Talking Freight Seminar Freight and Economic Development

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Talking Freight Seminar Freight and Economic
Development

• Glen Weisbrod
• Economic Development Research Group, Inc.
• 2 Oliver Street, 9th Floor
• Boston, MA 02109 USA
• www. edrgroup.com

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Three Themes

• Freight Flows changing due to National Global
  Economic Markets.
• Economic Development depends on Market Access
  Competitiveness.
• Infrastructure Investment directly affects Costs
  Competitiveness.

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Freight Growing Faster than Pop.
Trends
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Changing Freight Patterns
Trends

• Higher value/weight
• Higher time sensitivity
• Overnight delivery
• Small package delivery trucks
• Air Marine port dependence on rail hwy
• Rail truck companies focus on long-hauls

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Economic Development
Congestion Costs of Delay

• Overnight Delivery Services earlier pickup
  deadlines, fewer deliveries per driver
• Manufacturers overtime for handling deliveries
• Concrete mixer trucks shrink delivery area
  (spoilage)

Shippers, Air/Water Ports, Rail miss delivery
deadlines or pad schedules
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Competitiveness Productivity
Economic Development

• Effects on Business Location Growth
• Breadth of Suppliers Labor Inputs
• Size of Customer Delivery Markets
• Economies of Scale in Serving Markets
• Transportation Choice Reliability, Modes

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Urban Freight Limitation
Economic Development

• Higher Cost to Serve Markets
• Reduced Schedule Reliability
• Reduced Access Scale Economies

Reduced Opportunity for Attracting and Growing
Business
Smaller Market Area can be served within
requirements for cost and service quality
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Urban Econ Development
Example Vancouver BC International Trade Gateway
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Vancouver No Build Scenario
Urban Econ Development

• Ground Transport
• Cars increase in travel expense (134
  million/yr)
• Trucks raise shipper costs reduce business
  competitiveness attraction (280
  million/yr)
• Rail capacity limitation businesses seek
  alternative routes at higher cost (1100
  railcars/day)
• Ports
• Marine ports higher cost, shift activity
  elsewhere
• Airport raise costs for airport use

Diff Build vs. Not
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Vancouver Economic Implications
Urban Econ Development

• Economic Value of Gateway
• 30 Port Terminals, 22 Rail Yards, Airport,
  Border Crossings
• On Site 75,000 jobs, W. Canada 145,000 jobs
• Economic Impact of Constraint on Growth
• 7,300 to 16,300 jobs
• 475 million to 1.1 billion of GDP /year
• Economic Stakes for Cost Competitiveness
• Over 150,000 jobs in production industries
  produce over 30 billion of exports /yr that
  depend on Vancouver Gateway competitiveness

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Urban Econ Development
Vancouver
To Trans Can Hwy ?
To US Border
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Strategies for Port/Gateway Areas
Urban Economic Development

• Access Corridor
• Los Angeles (Alameda Corridor)
• Satellite Ports
• NY Port Inland Distribution Network
• Feeder System
• Rotterdam (Inland Ports)

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Example Chicago Rail Yards
Urban Econ Development

• 74 rail yards, 17 for intermodal (rail-truck)
• delays at 600 grade crossings

• congestion from 3200 daily truck trips
  transferring cargo from yard to yard
• Abandoned under-utilized rail yards

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Chicago Scenario Impacts
Urban Econ Development

• Scenarios (with without reuse of abandoned rail
  yards)
• Base Case existing facilities, adjust over time
• Shift Intermodal to Rim periphery of region
• Rationalization Consolidate w/upgraded
  infrastructure
• Minimal Rail Freight in City Intermodal moves to
  periphery loose-car business de-marketed
• Bypass Chicago Reroute trains to bypass routes

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NCHRP Study 8-42
Economic Development

• How Can We Use Rail Freight Solutions to Address
  Roadway Congestion
• Converging interests of private sector transport
  carriers and public planning agencies
• Reducing Congestion and Road/Rail conflicts that
  adversely affect business profits, public safety
  and economic development opportunities
• Developing Framework for Decision-making

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Rural Economic Development
Rural Freight Limitations

• Higher Trucking Cost due to deadheading
• Lower Availability When Needed reliability
  reduced by vehicle shortages, delays
• Higher Rail Cost full line cost for rail service
  to/from intermediate locations

Reduced Opportunity for Attracting and Growing
Business
Smaller Market Area can be served within
requirements for cost and service quality Lower
Value Added of existing products
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Example Appalachian Corridor T
Rural Economic Development
NY-17, Now I-86, Southern Tier Expressway Mountain
Region of Southwest NY State, Near Pennsylvania
Line Area had been economically distressed and
losing jobs I-86 designation brought new freight
distribution, manufacturing, and traffic-serving
businesses.
FHWA Study compared it to a similar area with no
new highway connections
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Rural Economic Development
Highway Mfg Employment
Southern Tier West
N. Country Central
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Example Janesville, WI
Rural Economic Development
Regional automotive mfg cluster

• Auto Mfg GM, Chrysler
• Parts Mfg to S Carolina (BMW), Mexico Mich.
  (Ford), Ontario Missouri (Chrysler)

• Reliance on just-in-time mfg, increasing needs
  for air and reliable truck movements
• Current facilities cannot meet this need,
  reducing productivity and efficiency in mfg
• Potential loss of jobs to Mexico or Canada

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WisDOT Multi-Modal Freight Access
Rural Economic Development
Rail Delay
Road Delay
Airport Constraints

• Airport Improvements (9.1 million)
• Highway Access Rail Crossing Improvements
  (13.5 million)

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ARC Export Transportation Study
Rural Economic Development

• Overseas Exports are Intermodal
• Truck to Air
• Rail or Truck to Sea

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Rural Economic Development
Appalachian Development Highways

• Serve historically isolated areas improve access
• Link to major markets and trade routes
• Motivated by econ development

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ARC Export Export Study
Rural Economic Development
Auto Parts, Upholstered Furniture
Food Processing Machinery
New York
Michigan
Maryland
Texas
Florida
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ARC Study Findings
Rural Economic Development

• There are limited E-W freeways, rail lines
  inter-modal connections across Appalachia,
  raising costs constraining export
  opportunities.
• States in eastern side export more to Europe
  because of easier access to east coast ports.
• States in the western side export more within
  North America because of better access to
  industrial parts of Canada and Mexico.

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Conclusions
Freight Connections Alone Do Not Cause Economic
Development
business growth attraction depends on
connections to markets, not just presence of a
highway
ARC Guide help planners identify opportunities
related to new highways, and actions needed to
pursue them.
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But Failure to Provide Freight Access Constrains
Economic Development
Conclusions

• Lost opportunity for economic growth, good-paying
  jobs,
• new jobs for next generation.

• Potential Benefits of Infrastructure Investment
• Opportunity for success is not lost.

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On the Web
FHWA Economic Development Studies (incl. I-86)
www.fhwa.dot.gov/planning/econdev Vancouv
er Freight Gateway Study http//www.edrgroup.com/
pages/n32.html North Country Transportation
Studies www.danc.org/ncts Chicago
Rail Freight Study www.edrgroup.com/pages/n25.htm
l ARC Guide to Economic Opportunities from
Highways www.edrgroup.com/pages/n11.html
Library of Economic Impact Studies
www.edrgroup.com