ENVIRONMENTAL BENEFITS OF Building an Intermodal Hub in St. Louis Sidra Naseer May 5, 2014

Research Question  Is a rail and trucking intermodal hub the most efficient environmental solution for transportation development and economic wellbeing in the Saint Louis region?  Efficiency—allocation of cargo movements between multiple modes where the surplus derived from these transfers is maximized in the form of reducing both operational cost and environmental damage

How do Jelly Belly Beans get to consumers?

Flow of Goods to Market for Jelly Belly Beans Buyer places an order with the seller Product shipped from the seller’s production facility in California Shipment sorted in the seller’s distribution center in Wisconsin Shipment sent to buyer’s main warehouse to be sorted Shipment sent to buyer’s local warehouse Shipment delivered to the store

Why Should YOU Care? Transportation affects:  Consumer prices  Congestion  Infrastructure  Pollution emission  Economic well-being

Definitions  Intermodal— Transfer of products involving multiple modes of transportation such as truck, railroad, or ocean  Intermodal Terminal— A railroad facility designed for the loading and unloading of containers and trailers to and from flatcars for movement on the railroad and subsequent movement on the street or highway  Intermodal Hub— Similar to an intermodal terminal but will allow multiple railroad carriers to run their tracks via separate lanes through a common location in order to capitalize on opportunities with various trucking carriers to transfer cargo across both short-haul and long-haul distances Source: Intermodal Association of North America. (2013). Intermodal Glossary.

Saint Louis— Gateway to the West  More than one billion tons of cargo passes through St. Louis Source: Missouri Department of Transportation. (2014)

Ideal Location Waterway Atlantic intracoastal waterway Great Lakes Gulf intracoastal waterway Mississippi River system \ Mississippi River main stem Ohio River system \ Columbia River Snake River Freight Carried on Major U.S. Waterways: 2003 to 2011 (In millions of short tons) Source: U.S. Army Corps of Engineers, Waterborne Commerce of the United States, 2011, November 2012, and earlier reports. Freight Carried on Major U.S. Waterways: 1985 to  Most U.S. cities available either same day or within two days by most modes  Economic hub of manufacturers

Current Situation

Environmental Arguments  Reduces carbon emissions  Creates positive externalities  Addresses concerns about property rights  Equalizes marginal control and damage costs  Maximizes net benefits  Leads to technological progress

Hub-and-Spoke Design Source: Racunica, I. &. (2005). “Optimal Location of Intermodal Freight Hubs.” Transportation Research: Part B: Methodological, 39(5), Figure 1.

Comparison CONVENTIONAL TRANSPORTATION Origin Local Warehouse Rail Terminal INTERMODAL HUB origin Intermodal Hub

Reduces Carbon Emissions  Reduction in drayage eases congestion and lessens CO 2 emissions  On average, railroads are four times more fuel efficient than trucks.  According to the Association of American Railroads, moving freight by rail instead of truck reduces greenhouse gas emissions by 75%  Highway gridlock costs the U.S. economy $121 billion per year in wasted fuel and time.  A 2005 case study by Bas Groothedde utilizing avoidance expenditure valuation techniques found that:  Average truckload shipping intensity is 125 grams of CO 2 per ton mile  Intermodal CO 2 intensity is 70 grams of CO 2 per ton mile

Assigns Property Rights  Each rail and trucking carrier wanting to operate within the hub signs a contract with the local agency that monitors the hub  Contract defines the owner’s rights, privileges, responsibilities, and limitations for use of the land  Transportation providers pay taxes and assist in damage clean-up costs

Internalizes External Costs  Hubs internalize external costs of accidents, noise, air pollution, climate change, and congestion Source: Study conducted by Fedele Iannone comparing marginal external costs of transporting full and empty containers exclusively road and rail transport. “The Private and Social Cost Efficiency of Port Hinterland Container Distribution through a Regional Logistics System.” Transportation Research: Part A: Policy And Practice, 46(9),

Intermodal Hubs Equalize Marginal Control & Damage Costs

Maximizes Net Benefits  Free markets with minimal regulation  Demand drives efficient allocation of cargo during consolidation  Private sector seeks to reduce marginal cost, and act as network planners to design cost effective solutions  Hubs mediate the volatility in fuel prices  Forces partnerships among each other  Private rail companies will invest in the building of these hubs  Governmental regulatory agencies to serve as the liaison in interstate commerce

Attracts Economic & Technological development  Primary sites for the introduction of transition technologies  Transportation as a whole accounts for 19% of global emissions  Energy emissions from transportation are expected to grow by 50% by 2030, and a 100% by 2050 from 2007 levels  In the U.S., trucking is expected to experience the fastest growth  More than 60% increase in freight emissions from heavy-duty freight trucks  Promotes new companies to locate in the region and regional investment Source: Craig, A. J. (2013). Estimating the CO2 Intensity of Intermodal Freight Transportation. Transportation Research: Part D: Transport And Environment:

Opposing Business & Political Arguments  Takes business away from trucking companies  What to do with existing rail terminals  Rebuttal:  Forces companies to adopt innovative technologies to gain a comparative advance  Incentivizes trucking as a whole to explore fuel and energy alternatives for operations  Utilize land for other development purposes

Opposing Economic Argument  Too much competition from surrounding Midwest intermodal hubs  Rebuttal: Source: U.S. Census Bureau, Foreign Trade Division, USA Trade Online. (2014). Table of U.S. Exports and General Imports of Merchandise by Customs District: 2002 to 2013.

Missouri in Comparison to Other States Source: U.S. Census Bureau Data. ArcGIS Geospatial Online Maps Commodity Flow Data.

Opposing Environmental Argument  Attracts new companies, which will increase emissions  Rebuttal:  Companies want to do business with companies that are environmentally and socially responsible for both the direct and indirect efforts of their business operations  Intermodal hubs foster healthy competition among firms to provide the most environmentally sustainable supply chain solutions

Alternative Solutions for St. Louis ALTERNATIVES  Expand an existing rail terminal  Construct a port  Leave things as they are PROBLEMS  Political issues—which one to expand?  Existing rail terminals are still far away from the locations of trucking warehouses  Expensive  Demand does not justify full port operations  Using scarce inefficiently  Environmental issues persist

Conclusion Based on environmental economic arguments, the construction of an intermodal hub in St. Louis will promote environmentally, sustainable economic growth.  Limited alternatives to the hub do not provide the optimal tradeoff  Overall environmental opportunity cost is too high to not pursue the intermodal construction

Thank You! Questions?