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Talking Freight Seminar Freight and Economic Development

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. Three Themes. Freight Flows: changing due to National & Global Economic Markets.

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Talking Freight Seminar Freight and Economic Development

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

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

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

  4. Trends… 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

  5. Economic Development… 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

  6. Economic Development… 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

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

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

  9. Urban Econ Development… Vancouver No Build Scenario Diff: Build vs. Not 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

  10. Urban Econ Development… 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

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

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

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

  14. Urban Econ Development… 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

  15. Economic Development… 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

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

  17. Rural Economic Development… Example: Appalachian Corridor T 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. Southern Tier West N. Country Central NY minus NYC Rural Economic Development… Highway & Mfg Employment Southern Tier West N. Country Central

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

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

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

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

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

  24. Rural Economic Development… 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.

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

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

  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

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