Economic Impacts of the Border on Transportation

1. Economic Impacts of the Border on Transportation Transportation leadership you can trust. Study Update presented to Canada/U.S. Transportation Border Working Group presented byStephen Fitzroy & Brian Alstadt, Economic Development Research Group Andreas Aeppli, Cambridge Systematics, Inc. November 19, 2008

2. Presentation Overview • Project Summary • Task 4 – Analysis/Methodological Concept • Remaining & next steps

3. Overview of Project • Main objective is to determine the economic consequences of delay at the US/Canada border, including: • impacts at specific border facilities or regions • macroeconomic effects for entire border • impacts of policy alternatives • Some key questions: • What are the impacts of freight versus passenger delay? • What commodities/industries are affected most? • How does the transport sector respond? • What role does reliability play?

4. Review of Study Tasks • Task 1: Work Plan • Identify data sources • Technical Approach & Detailed Work Plan (Technical Memo #1) • Task 2: Overview of Transborder Trade Data • Collect data and identify trends • Technical Memo #2 • Task 3: Literature Review • Summarize relevant work • Identify benefits and limitations of applied methodologies • Technical Memo #3

5. Review of Study Tasks - Continued • Task 4: Develop Analytic Methodology • Present logic • Compare to methods from literature review • Discuss data requirements • Draft Technical Memo #4 to be distributed shortly • Task 4-D: Define Select Sample Scenarios • Three impact scenarios that could be used to validate model • We need your input! • Differentiate between low, medium and high delay scenarios for each of the four border regions • Results incorporated into final version of Technical Memo #4 • Task 5: Summary Report

6. Summary of Literature Review • Most relevant studies: • HDR|HLB (2006) – San Diego/Baja Border • Taylor et al. (2003) – US/Canada Border • DAMF (2005) – US/Canada Border (impacts to trucking firms) • Two broad approaches: • macroeconomic – measure supply and demand elasticities of response to time delay • microeconomic – measure costs at vehicle-level, determine how costs “flow” through economy • Room for improvement: • “delay” is not the only cost of crossing border • address travel time variability • add commodity dimension • recognize multiple freight carrier types

7. Key Considerations for Methodology • Many types of costs • travel time and variability • operating costs (fuel, capital, maintenance, labor, etc.) • administrative costs • Costs affect many economic players • passenger (commute, leisure, on-the-clock) • freight carriers (own-account, for-hire, common carriers) • freight shippers (bulk, mixed freight, small package, JIT firms) • Many possible responses to costs • Vehicle: mode/ route/ time-of-day • Firm: inventory management/ production technology/ site location • Household: tourism, employment, residential location • Data

8. Analyzing Border Delays Overview of analytic approach Scenarios: • Changes in fees or charges • Change in processing time • Change in inspection policy • Change in hrs of operation • Change in security procedures Change in user costs by vehicle Facility Capacity Response: • Change in processing time • Change in idle time • Change in reliability • Change in tolls Demand Response: • Change in crossing demand by trip purpose • Change in vehicle/freight mix • Change in crossing location • Change in crossing time of day

9. Overview of Methodology Methodology blends micro- and macro- approaches Veh. Costs: • Trucks • Cars Vehicle Users: • Households • Industry (pass.) • Freight shippers • Freight carriers macroeconomic elements Users’ Responses: • Travel demand • Traveler spending • Carrier response • Shipper response Regional Impacts: • Employment • Output • Value Added • Wages microeconomic elements

10. Detailed Methodology

11. Implications • Addresses limitations of surveyed approaches • Vehicle based • Incorporates industry and macroeconomic responses • Includes travel time variability • Recognizes different truck carrier types • Impacts revealed at industry level • Additional features • Benefit/Cost analysis • Challenges • Appropriate data • Demand responses to cost changes

12. Sample Application: Single Border Crossing • Hypothetical Scenario: • Assess economic impacts of expanding usage of FAST or NEXUS programs • Data • Passenger travel – survey based, for example 2007 IMTC Cascade Gateway Passenger Intercept Survey • Freight travel – public sources • Economic forecasts • Model Setup • Establish “baseline” and “policy” scenarios • Determine capacity effects of scenarios (changes in wait times) • Estimate any applicable program fees • Enter changes in delay and program fees • Results • Direct benefits by trip type, “user” type, industry, and region • Macroeconomic impacts by industry • Benefit/cost ratios

13. Next Steps • Wrap-up “Phase I” study • Complete Task 4 – Analysis/Methodological Concept • Delivery of draft Tech Memo to TBWG by end of November • Final Tech memo with Task 4D scenarios by mid-December • Comments back by January 15, 2009 • Task 5 – Summary Report • Complete in February, 2009 • Optional Phase II – Test Model • Determine Identify critical policy issues to evaluate • Determine proper scale of analysis • Identify information requirements

14. The End

15. Cost Savings by Vehicle

16. User Responses to Cost Savings