1. Talking Freight Seminar Freight and Economic Development Glen Weisbrod Economic Development Research Group, Inc. 2 Oliver Street, 9 th Floor Boston, MA 02109 USA www. edrgroup.com

2. 2 Three Themes 1.Freight Flows: changing due to National & Global Economic Markets. 2.Economic Development: depends on Market Access & Competitiveness. 3.Infrastructure Investment: directly affects Costs & Competitiveness.

3. 3 Freight Growing Faster than Pop. Trends… Value of Mfg Freight Ton-Miles Population

4. 4 Changing Freight Patterns 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 Trends…

5. 5 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 Economic Development…

6. 6 Competitiveness & Productivity 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 Economic Development…

7. 7 Urban Freight Limitation Higher Cost to Serve Markets Reduced Schedule Reliability Reduced Access & Scale Economies Smaller Market Area can be served within requirements for cost and service quality Economic Development… Reduced Opportunity for Attracting and Growing Business …

8. 8 Example: Vancouver BC International Trade Gateway Urban Econ Development…

9. 9 Vancouver No Build Scenario 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 Urban Econ Development…

10. 10 Vancouver Economic Implications 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 Urban Econ Development…

11. 11 Vancouver… To Trans Can Hwy  To US Border Urban Econ Development…

12. 12 Strategies for Port/Gateway Areas Access Corridor – Los Angeles (Alameda Corridor) Satellite Ports – NY Port Inland Distribution Network Feeder System – Rotterdam (Inland Ports) Urban Economic Development…

13. 13 Example: Chicago Rail Yards 74 rail yards, 17 for intermodal (rail-truck) delays at 600 grade crossings http://hometown.aol.com/chirailfan/watchmap.html congestion from 3200 daily truck trips transferring cargo from yard to yard Abandoned & under- utilized rail yards Urban Econ Development…

14. 14 Chicago Scenario Impacts 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 Urban Econ Development…

15. 15 NCHRP Study 8-42 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 Economic Development…

16. 16 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 Rural Economic Development… Smaller Market Area can be served within requirements for cost and service quality Lower Value Added of existing products Reduced Opportunity for Attracting and Growing Business …

17. 17 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

18. 18 Highway & Mfg Employment Rural Economic Development… Manufacturing199519972000 Southern Tier West0.0%-0.3%1.6% North Country Central0.0%-4.9%-13.2% NY State Total0.0%-6.2%-14.0% Southern Tier West N. Country Central NY minus NYC Southern Tier West N. Country Central

19. 19 Example: Janesville, WI Auto Mfg – GM, Chrysler Parts Mfg –to S Carolina (BMW), Mexico & Mich. (Ford), Ontario & Missouri (Chrysler) Regional automotive mfg cluster 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 Rural Economic Development…

20. 20 WisDOT: Multi-Modal Freight Access Rail Delay Road Delay Airport Constraints  Airport Improvements ($9.1 million)  Highway Access & Rail Crossing Improvements ($13.5 million) Rural Economic Development…

21. 21 ARC Export Transportation Study Overseas Exports are Intermodal Truck to Air Rail or Truck to Sea Rural Economic Development…

22. 22 Appalachian Development Highways  Serve historically isolated areas; improve access  Link to major markets and trade routes  Motivated by econ development Rural Economic Development…

23. 23 ARC Export Export Study Florida New York York Michigan Auto Parts, Upholstered Furniture New York Florida Maryland Michigan Texas Food Processing Machinery Rural Economic Development…

24. 24 ARC Study Findings 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. Rural Economic Development…

25. 25 …business growth & attraction depends on connections to markets, not just presence of a highway… Freight Connections Alone Do Not Cause Economic Development Conclusions… ARC Guide: help planners identify opportunities related to new highways, and actions needed to pursue them.

26. 26 Lost opportunity for economic growth, good-paying jobs, new jobs for next generation. Potential Benefits of Infrastructure Investment… Opportunity for success is not lost. But Failure to Provide Freight Access Constrains Economic Development Conclusions…

27. 27 …On the Web FHWA Economic Development Studies (incl. I-86) www.fhwa.dot.gov/planning/econdev Vancouver 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.html ARC Guide to Economic Opportunities from Highways www.edrgroup.com/pages/n11.html Library of Economic Impact Studies www.edrgroup.com