Slide1 : Freight Trends and Freight Rail presented to
Delaware Valley Goods Movement Task Force
10th Anniversary Meeting
Philadelphia
presented by
Lance R. Grenzeback
Cambridge Systematics, Inc.
October 9, 2002
Presentation : Presentation Evolution of the freight transportation system
Freight forecasts
Congestion, capacity, and logistics productivity concerns
State of the freight-rail system
Freight-rail policy and program initiatives
18th Century/Sail Era Colonial economies were built on water transport; it cost as much to move a ton of goods 30 miles inland as across the Atlantic; 2 out of 3 settlers lived within 50 miles of the Atlantic coast; coastal and Atlantic trade dominated : 18th Century/Sail Era Colonial economies were built on water transport; it cost as much to move a ton of goods 30 miles inland as across the Atlantic; 2 out of 3 settlers lived within 50 miles of the Atlantic coast; coastal and Atlantic trade dominated
19th Century/Rail Era Regional economies were built on rail technology that freed business and industry from ports; east-west rail routes were built to follow development of the Midwest and West; domestic trade dominated : 19th Century/Rail Era Regional economies were built on rail technology that freed business and industry from ports; east-west rail routes were built to follow development of the Midwest and West; domestic trade dominated
20th Century/Truck Era National economy was built on truck and highway technology that freed business and industry from rail terminals; an east-west and north-south Interstate highway grid was built to connect cities and regional economies; Pacific and Gulf trade expanded : 20th Century/Truck Era National economy was built on truck and highway technology that freed business and industry from rail terminals; an east-west and north-south Interstate highway grid was built to connect cities and regional economies; Pacific and Gulf trade expanded
21st Century/Information Era U.S. global trade is being built on information, telecommunications, and low-cost, long-haul transport by water, rail, and air; north-south NAFTA trade is expanding rapidly : 21st Century/Information Era U.S. global trade is being built on information, telecommunications, and low-cost, long-haul transport by water, rail, and air; north-south NAFTA trade is expanding rapidly Atlantic Coast Canadian Border Pacific Coast Gulf Coast Mexican Border
Goods Movement Today U.S. freight system moved 14 billion tons of freight valued at $11 trillion over 4.5 trillion ton-miles in 2000 : Goods Movement Today U.S. freight system moved 14 billion tons of freight valued at $11 trillion over 4.5 trillion ton-miles in 2000 Source: Reebie TRANSEARCH and FHWA Freight Analysis Framework Project
Freight-Truck Traffic Trucks moved 11 billion tons valued at $9.5 trillion over 2.6 trillion ton-miles in 2000 : Freight-Truck Traffic Trucks moved 11 billion tons valued at $9.5 trillion over 2.6 trillion ton-miles in 2000 Tons (millions) Source: Reebie TRANSEARCH and FHWA Freight Analysis Framework Project
Freight-Rail Traffic Freight-rail moved 2 billion tons valued at $600 billion over 1.2 trillion ton-miles in 2000 : Freight-Rail Traffic Freight-rail moved 2 billion tons valued at $600 billion over 1.2 trillion ton-miles in 2000 Tons (millions) Source: Reebie TRANSEARCH and FHWA Freight Analysis Framework Project
U.S. GDP and Trade History Gross Domestic Product growth has averaged 3.2 percent per year; trade in goods and services is now equivalent to 27 percent of Gross Domestic Product : U.S. GDP and Trade History Gross Domestic Product growth has averaged 3.2 percent per year; trade in goods and services is now equivalent to 27 percent of Gross Domestic Product
U.S. Freight Tonnage Forecast, 2000-2020 With moderate economic growth (e.g., 3.1 percent CAGR), import/export freight tonnage could double by 2020 and domestic freight tonnage could increase by about 60 percent : U.S. Freight Tonnage Forecast, 2000-2020 With moderate economic growth (e.g., 3.1 percent CAGR), import/export freight tonnage could double by 2020 and domestic freight tonnage could increase by about 60 percent Source: Transearch and FHWA Freight Analysis Framework Project
Slide12 : Photo: Port of Portland Import Program
Congested Highways, 2000 Congestion disrupts truck-freight service by making trips slower, less reliable, and more expensive : Congested Highways, 2000 Congestion disrupts truck-freight service by making trips slower, less reliable, and more expensive Source: CSI based on FHWA Freight Analysis Framework Project and HPMS data
Potential Congested Highways, 2020 Without additional capacity or improved productivity, logistics costs will rise : Potential Congested Highways, 2020 Without additional capacity or improved productivity, logistics costs will rise Source: CSI based on FHWA Freight Analysis Framework Project and HPMS data
Total Logistics Cost Trend Logistics productivity gains have been a key engine behind US economy growth, but gains have stalled with total logistics expenditures at about 10 percent of Gross Domestic Product : Administration Transportation Inventory Source: Cass/ProLogis 12th Annual State of Logistics Report, 2000 Percentage of GDP Total Logistics Cost Trend Logistics productivity gains have been a key engine behind US economy growth, but gains have stalled with total logistics expenditures at about 10 percent of Gross Domestic Product
Freight and Public Policy Issues Do the truck and rail freight systems have the capacity to handle the growing volume of freight – even if mode shares remain constant? : 2020
Additional Truck Tons 2020
Additional Rail Tons 2000
Truck Tons 2000
Rail Tons Freight and Public Policy Issues Do the truck and rail freight systems have the capacity to handle the growing volume of freight – even if mode shares remain constant? Do the public benefits of a rail-freight system warrant public investment to expand rail-freight capacity?
State of the Rail Industry Today The rail industry today is stable, productive, and competitive with enough business and profit to operate, but not to replenish its infrastructure quickly or grow rapidly : State of the Rail Industry Today The rail industry today is stable, productive, and competitive with enough business and profit to operate, but not to replenish its infrastructure quickly or grow rapidly Cost of rail infrastructure is huge and relatively fixed
Competition among railroads and with trucking has driven rail rates down
Shippers and the economy have benefited, but
Railroads are not attracting long-term investment
Market economics will continue to streamline and downsize the rail system
Rail Network Today Today’s rail network has been rationalized and downsized to a core network that is descended directly from the 19th Century design. Seven Class I railroads now originate 84 percent of national rail traffic and generate 91 percent of railroad revenue. : Rail Network Today Today’s rail network has been rationalized and downsized to a core network that is descended directly from the 19th Century design. Seven Class I railroads now originate 84 percent of national rail traffic and generate 91 percent of railroad revenue. Source: Louis Thompson/World Bank Class I Railroads Rail Line Local Railroads Regional Railroads Deregulation Miles of Rail Line in the U.S.
Railroad Productivity Railroad productivity has improved dramatically : Railroad Productivity Railroad productivity has improved dramatically Index 1981 = 100 Source: Railroad Facts, AAR Productivity Volume Revenue Price
Railroad Return on Investment Railroads’ return on investment improved through the early 1990s, but is now trending downward; ROI is still below the cost of capital; productivity benefits have gone to shippers more than to investors : Source: AAR Railroad Return on Investment Railroads’ return on investment improved through the early 1990s, but is now trending downward; ROI is still below the cost of capital; productivity benefits have gone to shippers more than to investors
Mid-Atlantic Rail Network Major Links and Ownership : Mid-Atlantic Rail Network Major Links and Ownership
Mid-Atlantic Rail Program : Mid-Atlantic Rail Program $6.2 billion in improvements
$2.4 billion near-term program (within 5 years)
Buildable projects where current demand exceeds supply
Planning projects with long lead times
$620 million of quick-start projects ready now
$1.9 billion medium-term program (5 to 10 years)
Important choke points needing design and environmental approvals
$1.9 billion long-term program (10 to 20 years)
Growth
Mid-Atlantic Rail Network Program Program identified $6.2 billion of public-private improvements over 20 years; the near-term program covered $2.4 billion of bridge, clearance, capacity, and connector project within 5 years : Mid-Atlantic Rail Network Program Program identified $6.2 billion of public-private improvements over 20 years; the near-term program covered $2.4 billion of bridge, clearance, capacity, and connector project within 5 years
Mid-Atlantic Rail Network Program (continued) Near-Term Program: $2.4 billion within 5 years : Mid-Atlantic Rail Network Program (continued) Near-Term Program: $2.4 billion within 5 years
Two Tracks Forward Market-Driven Evolution or Policy-Driven Expansion : Two Tracks Forward Market-Driven Evolution or Policy-Driven Expansion Market-Driven Evolution
A rail industry that continues to be stable, productive, and competitive with enough business and profit to operate, but not to replenish its infrastructure quickly or grow rapidly
Public-Policy-Driven Expansion
A rail industry that provides cost-effective transport needed to serve national and global markets, helps relieve pressure on overburdened highways, and supports social, economic, and quality-of-life goals
The Bottom Line : The Bottom Line Freight volumes are growing with the economy; this growth will strain the nation’s freight system
Rail freight productivity is challenged by congestion and capacity choke points along national corridors, at intermodal terminals, and at urban rail interchanges
Public rail investment historically has treated the bottom of the system: grade crossings, branch lines, and commuter rail services
Present need is to treat the top: nationally significant corridors, intermodal terminals and connectors, and urban rail interchanges
The Bottom Line (continued) : The Bottom Line (continued) Market-driven evolution will be stable and productive, but the rail-freight system will slowly lose market share to trucks, which will stress congested highways
Policy-driven expansion will accommodate economic growth and relieve some of the pressure on highways
Without coordinated public and private action, congestion and capacity constraints will weaken the freight industry, the economy, communities, and the environment
The public and private freight community must advance public policy options that improve the productivity and security of the rail freight system as an integral part of the national freight system
Slide28 : Freight Trends and Freight Rail Contact Information: Lance R. Grenzeback Cambridge Systematics, Inc. 150 CambridgePark Drive, Suite 4000 Cambridge, MA 02140 617.354.0167 lgrenzeback@camsys.com