Transportation leadership you can trust. presented to SEMCOG Southeast Michigan Council of Governments Detroit presented by Lance R. Grenzeback and Marwan Madi Cambridge Systematics, Inc. January 23, 2009 Freight Transportation, Investment, and Strategic Economic Development

1 Presentation Freight transportation issues for the Detroit region Linking freight transportation investment to economic development Freight transportation trends and implications for the Detroit region and SEMCOG Truck freight Rail freight Waterborne freight Next steps

2 Issues

3 The Detroit region’s key freight transportation issues are – Reshaping the region’s economy – new industries with new demands for transport of people and goods Targeting transportation investments to support the new economy – new networks and operations Matching public decisionmaking to economic geography – new roles and responsibilities Financing transportation improvements – new sources and partnerships

4 Travel Time Transportation investments can be used to help reshape the Detroit economy and drive economic development – Transportation System Investment Productivity Competitiveness Economic Growth MPO/DOT Carrier Business Public Market Access Source: Cambridge Systematics, Inc. Cost Reliability Connectivity

5 World Markets U.S. Markets Transportation investments must support both traded and local industries – Detroit’s Traded Industries Detroit’s Local Industries Detroit’s Trade Corridors Source: EDRG Detroit’s Local Network

6 Wages (in Millions) Source: Woods & Poole The Detroit economy is likely to shift from a predominately automobile and manufacturing economy to a more diversified and knowledge-based economy – Source: SEMCOG, Employment by Sector

7 As the structure of the Detroit economy changes, more freight will likely go by truck and air, less by rail and water – From automobile and manufacturing industries From heavier, bulkier, lower-value, and less time- sensitive freight To knowledge-based industries To lighter, higher value, more time sensitive freight

8 Truck Freight Trends and Implications for the Detroit Region

9 Trucking will continue to dominate freight transportation, hauling the most tonnage, garnering the most revenue, and accounting for the most ton-miles of travel – Up from 77% in 2005 Up from 92% in 2005 Up from 61% in 2005 Down from 14% in 2005 Down from 5% in 2005 Down from 25% in 2005 Same Down from 11% in Tons Value Ton Miles 80% 13% 6% 95% 4% 1% 65% 24% 8% Down from 7% in 2005 TruckTruckTruckRailRailRailWaterWaterWater Percent Source: Cambridge Systematics, Inc. AASHTO Freight Transportation Bottom Line Reports, based on Global Insight 2004 TRANSEARCH data and economic forecasts. Modal Shares, 2005 and 2035

10 Trucking will also continue to dominate long-haul freight transportation – Source: Cambridge Systematics, Inc. AASHTO Freight Transportation Bottom Line Reports, based on Global Insight 2004 TRANSEARCH data and economic forecasts. Freight Truck Volumes

11 Source: MetroNation: How U.S. Metropolitan Areas Fuel American Prosperity. Metropolitan Policy Program at Brookings. Seattle (15) $182,170,000 New York (1) $1,056,381,000 Los Angeles (2) $632,407,000 Chicago (3) $461,374,000 Washington, DC (4) $347,631,000 Dallas (5) $315,544,000 Philadelphia (6) $295,236,000 Miami (7) $231,806,000 Boston (8) $261,086,000 Houston (9) $316,332,000 Atlanta (10) $242,382,000 San Francisco (11) $268,300,000 Detroit (12) $198,630,000 Phoenix (13) $160,028,000 Minneapolis (14) $171,361,000 San Diego (16) $146,341,000 St. Louis (17) $116,215,000 Baltimore (18) $118,063,000 Riverside (19) $101,561,000 Tampa (20) $100,952,000 However, as fuel and labor costs increase, trucking will reorient to serve megaregion trips, shifting more long-haul freight to intermodal and transload rail freight services –

12 But congestion bottlenecks – especially at Interstate interchanges – are driving up the cost of truck trips and reducing the reliability of the national highway network – Source: FHWA, Estimated Cost of Freight Involved in Highway Bottlenecks, 2008 Major Interstate Interchange Bottlenecks for Freight Trucks

13 Reducing delays and maintaining the connectivity of the national highway freight network will be a key national priority – I-94 at I-75 Interchange in 2006 – AADT = 181,300 Percent Trucks ~ 10% Annual Total Delay Hours = 5,614,855 Annual Truck Delay Hours = 561,485 I-94 at I-75 Interchange Source: FHWA, Estimated Cost of Freight Involved in Highway Bottlenecks, 2008

14 As will reducing delays and maintaining the capacity of international trade gateways – Source: Detroit River International Crossing Study Final Environmental Impact Statement, The Corradino Group of Michigan, Inc. Detroit River International Crossing Options

15 Equally important will be reducing delays and maintaining the reliability of metropolitan freight arterials linking businesses, consumers, and distribution centers – Source: SEMCOG 2030 RTP Employment Growth, 2005 to 2035 Congested Roads and Distribution Centers

16 Highway transportation investments must be targeted to ensure reliable and predictable truck freight services for Detroit’s emerging industries – Improve urban freight flows Look to traffic management, pavement and bridge maintenance, and congestion pricing Improve access to regional/megaregion distribution centers and intermodal rail, waterborne, and air terminals Look to steer development to areas already well served by highways; focus investment on intermodal connectors Improve national and U.S.-Canada connectivity Look to national “corridors of the future,” international gateway, and multistate programs to coordinate and fund improvements at major freight transportation bottlenecks

17 Rail Freight Trends and Implications for the Detroit Region

18 Source: Global Insight, Inc., TRANSEARCH 2004 The freight rail system has been restructured since the economic deregulation of the industry in 1980; rail volumes may grow significantly if fuel and GHG emission costs rise – Freight Rail Traffic

19 Detroit’s rail system is geared primarily to serve general merchandise/ carload train traffic – Source: AASHTO Rail Freight Transportation Bottom Line Report, 2008 Merchandise/Carload Rail Traffic, 2005

20 But most of the growth in rail traffic has been in long-haul intermodal service, which in the Midwest is centered on Chicago – Source: AASHTO Rail Freight Transportation Bottom Line Report, 2008 Intermodal Rail Traffic, 2004

21 As intermodal rail freight volumes increase, so will opportunities for intermodal service to Detroit – Detroit Intermodal Freight Terminal Project Livernois-Junction Yard

22 But the freight rail network is nearing capacity, especially on the lines west and south of Chicago, which could increase costs for Detroit shippers and receivers – Source: National Rail Freight Capacity Study, 2007 Future Corridor Volumes Compared to Current Corridor Capacity, 2035 without Improvements

23 Rail transportation investments must be targeted to ensure that Detroit has access to major markets and ports – Improve national access Look to improve intermodal service to NY, Norfolk, LA, Montreal, and the PNW ports, which are critical ports because of their high volumes; focus on the most critical market pairs (which will change with Detroit’s economy) Improve cross-border movement Look to provide doublestack rail clearance to improve intermodal service and reduce costs along the Montreal- Toronto-Detroit-Chicago rail corridor Improve local rail service Look to hold onto rail-served properties for “industrial villages;” upgrade intermodal truck connections

24 Waterborne Freight Trends and Implications for the Detroit Region

25 Growth at the largest tonnage ports is driven by petroleum imports, agricultural exports, and movement of non-metallic minerals – Top U.S. Ports by Tonnage

26 Growth at the largest container ports is driven by merchandise imports; LA and NY dominate, but the southeastern ports are growing rapidly – Top U.S. Ports by Container Volume (TEUs)

27 Rail Water Highway Congested Constrained Adequate Volumes at container ports will likely triple or quadruple, putting intense pressure on intermodal rail and highway links and opening up opportunities for other ports – Source: Cambridge Systematics, Inc Approximate Water, Rail, and Highway Access Conditions at Top U.S. Container Ports

28 Detroit could benefit from access to emerging ports – Source: SEMCOG Proposed Intermodal Services

29 Waterborne freight transportation investments must be carefully tailored to match industry needs – Improve all-water access Look to develop specialized services, especially for exports, that cannot be matched by large, mass-market container ports −Example: Baltimore’s roll-on/roll-off vehicle export services Improve intermodal connectors and port operations Look to highway and rail improvements that provide reliable access and low transfer costs; transit time and handling costs drive shipper choice of ports (and airports)

30 Next Steps Recognize wider economic implications of investment decisions Identify key corridors and bottlenecks from economic perspective Establish formal tracking systems that include economic measures, not just engineering measures Set up dialog with private sector and economic development interests, as well as existing public constituencies Discuss priorities, processes, and strategies Balance short-term constraints and longer-term implications, using data from decision-support systems

Transportation leadership you can trust. presented to SEMCOG Southeast Michigan Council of Governments Detroit presented by Lance R. Grenzeback and Marwan Madi Cambridge Systematics, Inc. January 23, 2009 Freight Transportation, Investment, and Strategic Economic Development