic growth. I-69 traverses some of the nation's
most impoverished regions. There are over 9.1 million people living
below the poverty level in the I-69 Corridor States. In six of the
Corridor States the population in poverty exceeds the U.S. average.
There are 13 empowerment zones, enhanced enterprise communities and
enterprise communities along the Corridor, including two rural
empowerment zones--Mid-Delta and Lower Rio Grande Valley. Construction
of I-69 will provide economic growth. The Corridor 18 Feasibility Study
estimated that, in the Houston to Indianapolis segment alone, I-69 will
create 27,000 jobs, add $11 billion in wages and produce $19 billion in
value added through 2025.
When the Interstate system was initially designed in the 1940's and
50's, it was laid out generally east to west, reflecting the
demographics, trade patterns and defense needs of the time. Trade has
shifted, particularly after the passage of the North American Free
Trade Agreement (NAFTA), from east-west to north-south. However, when
the Interstate was declared completed in 1995, some of the newer north-
south sections like I-69 were left dangling and unfinished. The promise
of the National Corridor Planning and Development and Coordinated
Border Infrastructure programs in TEA-21, of which the I-69 Mid-
Continent Highway Coalition was a major proponent, was the recognition
that within the 160,000 mile National Highway System there were some
remaining, unfinished corridors of significance to the Nation as a
whole, serving national objectives of trade and economic growth, that
still needed to be completed and merited a separate program with
dedicated funding to do so. Unfortunately, the program was only funded
at $140 million a year nationwide and many of the projects that
qualified or were earmarked for funding were of local, not national
interest. Despite insufficient funding diluted among projects that are
not nationally significant, the I-69 Corridor made significant
progress. Since the inception of TEA-21, I-69 has received over $245
million from the National Corridor Planning and Development and the
Coordinated Border Infrastructure programs and directly from the
Highway Trust Fund. Funds have also been provided for specific segments
in ISTEA, TEA-21 and appropriations. States have also invested
substantial amounts of their own funds.
The Corridor has moved ahead so significantly that all of I-69 can
go to construction in the period of TEA-21 reauthorization and much of
it can be completed--if dedicated funds are available to do so. The
last estimated cost of completing the unfinished portion of I-69 was
$8.3 billion, with the Federal share at $6.6 billion.
Having built the Interstate system, which served us well for the
latter half of the twentieth century, we cannot rest on our laurels. We
must invest our resources in those unfinished corridors that serve
today's and tomorrow's 20 first century trade flows such as I-69. There
are a number of mechanisms to accomplish this; limiting the Corridors
and Borders program to major trade corridors and increasing its
funding, dedicating program funds to complete unfinished Interstate
links or funding freight corridors. Any of these programmatic options
would work--whether alone or in combination. The point is that we must
recognize the need for and build the infrastructure to serve our
nation's freight flows. The traffic is there. The intermodal
connections--rail, water, and air--are there. The trade is surging at
Houston, Detroit and Laredo. The maquiladoras in the Lower Rio Grande
Valley of Texas are manufacturing automobile parts, electronics,
computers, batteries and plastic, glass and rubber components and
transporting them by truck for final assembly in manufacturing
facilities in Michigan, Indiana, Illinois and Ohio. Corn from Indiana
is being trucked to the Lower Rio Grande Valley to be used as corn
syrup in soft drinks, fruit juices and candy produced in maquiladoras
and shipped worldwide. Cotton is going by truck from Mississippi to be
made into clothing apparel in South Texas. Foreign exports from the
Port of Houston are going by truck to Chicago and Indianapolis. Yet the
Interstate level facility to transport these products safely,
efficiently and economically--I-69 remains unfinished.
Interstate 69--High Priority Corridors 18 and 20
Designated as congressional High Priority Corridors 18
and 20 in the Intermodal Surface Transportation Efficiency Act of 1991
(ISTEA) and as Interstate Route I-69 in the Transportation Equity Act
for the 21st Century (TEA-21), the I-69 Corridor traverses over 150
counties and hundreds of municipalities, directly serving over 25
million people. When completed, I-69 will span the nation's heartland,
connecting Canada and Mexico through the States of Michigan, Illinois,
Indiana, Kentucky, Tennessee, Mississippi, Arkansas, Louisiana and
Texas.
Two sections of the Corridor 18 system--Interstate 69
from Port Huron, Michigan at the Canadian border to Indianapolis,
Indiana and Interstate 94 from Port Huron southwest to the Ambassador
Bridge in Detroit and west to Chicago, Illinois--are existing-open-to-
traffic Interstates. The rest of Corridor 18, as well as Corridor 20,
is under development. From Indianapolis south I-69 connects Evansville,
Indiana, Memphis, Tennessee, Mississippi, Arkansas, Shreveport/Bossier
City, Louisiana and Houston, Texas to the Lower Rio Grande Valley at
the Mexican border. Corridor 20 extends along US 59 from Laredo, Texas
at the Mexican border through Houston to Texarkana, Texas. A portion of
Corridor 20 overlaps Corridor 18. Together, Corridors 18 and 20
comprise I-69.
When the Interstate system was initially designed, it was
laid out generally east to west, reflecting the demographics, trade
patterns and defense needs of the time. Trade has shifted, particularly
after the passage of the North American Free Trade Agreement (NAFTA),
from east-west to north-south. U.S. Mexican trade has more than doubled
since the passage of NAFTA in 1993. U.S. imports from Mexico were up
175 percent from 1993 to 1999. U.S. exports to Mexico rose 109 percent
over the same period and trade with Canada increased 73 percent. The I-
69 Corridor accounts for over 63 percent of the nation's trade with
Canada and Mexico. It has the nation's busiest border crossings on both
the Canadian and Mexican borders, accounting for 48 percent of the
nation's trade with Canada and over 49 percent of the nation's trade
with Mexico.
Yet there is no direct Interstate level highway from
Indianapolis to the Mexican border. Completion of I-69 will
significantly enhance safety and efficiency along this key
international trade route. Completion of the Corridor 18 portion of I-
69 alone is projected to save 3100 lives, avoid 158,000 injuries and
409,000 property damage accidents. I-69 will reduce travel time, fuel
consumption and costs over the existing circuitous route. It is an
essential intermodal link for trade and commodity flow. Seventeen of
the nation's top 25 seaports are directly connected to I-69 and 15 of
the nation's top 25 air cargo airports are readily accessible to I-69.
In addition to its national and international trade
benefits, I-69 will stimulate economic growth. I-69 traverses some of
the nation's most impoverished regions. There are over 9.1 million
people living below the poverty level in the I-69 Corridor States. In
six of the Corridor States the population in poverty exceeds the U.S.
average. There are 13 empowerment zones, enhanced enterprise
communities and enterprise communities along the Corridor, including
two rural empowerment zones--Mid-Delta and Lower Rio Grande Valley.
Construction of I-69 will provide economic growth. The Corridor 18
Feasibility Study estimated that, in the Houston to Indianapolis
segment alone, I-69 will create 27,000 jobs, add $11 billion in wages
and produce $19 billion in value added through 2025.
The I-69 Corridor 18 and 20 system spans over 2600 miles.
About 2000 miles from Indianapolis to the Mexican border remain to be
completed. The last estimated cost of completing the unfinished portion
of I-69 was $8.3 billion, with the Federal share at $6.6 billion.
Completion of I-69 will not require an entirely new facility from
Indianapolis to the Mexican border. In some areas it will link existing
Interstates or highways at Interstate standards. In other areas it will
require upgrading and linking existing non-Interstate highways and in
others new construction.
ISTEA provided $4.05 million for Corridor 18 Feasibility
and Special Issues Studies, the identification of Sections of
Independent Utility (SIUs) and Special Environmental Studies. The State
of Texas paid for the Corridor 20 Feasibility Study and other location
studies out of State only funds. Since the inception of TEA-21,
Corridors 18 and 20 have received over $245 million from the National
Corridor Planning and Development and the Coordinated Border
Infrastructure programs and directly from the Highway Trust Fund. Funds
also have been provided for specific segments in appropriations, ISTEA
and TEA-21 and States have invested their own funds.
Work is underway along the entire I-69 corridor.
Feasibility studies have shown that both Corridors 18 and 20 have
positive cost benefit ratios returning $1.57 and $1.68 respectively for
every dollar invested. Location and environmental studies are in
progress and some sections are in design, preliminary engineering and
construction. The entire corridor will be ready to go to construction
and, in fact, much of it can be completed in the upcoming TEA-21
reauthorization, if funds are available.
The Corridors and Borders program is only authorized at
$140 million per year and there has been over $2 billion in demand for
funding each year. While I-69 is truly a national/international
Corridor, there are many projects that have received funding under the
Corridor program that only serve one State or region.
Completion of I-69 will require funding dedicated to I-69
and other corridors that are truly international in scope and service.
I-69 is the nation's preeminent national/international Corridor. It is
one of the nation's few unfinished Interstates that remained when the
Interstate program was terminated in 1995. It is also one of a handful
of high priority corridors that are designated as future Interstates
under Section 1105(e)(5)(A) of ISTEA.
The I-69 Mid-Continent Highway Coalition has been the
primary advocate for I-69 before Congress and the executive branch. The
Coalition spearheaded the creation of the National Corridor Planning
and Development and Coordinated Border Infrastructure programs in the
Transportation Equity Act for the 21st Century and has consistently
advocated funding for I-69 in annual appropriations and at the
Department of Transportation. The Coalition is a dues paying
organization of cities, counties, states, business, labor and civic
organizations all along the I-69 Corridor. Supporters include over 45
Chambers of Commerce representing over 13,050 businesses. The I-69 Mid-
Continent Highway Coalition reflects the economic diversity of this
vast region, including the agriculture, mining, timber, energy,
transportation, chemical, electronic and industrial sectors-current and
future users of the I-69 Corridor.
__________
Statement of Jim Fiske, Chairman, Magtube, Inc., Goleta, CA
I am Jim Fiske, Founder and Chairman of Magtube, Inc. of Goleta,
California. We are a venture funded-company developing a new freight
transportation system that promises faster service, higher security,
far better energy efficiency, cleaner operation, and lower cost than
any existing mode. Thank-you for giving me this opportunity to present
information that I think could have a significant impact on the
transportation planning that is so crucial to the economic future of
this country.
As I'm sure the Committee is aware, the American transportation
industry is vast, encompassing nearly 11 percent of the GNP. According
to the Bureau of Transportation Statistics, one out of every 10 U.S.
jobs is directly or indirectly related to transportation. Some industry
experts say the figure is closer to one out of five when all inventory,
logistics, and related corporate functions are included. This industry,
and the American population, is now facing severe problems, not the
least of which is increasing congestion. For example, according to the
Southern California Association of Governments (SCAG) the average speed
for a 24-hour weekday period on the greater Los Angeles highway and
arterial system is about 38 miles per hour. During the morning peak
period in some of the heaviest corridors the average travel speed is
less than 20 miles per hour. And Los Angeles is far from alone. In
general, demand for transport rises faster than population or average
incomes. Roughly 20 percent of U.S. urban areas are experiencing
extreme congestion, and the percentage is growing.
The capacity of our highways is clearly being strained to the
limit, and yet the Department of Transportation projects that highway
demand will only grow. Between the years 2000 and 2025 the number of
passenger vehicles is forecast to grow from 219 to 262 million, while
intercity ton-miles of freight carried by truck grows by 88 percent.
City, State, and Federal agencies have earmarked huge sums of money to
deal with this growth. The SCAG Regional Transportation Plan alone
includes $15 billion for highway and arterial improvement projects
including mixed-flow lanes, interchanges, truck climbing lanes, truck
lanes and grade crossings. But even if this plan is completed SCAG
projects that Southern California congestion delays could increase more
than 100 percent by 2025. Some statistics project that a freeway trip
taking 1 hour under normal conditions today will take 3 hours and 10
minutes in 2020.
What are we to do? Government and industry experts are straining to
provide improvements but most industry analysts seem to believe that
increasing congestion, safety concerns, and environmental damage is
inevitable--``an inescapable part of modern urban life worldwide''. I
am here to tell you that nothing could be further from the truth. The
``Electro-Mechanical Revolution'' is far from over.
The immensity of the transportation industry aggravates its
problems and makes them difficult to deal with, but it also creates a
huge potential market for cost effective solutions.
I think there is a common misconception that the passenger
transport business is much larger than the freight business, and as a
result far more attention has been focused on improving the
infrastructure and technology required to move people than that
required to move freight. If this continues, we run the risk of missing
a major opportunity. In reality, the freight component of the industry
is both larger than the passenger component and far easier to improve.
Furthermore, by improving the freight component we will greatly reduce
the strain on the passenger component of the industry. But railroad,
truck and air transport are all mature technologies with fundamental
barriers to improvement. Significant improvement in speed, cost, and
quality of service requires a totally new approach that circumvents
existing problems.
One possibility frequently overlooked is the pipeline. More than
1.4 million miles of gas and petroleum transmission and distribution
pipeline are in service in America. The technology is highly developed,
well understood, and extremely cost effective. Transporting a ton of
oil by pipeline is nearly 5 times cheaper than shipping a ton of
freight by rail, 50 times cheaper than truck, and 170 times cheaper
than air. Pipelines are also the safest transport mode and the least
disruptive to the environment. But pipelines have two major limitations
that prevent their application to general freight--their transport
speed is very low (oil travels at roughly 4 miles per hour), and they
only carry fluids.
Another possibility is Maglev, or magnetic levitation, which uses
magnetic forces to provide both lift and propulsion. Studies sponsored
by U.S. Government agencies in the early 1990's compiled a long list of
potentially beneficial attributes, including high speed, faster trips,
low energy consumption, low operating costs, high reliability, low wear
and maintenance, petroleum independence, low pollution, excellent
system control, high capacity, safety, convenience, modest land
requirements, and low noise. But they also revealed that capital costs
exceeding $35 million per mile for maglev systems would result in a
very low return on investment, making them commercially infeasible.
Since the 1970's Germany and Japan have invested billions of dollars in
maglev development. Neither has constructed an operational system. Only
the Chinese government, which has purchased the German Transrapid
design for a short installation in Shanghai, has been willing to foot
the bill for an operational system. Barring a major cost breakthrough,
maglev systems will never be constructed by private business alone.
We have found that cost breakthrough.
Engineers constantly improve operational equipment, so it's no
surprise that their first impulse after discovering maglev technology
was to apply it to an existing transport mode, namely railroad. Over
time maglev became synonymous with trains. ``Maglev Train'' has become
a single concept. This is a huge oversight. Trains are the wrong
metaphor. Maglev is a powerful technology crippled by its association
with the wrong application. Using maglev simply to improve a train is
rather like using jet engines to propel a barge.
If maglev technology is applied to pipelines, however, particularly
freight pipelines, the result is revolutionary. This combination allows
smaller vehicle size, narrower rights-of-way, lower complexity, reduced
initial investment, lower energy costs, higher acceleration, higher
speed, shorter headway, and higher system capacity. These capabilities
reinforce each other to create a new synergy. Costs plummet,
performance skyrockets, and the available market increases. Unlike
maglev passenger trains, a system of maglev freight pipelines has the
potential for a high return on investment.
Magtube is creating just such a system. We have discovered a new
maglev technique, for which we have patents pending, with fundamental
advantages over previous designs. We are implementing it now. At this
moment our first full-size maglev vehicle is floating over its track
just outside Santa Barbara, California. Our goal is to create a new
transportation paradigm, a arrangement of maglev pipelines or
``Magtubes'' we call the Magnetic Levitation Freight Transportation
Network, or more simply, the Mag Net(. This network will provide a
level of speed, safety, security, efficiency, and cost-effectiveness
not currently possible for mail, priority packages, perishables, and
freight of all types. Transit times will be measured in minutes or
hours instead of days. Think of it as an ``Internet for Freight.'' The
Mag Net will streamline vital transportation corridors to reduce
congestion, transit times, and costs while improving reliability.
Construction costs will be a fraction of conventional Maglev, high
speed rail, or highway expansion. Shipping costs will be lower than air
freight, truck or railroad. The potential for high return on investment
will permit private ownership, decreasing highway damage and congestion
at no direct cost to the Federal Government. The same design can be
used around the globe, providing even greater benefits for countries
with poorly developed transport.
We are currently planning the construction of pipelines a bit over
six feet in diameter with a projected cost in the vicinity of $5
million per mile. Our vehicles are sized to handle standard freight
pallets for easy interchange with other modes. They will have the
capability to move a one-ton payload at up to 500 miles per hour or
more through an evacuated tube while providing an energy efficiency
equivalent to more than 1000 miles per gallon of gasoline. Magtubes
will have very high capacity when fully utilized -10,000 tons per hour
or more should be readily achievable for a single pipe. This compares
to a capacity of 7000 to 18000 tons per lane per hour for heavy trucks
on an uncongested highway. Truck lanes planned for the Los Angeles area
are projected to cost over $50 million per lane mile.
The Mag Net's extreme energy efficiency provides a potential energy
savings exceeding 8 billion gallons of diesel fuel per year in the U.S.
alone, with a 72 million metric ton decrease in CO2 emissions. The
carbon monoxide, nitrogen oxides, particulates, sulfur dioxide,
volatile organic compounds and noise normally emitted by truck and air
freight carriers would likewise be eliminated. With our vehicles
traveling through underground tubes, totally isolated from passenger
traffic, they will provide a level of safety never before seen in a
transportation system.
The Mag Net will also provide an unprecedented level of security.
America's current freight system is barely able to handle the
immense traffic flow required for free trade, even with minimal
security. But the events of 9/11 have created a frightening dilemma--
while cursory inspection of imports is no longer acceptable, thorough
screening seems impossible without bringing trade to a halt. Government
and industry are struggling to find ways to efficiently move freight
across borders while ensuring detection of explosives, chemical
weapons, biotoxins, nuclear materials and other contraband. At present
officials search only 2 percent of the 11 million freight containers
arriving here each year. The solutions that have been proposed, such as
they are, provide stop-gap measures at best. They will require huge
expenditures and attempt to maximize security primarily by focusing it
on a small fraction of shipments. Most trade goods will continue to
cross borders without inspection, as they do now, or will encounter
severe delays--or both.
Magtube vehicles, on the other hand, will travel silently out of
sight, protected by a vacuum, a steel tube, and several feet of earth.
Untouchable. With computer control their precise location will always
be known to Magtube and our security partners--and no one else. Small,
standardized shipping containers will provide compatibility with other
shipping modes and easy access for inspection or machine scanning.
Automated searches for contraband will be fast and cheap with minimal
delays. Nuclear, biologic, and/or chemical sensors can be installed in
each vehicle for enhanced detection capability. Freight can be
inspected either at its source or at a facility far from any border,
then sent to a border crossing with complete assurance that it will
remain under constant supervision until it reaches its destination.
Whether their cargo is tissue paper or spent nuclear fuel rods, our
vehicles will bypass highways, railroads, border inspection stations,
and all other sources of congestion or concern. If one link of the Mag
Net is shut down its normal traffic will simply be rerouted through
other links.
We are currently in the final stages of constructing a laboratory
demonstration of a full-scale vehicle and track. In 2003 we plan to
begin construction of a second-generation vehicle and a high-speed test
track. At the same time we're exploring options for commercial pilot
projects--actual revenue-producing freight transport installations--
with organizations such as SCAG, other transportation groups in
California, New York and Michigan, and the Department of
Transportation. Our goal is to be ready to begin the construction of
pilot projects in the 2004-2005 timeframe. The most attractive sites
for these installations will be those areas with the worst problems,
such as clean air non-attainment areas, border bottlenecks, and
severely congested cities.
We do not expect or want the Mag Net to be publicly funded. We are
in business to design, build, and operate the Mag Net for profit. But
there are several things the Federal Government could do to accelerate
system startup and expansion. (1) Congress could make freight maglev
installations explicitly eligible for DOT's Transportation
Infrastructure Finance and Innovation Act (TIFIA) to provide Federal
credit assistance such as direct loans, loan guarantees and lines of
credit. Additionally with much of the focus of next year's TEA-21
reauthorization on the Congestion Mitigation and Air Quality (CMAQ)
program, we would respectfully that it be clarified that technologies
such as ours, be eligible, where appropriate and necessary, for CMAQ
funding for those areas of the country in air quality non-attainment
and maintenance areas. (2) Congress could help provide access to or
assistance in acquiring rights-of-way for such installations adjacent
to Federal aid highways. (3) Congress could make freight maglev part of
any proposed freight component in the next highway authorization. (4)
Congress could provide assistance with Federal agencies in identifying
pilot projects and planning border crossing installations to improve
freight flow and security. (5) Congress could assist us in our
discussions with multiple Federal agencies and with our cross-border
trading partners, Canada and Mexico.
Major breakthroughs in transportation technology are exceedingly
rare--the railroad, the automobile, the airplane--but they have far-
reaching consequences. In 1942 German submarines sank most of our oil
tankers along the Gulf and East Coasts. In response we built the
government-financed War Emergency Pipeline, the first large-diameter
long-distance oil pipeline, and soon discovered it had immense economic
and operational advantages. In that case it took a World War to
overcome inertia and jumpstart a better method of transportation. We
are now facing another crisis, a battle against increasing congestion,
major threats to security, stagnating travel, slower goods movement,
and increasingly severe environmental impact. We can win this war--
without constraining the free movement of goods and people. Indeed, we
now have a clear path to a level of mobility previously considered
science fiction. The ``Network Economy'' need not be limited to the
exchange of information. If we build the Mag Net and move freight
transport below ground everybody wins--shippers, carriers, the
government, and the public. This Committee and the Congress can help us
do it.
Again, my thanks to the Committee for allowing me to present this
testimony. My associates and I are available at your convenience should
you care to discuss the information I have presented, or any issue
dealing with freight transportation and security.
Energy Efficiency Comparison
------------------------------------------------------------------------
Ton-
miles/
Speed BTU/ ton- Gal.
Mode (mph) mile (diesel
equiv.
*)
------------------------------------------------------------------------
Railroad............................... 65 368 377
Long-haul truck........................ 65 1151 120
Truck (avg)............................ 65 2793 150
747-400F............................... 500 10,800 12.5
Air Freight (avg)...................... 500 20,000 7
Mag Tube (est.)........................ 200 48 2890
Mag Tube (est.)........................ 300 49 2831
Mag Tube (est.)........................ 400 60 2312
Mag Tube (est.)........................ 500 81 1712
------------------------------------------------------------------------
*138,700 btu/gal
__________
Statement of the Los Angeles County Economic Development Corporation
(LAEDC)
Mr. Chairman and members of the subcommittees, the Los Angeles
County Economic Development Corporation (LAEDC), a private nonprofit,
501(c)3, is pleased to present this overview of goods movement in
Southern California. We appreciate the opportunity to offer this
statement as part of legislative hearing record being developed by the
U.S. Senate in preparation for the reauthorization of TEA-21. We
greatly appreciate the interest and focus of the respective full
Committees in the issues surrounding TEA-21. In addition, we are very
appreciative of the leadership demonstrated by Senator Barbara Boxer
and Senator Diane Feinstein and the great economic and environmental
benefits TEA-21 has brought to California's transportation system.
This statement is based from four public policy and transportation
studies: the Southern California Freight Management Case Study
(enclosed); the Alameda Corridor East Train Study (enclosed); the 60-
Mile Circle (available at www.laedc.org the week of September 16th);
and the forthcoming On-Trac Corridor Trade Impact Study, 2002. Together
these studies, coordinated by the LAEDC, paint a remarkable picture of
a region with a rapidly growing population, burgeoning international
and domestic trade, and a looming trade transportation capacity crisis
that has both local and national implications. Southern California is
America's gateway to the Pacific Rim, and our nation's international
trade is growing rapidly. Yet, Southern California's infrastructure is
inadequate to handle this rising tide of trade, and the region will
need Federal assistance and creative solutions to finance the required
improvements.
Today we would like to briefly introduce you to the region,
describe its key population and trade trends, and summarize the
region's infrastructure capacity shortfalls.
Regional Overview
Southern California, the five-county region comprised of Los
Angeles, Orange, Riverside, San Bernardino and Ventura Counties,
operates on a scale normally associated with States and even countries.
At 17 million people and growing, more people live in Southern
California than in all of Florida, currently the fourth most populous
State in the union. Despite its reputation for making movies and little
else, Southern California employs more than a million people in
manufacturing. Powered by core strengths in aircraft, biomedical
technology, business services, food, furniture, metal fabrication,
motion pictures and television production, textiles and apparel and
tourism, the region produces over $600 billion in goods and services
annually. This places the region's gross domestic product tenth in the
world among countries, just behind Canada and Brazil and ahead of
Mexico, Spain, India, South Korea and Australia. Home to almost 200
different nationalities and cultures, Southern California is one of the
most diverse places on earth. The region is one of the top tourist
destinations in the country, and thanks to its combination of wealth,
size and reputation for trend setting, comprises one of the world's
most important consumer markets.
Regional Trends and Resulting Capacity Shortages
Population and trade growth are the two key trends affecting the
region. The five-county Southern California region will add more than 5
million people between 2000 and 2020. This is roughly equivalent to the
combined populations of the Cities of Los Angeles and San Diego, or
twice the population of Chicago. Much of the growth will be internally
generated: In addition to having the largest population base among the
50 States, California also has one of the highest rates of natural
increase (births minus deaths as a share of total population). Internal
population growth will be supplemented by immigration. California has
the highest rate of net international migration of any State, helping
make Los Angeles a modern Ellis Island.
Two shocking implications of this growth: First, at current rates
of automobile ownership, five million more people will add about 2.7
million private vehicles to the region's already congested freeways.
Second, just to maintain the status quo, population growth of more than
five million people will require adding twice the infrastructure and
services that exist in present-day Chicago. For every school in
Chicago, Southern California will need to build two.
In terms of trade, Southern California has emerged as a leading
global trade and transshipment center because of its massive internal
market, heavy investment in world-class trade infrastructure, and its
new role as the distribution center for U.S.-Pacific Rim trade. The
massive internal market draws trade both for final consumption and for
inputs in valued-added products ranging from shirts that are labeled
and placed on hangers to parts that are used in manufacturing. These
two factors help to pull in still more trade, and drive up the
percentage of international cargo that makes its first stop in Southern
California. With so much cargo destined here in the first place, it
makes sense for shippers to use the region as a distribution center for
the rest of the United States. This role is confirmed by data from the
Los Angeles Customs District, which recorded almost one-quarter
trillion ($230 billion) dollars in trade for year 2000.
The $230 billion in trade is an underestimate since it is
merchandise trade only, therefore excluding some of the region's core
strengths such as motion pictures, tourism, and financial services. The
number is also low because it is based on port of entry only, thereby
excluding the region's NAFTA trade with Canada and Mexico, which
travels primarily by truck and rail and thus is counted in border areas
such as San Diego, Laredo and Detroit. Even still, the value of
merchandise trade at the L.A. Customs District is expected to almost
triple to $661 billion, 2000-2020. We'd like to quickly describe the
growth trends and capacity issues for the region's ports, railroads,
freeways and airports.
Ports--The Ports of Los Angeles and Long Beach are the busiest in
the Nation, together handling one-third of all container traffic in the
United States and an astonishing 65 percent of all container traffic on
the West Coast. With a combined container throughput of 9.5 million
Twenty-Foot Equivalent Units (TEU) in 2000, they were the third busiest
container facility in the world, behind only Singapore and Hong Kong.
The long-term trend in container traffic at the ports has seen
steady growth, though the pace has slowed in recent months. As recently
as 1998, the Alameda Corridor Transportation Authority (ACTA)
conservatively forecast year 2000 container traffic of 5.6 million TEUs
(twenty-foot equivalent units). The actual total was 9.5 million TEUs;
no one, including the ports, anticipated that container traffic would
grow so fast.
Container traffic on the Alameda Corridor East (see geographic map
in Rail Corridors section) is now expected to almost double by 2010,
and then double again to 32 million TEUs by 2025. For perspective,
consider that a single large ship typically carries 6,000 TEUs. That is
enough containers, placed end to end, to build a wall of boxes more
than 20 miles long. The forecast growth may seem incredible, but if
anything, it is probably conservative. Indeed, for the past 10 years,
traffic levels have consistently surpassed previous estimates.
Rail Corridors--Driven by the rising tide of trade flowing through
the ports, easterly bound rail traffic is expected to rise dramatically
over the next twenty-five years. The newly constructed Alameda
Corridor--a 20-mile, high-speed, completely grade-separated train route
connecting international trade via the ports and the rail yards just
east of downtown Los Angeles--will handle some of the international
increases. Yet the Alameda Corridor is only the first link of a massive
regional mainline rail corridor network. Domestic and international
trade at the two rail yards east of downtown is the starting points of
the Alameda Corridor East. This eastbound corridor carries about three
times the cargo of the recently completed Alameda Corridor because the
intermodal rail yards receive more international goods by truck from
the ports and even more domestic or locally produced goods for movement
to the rest of the United States. The short answer is that Alameda
Corridor East carries about 23 percent of the United States waterborne
international trade and is the only corridor in Southern California
that carries both domestic and international goods through the region
to and from the rest of the United States.
Alameda Corridor East
(Union Pacific and Burlington Northern Santa Fe Mainlines)
As seen in the above graphic, the two rail corridors connect the
downtown rail yards with the transcontinental rail network: the Alameda
Corridor East (San Gabriel Valley Corridor), via the Union Pacific (UP)
tracks through the San Gabriel Valley into San Bernardino and Riverside
Counties, and the Alameda Corridor East (OnTrac Corridor), which
follows the Burlington Northern Santa Fe (BNSF) mainline through
densely populated northern Orange County into Riverside and San
Bernardino Counties. Freight and commuter trains also share the tracks
of both corridors, further complicating efficient mobility. The OnTrac
Corridor, going through the city of Placentia, carries 50 percent of
all eastbound rail cargo and is the only rail artery used by the United
Parcel Service to move cargo to Midwest and East Coast destinations.
OnTrac Corridor train traffic will rise 210 percent, 2000-2025, while
the San Gabriel Valley Corridors train traffic will increase 236
percent over the same period. Rail traffic on these routes, at more
than one train every 10 minutes, will easily surpass current capacity,
barring major improvements, in the next 3-5 years. Intermodal lift
capacity in the region--the facilities that transfer containers between
trucks and trains--is greatly constrained. Demand for intermodal lifts
is expected to exceed capacity within the next 5 years. Simply put, in
just a few years, a shortage of intermodal capacity and additional
passenger trains will mean more trucks on the already congested
freeways. At the same time, additional freight trains will translate
into more cars on the freeway. Without additional capacity it is a no-
win situation for local commuters, the other 49 States, and the U.S.
Treasury. Local commuters will be impacted because they will reach
unbearable congestion. The other forty-nine will see job growth slow
because Southern California consumers will see more difficulty
receiving goods through eastbound rail corridors, and the U.S. Treasury
because the customs revenues collected on imported international
goods--an unbelievable 1 percent of all U.S. Treasury revenues comes
from customs duties--will likely slow or decrease due to inefficient
freight mobility in Southern California. Currently about half of those
customs revenues are collected on goods going through Southern
California's transportation systems.
Freeway System--On the freeways, the number of vehicle miles
traveled in Southern California has been rising faster than population
growth. ``Rush hour'' has become an oxymoron in Los Angeles. The peak
travel period has crept up to 6 hours per day, during which the average
travel speed drops to 35 miles per hour. The Texas Transportation
Institute annually surveys road congestion in metropolitan areas across
the U.S., and Los Angeles has had the worst congestion every year since
1982. The latest survey reveals 85 percent of all lane miles are
congested, with almost half classified as ``extremely congested.'' As a
result, on a per capita basis, the region wastes more hours (56)
annually stuck in traffic than anywhere else in the country.
Some freeways handle up to 40,000 trucks daily, and with heavy
truck traffic expected to rise 65 percent, 1995-2020, they may soon
handle up to 80,000 truck trips daily. Owing to their size and
operating characteristics, trucks use a much greater share of freeway
capacity than their numbers might suggest. Already, heavy trucks use 45
to 60 percent of capacity on certain freeways, most notably the I-710.
Since trucks move 81 percent of all tonnage originating in Southern
California (according to the 1997 Commodity Flow Survey), increasing
freight flows will mean more trucks on the freeways.
Airports--Southern California's economy is increasingly dependent
on airports. Many of the region's leading industries--from tourism to
manufacturing to biotechnology--depend on air travel and air cargo.
Even businesses that don't rely on air cargo directly benefit from the
enhanced business connections and opportunities made possible by direct
flights to and from our key overseas trading partners. The region's
exports increasingly travel by plane. In 1995, 54 percent of regionally
produced exports (by value) were shipped by air, and the percentage is
higher today. Indeed, LAX handles more exports by dollar value each
year than the Ports of Los Angeles and Long Beach combined.
LAX is already extremely busy. In 2000, LAX was the third busiest
passenger airport in the world, after Atlanta (ATL) and Chicago (ORD).
Similarly, LAX was the third busiest cargo airport in the world behind
only FedEx-hub Memphis (MEM) and Hong Kong (HKG). Although air demand
dipped following the September 11, 2001 tragedy, the impact on long-
term air travel trends is expected to be slight. Air traffic demand has
been skyrocketing, outpacing population growth. Estimates from the
Southern California Association of Governments (SCAG) suggest air
passenger demand will almost double from 82 million annual passengers
(MAP) in 1998 to 157 MAP in 2020. Air cargo volume is expected to
triple from 2.8 million annual tons in 1999 to 8.9 million tons in
2020. Preliminary, post-9/11 revisions suggest these levels will be
reached two to 3 years later than previously estimated, with passenger
growth delayed more than cargo. Overall, the region faces a capacity
crisis; particularly now that it seems certain that an airport will not
be built at El Toro in Orange County.
Congestion is a problem across all modes of transportation. The
region will struggle to accommodate future freight operations; 10-15
year lead times for financing and constructing upgrades to
infrastructure are almost guaranteed; current intermodal facilities at
local ports and rail yards will reach capacity within 5 years; and
without major investments, the rail lines east of downtown Los Angeles
will be so congested the rail network will effectively cease to
function. These problems will be exacerbated by congestion on the
roads. Air cargo facilities, for example, rely on trucks to feed
shipments to the airport and deliver airfreight to its final
destination, yet traffic is terribly congested in the vicinity of LAX.
Congestion threatens both domestic and international trade moving
through the region, and the quality of life for people who live there.
National Implications
Southern California's trade transportation infrastructure should be
of great concern to the rest of the United States because the region's
global gateways and trade corridors act as conduits for two-way
domestic and international surface trade between Pacific Rim nations
and every region of the United States. Let's take a quick look at the
OnTrac Corridor Trade Impact Study (2002) for two-way domestic and
international surface trade during the year 2000 between California and
regions of the United States.
The international trade figure for each region represents the two-
way trade between other regions of the United States and overseas
customers and suppliers that travel via the UP and BNSF train routes
that comprise the Alameda Corridor East. The domestic trade numbers
represent commerce between California and other States. Roughly half of
the domestic trade between California and other States will originate
or be consumed in Southern California (based on Southern California's
share of the State's GDP). International trade diversion to other ports
of entry is cost prohibitive since half of all international goods
would still need to be delivered to Southern California. This means
that over 20 percent of all U.S. waterborne trade is consumed locally
in Southern California, or 45 percent of all customs revenue that is
generated in the United States goes through Southern California, or .5
percent of all the revenues of the United States Treasury is collected
via customs duties on products imported through Southern California
each year.
The Northwest States (WA, OR, MT, ID and WY) received and sent
international trade via the Alameda Corridor East in 2000 valued at
$2.2 billion dollars. Domestic trade between the Northwest and
California for the same year was $60.4 billion. For the Great Plains
States (ND, SD, NE, KS, MN, IA and MO), the comparable figures were
$8.6 billion and $42.4 billion. The numbers for the Great Lakes States
(IL, WI, MI, IN, KY, OH and WV) were $25.0 billion and $69.4 billion.
For the Atlantic Seaboard (CT, DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT
and VA), the figures were $34.4 billion in international and $74.6
billion in domestic trade. In the Southeast (AR, AL, GA, FL, LA, NC,
SC, TN and MS), the numbers were $16.0 billion international and $71.7
billion domestic. For Texas and Oklahoma, the numbers were $12.1
billion international and $54.2 billion domestic. And finally, for the
Southwest States (CA, NV, AZ, UT, CO and NM), international trade
moving through the Alameda Corridor East rail routes was valued at
$98.0 billion and domestic trade with California was worth $80.3
billion. The Southwest was the only region where the international
trade was larger than the domestic only because California's
international trade is included, but California's domestic trade with
itself (worth $1.3 trillion in 2000) is not included in the $80 billion
regional total.
All these billions of dollars in domestic and international trade
represent the value in two-way trade to other regions of the country
and highlight the importance of efficient movement of goods through
Southern California for the entire country. The domestic surface trade
between California and the other States, worth tens of billions of
dollars annually, dwarfs the enormous international trade flows.
California consumers represent one of the largest markets for goods
produced by other U.S. States. Thus, investing national funds in
efficient transportation networks in California is actually in other
States' interest. For example, Montana sells Californians about $1.5
billion of domestic products each year and receives about $10 million
of international trade through Southern California ports and corridors.
Iowa, on the other hand, sells Californians about $5 billion worth of
products each year and only buys about $300 million of Californian
products in return. So, a lot of jobs depend on Southern California's
appetite for products and all the Federal money spent on trade
transportation infrastructure in Southern California will ensure that
the goods produced in other States continue to reach their California
customers in a timely way; may reduce warehousing cost through
logistics strategies like ``just-in-time'' delivery; and will speed
goods to and from overseas to destinations throughout the United
States.
Reauthorization of TEA-21 and Freight Policy
During the deliberations by your respective subcommittees regarding
the reauthorization of TEA-21, we urge that you give strong
consideration to the following proposals for Federal action to enhance
the efficient movement of goods and freight on the nation's
transportation system:
1) Freight movement should be considered a major policy focus and
high priority in the TEA-3 legislation;
2) A dedicated category of Federal funding should be established to
support freight related transportation infrastructure. Particular
support should be given to trade corridor improvements, similar to the
Alameda Corridor East extension program in Southern California, and
other similar global gateways throughout the country. In addition,
support should be given to the implementation of intermodal connectors,
including connectors designed to improve ground access at international
airports;
3) Increased funding flexibility should be extended to existing
TEA-21 funding categories, including CMAQ, providing access to freight
related infrastructure, including rail grade-crossing and lowering
improvements;
4) Consideration should be given to new and innovative funding
sources, including direct user-based fees, similar to the financing
arrangement used for the Alameda Corridor project. Another concept we
urge you to review is the earmarking of the incremental growth in
custom revenues going through the nation's corridors and global
gateways. These added funds should be targeted to support unfunded
infrastructure improvements in communities that are directly related to
the growth of two-way domestic and international trade;
5) New policies and provisions, including changes in Federal tax
policy to encourage public private transportation partnerships,
including an enhanced role for Class I railroads serving the nation's
most severely congested corridors; and
6) Establish an Office of Freight Policy and Implementation in the
Office of the Secretary of Transportation. One option would be to
expand the current responsibilities of the Office of Intermodalism, and
place the management responsibility with the Under Secretary of
Transportation.
Mr. Chairman, thank you for the opportunity to submit this
statement for the legislative record associated with the
reauthorization of TEA-21.
__________
Statement of Hon. James P. McGovern, U.S. Representative from the
Commonwealth of Massachusetts
Mr. Chairman, thank you for the opportunity to testify before the
Sub-Committee today. I commend you and the members for holding this
TEA-21 reauthorization hearing on truck safety. It is, as we all know,
a critically important issue.
Mr. Chairman, I appear before the sub-committee this afternoon
because I believe strongly that any serious and substantive discussion
regarding truck safety begins and ends with the subject of truck size
and weight. That is because truck safety is largely a function of truck
size and weight. We know this, not only from recent studies and
reports, but from our shared common experience as well.
Too many of us, too often, have been unsettled while driving
alongside or behind huge triple trailer trucks and other longer
combination vehicles known as LCVs. These trucks can be more than 100
feet in length and can sway three to four feet into adjacent lanes of
traffic, even on a windless day. In some instances, a truck veering
sharply can cause a ``crack the whip'' effect, where the wheels on one
side of the rear trailer are actually lifted off the ground. These
life-threatening occurrences are altogether too frequent to be
dismissed as dramatized anecdotal evidence. In fact, the research
suggests the danger posed by such trucks is very real.
The US Department of Transportation's 2000 Comprehensive Truck Size
and Weight Study confirmed that multi-trailer trucks are especially
dangerous. According to the DOT study, if the current restrictions on
LCVs were removed, they would likely have a fatal crash rate of at
least 11 percent higher than single trailer trucks.
An earlier report prepared for the Association of American
Railroads suggested that LCVs are actually 66 percent more likely to be
involved in a fatal crash. Similar studies have found that heavier
trucks take more time and distance to stop and merge into traffic,
thereby increasing the likelihood of crashes. Not surprisingly, these
same studies have found that increasing truck weight increases the risk
of rollover crashes and enhances the risk that collisions between
trucks and cars will be fatal for the occupants of the car.
Now, I recognize and appreciate that the Transportation Research
Board's (TRB) recent report on truck size and weight finds much of the
research I have just cited as inconclusive. And while I congratulate
the TRB for their contribution to this policy discussion, I must tell
you that I am more than a little troubled by their recommendation that
we should instead experiment with bigger trucks on America's roads and
bridges. I can assure you my constituents do not care to be guinea pigs
in that experiment.
Mr. Chairman, just as our common experience informs our opinion on
this issue, so must common sense dictate the solution. I am pleased to
be joined by nearly 75 of my colleagues in bi-partisan support of H.R.
3132, the Safe Highways and Infrastructure Preservation Act. This IS
common sense legislation that will maintain the reasonable limits that
currently exist on truck size and weight on our Interstate System and
extend those same limits to the National Highway System. It does not
roll back truck size and weight, but rather closes loopholes in the
current law that have resulted in a proliferation of overweight trucks.
Ultimately, this legislation will both save lives AND protect the
nation's multi-billion dollar investment in our highway infrastructure.
Mr. Chairman, the fiscal considerations attendant to this issue
must also not be minimized. According to the Federal Highway
Administration's 1999 Status Report on the Nation's Surface
Transportation System, it will take $1.13 trillion over the next 20
years simply to maintain our roads and bridges. But, as we are all
keenly aware, there is a backlog on road and bridge maintenance. Nearly
30 percent of our nation's bridges--and 50 percent of the bridges in my
home state of Massachusetts--are structurally deficient or functionally
obsolete. Now, we also know that as truck weight increases, the amount
of pavement damage increases exponentially. In fact, according to the
DOT's 2000 Comprehensive Truck Size and Weight Study I referenced
earlier, bigger trucks would add more than $300 billion in costs to our
transportation spending.
Mr. Chairman, as Congress prepares to consider the reauthorization
of its major transportation spending bill, I am hopeful that the Safe
Highways and Infrastructure Preservation Act will be adopted in some
form or fashion.
The legislation makes sense, the timing is right and above all
else, the American public must be protected from the danger of still
bigger trucks.
Thank you very much.
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