Update of the Freight Rail Bottom Line Report: Continuing Study of Freight Rail Supply Meeting Demand Briefing for AASHTO Freight States Alexander King WSP USA September 20, 2017 Oakland, CA

AASHTO Study Tasks and Status Work Item 1: Critique of SCORT Study Proposal Work Item 2: Review of the 2002 Freight Rail Bottom Line Report Work Item 3: Analysis of Railroad Share of Freight Movement Work Item 4: Impacts of Expected Railroad Share of Transport Market Work Item 5: Industries most impacted by Rail Capacity Work Item 6: Parameters for State-Railroad PPPs for Capacity Projects Work Items 7 and 8: Draft and Final Report We’re Here Began June 2015 End in 2017

Potential Roles of Final Report Manifesto, a call to action A guidebook A discussion of current issues Some mix of 1 through 3

Key Questions Why should the public sector be involved with freight rail projects? What sort of projects should these be? (also supports the why) When should the public sector be involved with freight rail projects?

Why: The Freight Issue Growth of Freight Volumes Growth in Highway Congestion 1.4 percent annual growth. Trucking retains the highest modal share of freight transportation, but will require significant investment. Source: FHWA Source: FHWA FAF-4

Why: Shifting Just 1 Percent of Truck Freight to Rail Results in $55 Billion in Benefits   1% Mode-shift (Millions in $2015) 3% Mode-shift 5% Mode-shift Shipper Savings $8,573 $25,720 $42,867 Pavement maintenance savings $3,000 $9,000 $15,000 Marginal congestion savings $1,073 $3,219 $5,366 Emissions savings - CO2 emissions savings $2,345 $7,034 $11,723 - NOX emissions savings $14 $43 $71 - PM emissions savings $520 $1,560 $2,600 - VOC emissions savings $0 Emissions subtotal $2,879 $8,637 $14,394 Safety savings - Injury crash savings $888 $2,664 $4,439 - Fatality crash savings $2,286 $6,859 $11,432 - Property damage only crash savings $103 $308 $514 Safety subtotal $3,277 $9,831 $16,385 Total Discounted Benefits $18,802 $56,406 $94,011 Total Undiscounted Benefits $55,488 $166,465 $277,442

What: Public Involvement in Freight Rail Has Become More Diverse Timeline of Public Sector Involvement in Freight Rail Projects 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Federal Legislation 3R Act LRSA LRFA 45G Tax Credit TIGER FAST ACT 4R Act Sec 130 Major Public/Private Partnerships Rail Preservations Alameda Corridor Heartland Corridor Crescent Corridor National Gateway CREATE Colton Crossing Tower 55 Route Miles of U.S. Rail Network

What: Different Types of PPPs Will Benefit Different Shippers Intermodal Unit Train Source: By BriYYZ from Toronto, Canada Manifest Source: Jeff Schultz Transit Time and Service Variability   Boxcar in Manifest Service Covered Hopper in Unit Train Service Double Stack Train Service Average Loaded Trip Time (Days) 8.77 5.33 3.21 Percentage of Shipments Arriving within 24 Hour Window 32.42 41.90 89.2 Total Cycle Time (Days) 26.88 15.27 6.14 Source: Transportation Research Record, 1995 Source: Craig Sanders of the Akron Railroad Club

What: Projects by Which Different Types of Shippers Would Benefit Small/ Manifest Shippers (e.g. smaller manufacturing, building supply) Intermodal Shippers (e.g. retail, automotive) Shippers with Heavy Reliance on Rail (e.g. coal, some grain) Corridor preservation, short line projects Improvements to low density rail lines Better mainline access, such as improvements to, access to sidings and spurs Transload Projects that aggregate demand, share industrial access, such as industrial parks Yard improvements Intermodal terminals, terminal capacity Clearance projects Access to terminals Mainline capacity Access to competing railroads Industrial locations with access to multiple Class I railroads Short lines that can physically and legally interchange with multiple Class I railroads Many of these projects are things that multiple industries would want, but differences in emphasis

What: Public Sector Can Help Adjust to Changes in Rail Services Source: STB Waybill Sample

When: Parameters of State – Railroad Public/Private Partnerships What the public sector would invest in What the private sector would invest in Public/ Private Partnership Opportunities

When: Framework Relating PPPs to Public Benefits and Private Returns Similar to Framework Presented in NCRRP 1

When: Introduced concept of risk, gradations of private return Private Financial Returns Project is Profitable with Low Risk Investment should Pay for Itself but Is Risky Railroad Makes Money Providing the Service, but Investment Would Never Pay for Itself Railroad Loses Money on Every Ton Shipped PPP Potential

When: Role of PPPs for Class I, Class II/Class III Railroads, Based on Project Need Must Fund Optional Types of Project Maintenance and plant renewal for infrastructure and rolling stock, needed repairs Operational improvements, extensions to customers, new IT, other projects Public Sector Role – Class I Projects None Potential PPP opportunity Public Sector Role – Class II and Class III Projects

When: Could the Project Have Been Funded by Private Money Alone? How necessary is the project for the railroad to function properly? How risky is the project? Reported service problems? Known bottlenecks? Growth on the corridor? Part of core network? Likely level of competition? What is the uncertainty regarding future traffic levels?

When: Benefit Assessment Questions What Types of Evaluations? How much effort should be spent?/What can or cannot be quantified? Scoring Performance Measures BCA Economic Impact What drives benefits? -Changes in rail traffic -Truck/rail diversion -Operating improvements Parameters Who does the scoring? -Jobs -Income -Investment -Gross regional product Where is the data to come from? -Applicant? -Other? -How to verify? When is the economic impact a “good value?” Combined Assessment

Case Studies Case Study Public Benefits Why This Made Sense as a PPP Crescent Corridor Avoided truck traffic, lower need for highway investment Lower costs to rail users Better access to intermodal transportation Project would have been unlikely to be privately funded due to risks of high up-front costs for returns that would only develop over the long-term Heartland Corridor Improved service and transportation options to Port of Virginia customers Improved accessibility to intermodal service to customers served by corridor Project would have been unlikely to be privately funded due to risks of high up-front costs for uncertain returns CCX Intermodal North Carolina Iowa, Oregon, Washington Port of Tucson

Questions/Comments Alex King Alexander.king@wsp.com 860-815-0288