Implications for Land Use and Infrastructure Finance

1. Implications for Land Use and Infrastructure Finance

2. Overview • Policies That Have Created Trends in Logistics • Trends in Logistics • Effects on Transportation • Attempts to Match Transportation Infrastructure with Demand Finance: The Critical Link

3. Current U.S. Policies • Transportation • Little or No Guidance to Modal Development • Freight Markets Designed for Lowest Direct Cost to Shippers • Transportation Infrastructure • Lowest Possible Short-Term Direct Cost to Shippers • Dramatic Decrease in Cost • Transportation Rates • Logistics Cost • Tax • No Tax on Internet, Interstate Sales • Dramatically Lowered Duties Finance: The Critical Link

4. Changes In Technology • Manufacturing • Agile Manufacturing • Improved IT (GIS,ERP,GPS,EDI,UPC) • Transportation • Containerization • Retail • Internet Ordering Finance: The Critical Link

5. Resulting Trends • Shipment Demographics • Longer Distances • Smaller Shipments • All Resulting in More Trips and VMTs • Carrier Economics • Governmental Funding Finance: The Critical Link

6. Resulting Trends 2 • Supply Chains • Lack of Equipment Standardization • Mostly 20 and 40 Foot Containers for International • Mostly 53 Foot Containers or Trailers for Domestic • Need Terminals to Transload International Shipments to Domestic Vehicles • Transload Terminals Become More Attractive With Greater Volumes of International Traffic Finance: The Critical Link

7. Implications For Land Use • Undervalued Transportation Costs • Increase Use of Transportation Versus Other Inputs Such as Land or Capital • Increase Use of Truck Versus Rail • National Transportation Policy • Retards Intermodal Coordination • Increases Demand for Transportation • Accelerates Movement of Manufacturing Offshore Finance: The Critical Link

8. Implications For Finance • Need For Infrastructure Investment Growing Dramatically • Doubling of Freight Transportation Between 2000 and 2020 • Growth in International Traffic Requires Additions to Infrastructure • Ports, Bridges, Interstates, and Connectors Finance: The Critical Link

9. Implications For Finance: Who Will Pay? • Rail Carriers Will Remain Cash Poor and Unable to Invest Large Amounts of Capital in Infrastructure • Governments’ Will be unable to Build New Infrastructure Fast Enough • Need More or Less • More Efficiency and More Capacity • Less Demand Finance: The Critical Link

10. Financing Highways • More Efficiency • Scale, Density, and Technology • “Free” Highways • Not Free and Not Affordable • Standard Toll Roads • Not Efficient and Avoidable • Smart Toll Systems • Efficient but Intrusive Finance: The Critical Link

11. Case Study I-95 I-81 Corridor • Rail • Conrail Merger was Sold as Taking Freight Off Highways Between Atlanta and NYC • Bottlenecks Prevent Highway Relief • Highway • Most New Capacity Needed in Virginia, but Mostly for Interstate Traffic • Toll Road Proposed for Trucks • Motor Carriers Vow Not to Use Toll Road • Virginia Can’t Build Without Tolls Finance: The Critical Link

12. Implications For Everything Else • Transportation Cost Will Increase Dramatically • Congestion • Reliability • New Hours of Service Laws • Higher Cost Should Reduce Demand For Transportation • But Only After We Have Had an Infrastructure Meltdown Finance: The Critical Link