Freight Transportation, Investment, and Strategic Economic Development

1. Freight Transportation, Investment, and Strategic Economic Development Transportation leadership you can trust. presented toSEMCOGSoutheast Michigan Council of GovernmentsDetroit presented byLance R. Grenzeback and Marwan MadiCambridge Systematics, Inc. January 23, 2009

2. Presentation • Freight transportation issues for the Detroit region • Linking freight transportation investment to economic development • Freight transportation trends and implications for the Detroit region and SEMCOG • Truck freight • Rail freight • Waterborne freight • Next steps

3. Issues

4. The Detroit region’s key freight transportation issues are – • Reshaping the region’s economy – new industries with new demands for transport of people and goods • Targeting transportation investments to support the new economy – new networks and operations • Matching public decisionmaking to economic geography – new roles and responsibilities • Financing transportation improvements – new sources and partnerships

5. Transportation investments can be used to help reshape the Detroit economy and drive economic development – Public Economic Growth Competitiveness Business Productivity Market Access Carrier Travel Time Cost Reliability Connectivity MPO/DOT Transportation System Investment Source: Cambridge Systematics, Inc.

6. Transportation investments must support both traded and local industries – Detroit’s Traded Industries Detroit’sLocal Industries WorldMarkets U.S.Markets Detroit’s Trade Corridors Detroit’s Local Network Source: EDRG

7. The Detroit economy is likely to shift from a predominately automobile and manufacturing economy to a more diversified and knowledge-based economy – Wages (in Millions) Source: Woods & Poole Source: SEMCOG, Employment by Sector

8. From automobile and manufacturing industries From heavier, bulkier, lower-value, and less time-sensitive freight To knowledge-based industries To lighter, higher value, more time sensitive freight As the structure of the Detroit economy changes, more freight will likely go by truck and air, less by rail and water –

9. Truck Freight Trends and Implications for the Detroit Region

10. Trucking will continue to dominate freight transportation, hauling the most tonnage, garnering the most revenue, and accounting for the most ton-miles of travel – Modal Shares, 2005 and 2035 Percent 95% 100 Up from 92% in 2005 90 80% Up from 61% in 2005 Up from 77% in 2005 80 65% 70 60 Down from 25% in 2005 Down from 5% in 2005 Down from 14% in 2005 50 40 24% 30 Down from 11% in 2005 Down from 7% in 2005 20 Same 13% 8% 6% 10 4% 1% 0 Truck Rail Water Truck Rail Water Truck Rail Water Tons Ton Miles Value Source: Cambridge Systematics, Inc. AASHTO Freight Transportation Bottom Line Reports, based on Global Insight 2004 TRANSEARCH data and economic forecasts.

11. Trucking will also continue to dominate long-haul freight transportation – Freight Truck Volumes Source: Cambridge Systematics, Inc. AASHTO Freight Transportation Bottom Line Reports, based on Global Insight 2004 TRANSEARCH data and economic forecasts.

12. However, as fuel and labor costs increase, trucking will reorient to serve megaregion trips, shifting more long-haul freight to intermodal and transload rail freight services – Seattle (15) $182,170,000 Minneapolis (14) $171,361,000 Chicago (3) $461,374,000 St. Louis (17) $116,215,000 Detroit (12) $198,630,000 Boston (8) $261,086,000 New York (1) $1,056,381,000 Philadelphia (6) $295,236,000 San Francisco (11) $268,300,000 Baltimore (18) $118,063,000 Washington, DC (4) $347,631,000 Los Angeles (2) $632,407,000 Atlanta (10) $242,382,000 San Diego (16) $146,341,000 Miami (7) $231,806,000 Riverside (19) $101,561,000 Phoenix (13) $160,028,000 Dallas (5) $315,544,000 Houston (9) $316,332,000 Tampa (20) $100,952,000 Source: MetroNation: How U.S. Metropolitan Areas Fuel American Prosperity. Metropolitan Policy Program at Brookings.

13. But congestion bottlenecks – especially at Interstate interchanges – are driving up the cost of truck trips and reducing the reliability of the national highway network – Major Interstate Interchange Bottlenecks for Freight Trucks Source: FHWA, Estimated Cost of Freight Involved in Highway Bottlenecks, 2008

14. Reducing delays and maintaining the connectivity of the national highway freight network will be a key national priority – I-94 at I-75 Interchange I-94 at I-75 Interchange in 2006 – • AADT = 181,300 • Percent Trucks ~ 10% • Annual Total Delay Hours = 5,614,855 • Annual Truck Delay Hours = 561,485 Source: FHWA, Estimated Cost of Freight Involved in Highway Bottlenecks, 2008

15. As will reducing delays and maintaining the capacity of international trade gateways – Source: Detroit River International Crossing Study Final Environmental Impact Statement, The Corradino Group of Michigan, Inc. Detroit River International Crossing Options

16. Equally important will be reducing delays and maintaining the reliability of metropolitan freight arterials linking businesses, consumers, and distribution centers – Employment Growth, 2005 to 2035 Congested Roads and Distribution Centers Source: SEMCOG 2030 RTP

17. Highway transportation investments must be targeted to ensure reliable and predictable truck freight services for Detroit’s emerging industries – • Improve urban freight flows • Look to traffic management, pavement and bridge maintenance, and congestion pricing • Improve access to regional/megaregion distribution centers and intermodal rail, waterborne, and air terminals • Look to steer development to areas already well served by highways; focus investment on intermodal connectors • Improve national and U.S.-Canada connectivity • Look to national “corridors of the future,” international gateway, and multistate programs to coordinate and fund improvements at major freight transportation bottlenecks

18. Rail Freight Trends and Implications for the Detroit Region

19. The freight rail system has been restructured since the economic deregulation of the industry in 1980; rail volumes may grow significantly if fuel and GHG emission costs rise – Freight Rail Traffic Source: Global Insight, Inc., TRANSEARCH 2004

20. Detroit’s rail system is geared primarily to serve general merchandise/ carload train traffic – Merchandise/Carload Rail Traffic, 2005 Source: AASHTO Rail Freight Transportation Bottom Line Report, 2008

21. But most of the growth in rail traffic has been in long-haul intermodal service, which in the Midwest is centered on Chicago – Intermodal Rail Traffic, 2004 Source: AASHTO Rail Freight Transportation Bottom Line Report, 2008

22. As intermodal rail freight volumes increase, so will opportunities for intermodal service to Detroit – Detroit Intermodal Freight Terminal Project Livernois-Junction Yard

23. But the freight rail network is nearing capacity, especially on the lines west and south of Chicago, which could increase costs for Detroit shippers and receivers – Future Corridor Volumes Compared to Current Corridor Capacity, 2035 without Improvements Source: National Rail Freight Capacity Study, 2007

24. Rail transportation investments must be targeted to ensure that Detroit has access to major markets and ports – • Improve national access • Look to improve intermodal service to NY, Norfolk, LA, Montreal, and the PNW ports, which are critical ports because of their high volumes; focus on the most critical market pairs (which will change with Detroit’s economy) • Improve cross-border movement • Look to provide doublestack rail clearance to improve intermodal service and reduce costs along the Montreal-Toronto-Detroit-Chicago rail corridor • Improve local rail service • Look to hold onto rail-served properties for “industrial villages;” upgrade intermodal truck connections

25. Waterborne Freight Trends and Implications for the Detroit Region

26. Growth at the largest tonnage ports is driven by petroleum imports, agricultural exports, and movement of non-metallic minerals – Top U.S. Ports by Tonnage

27. Growth at the largest container ports is driven by merchandise imports; LA and NY dominate, but the southeastern ports are growing rapidly – Top U.S. Ports by Container Volume (TEUs)

28. Volumes at container ports will likely triple or quadruple, putting intense pressure on intermodal rail and highway links and opening up opportunities for other ports – Congested Constrained Adequate Rail Water Highway Approximate Water, Rail, and Highway Access Conditions at Top U.S. Container Ports Source: Cambridge Systematics, Inc

29. Detroit could benefit from access to emerging ports – Proposed Intermodal Services Source: SEMCOG

30. Waterborne freight transportation investments must be carefully tailored to match industry needs – • Improve all-water access • Look to develop specialized services, especially for exports, that cannot be matched by large, mass-market container ports • Example: Baltimore’s roll-on/roll-off vehicle export services • Improve intermodal connectors and port operations • Look to highway and rail improvements that provide reliable access and low transfer costs; transit time and handling costs drive shipper choice of ports (and airports)

31. Next Steps • Recognize wider economic implications of investment decisions • Identify key corridors and bottlenecks from economic perspective • Establish formal tracking systems that include economic measures, not just engineering measures • Set up dialog with private sector and economic development interests, as well as existing public constituencies • Discuss priorities, processes, and strategies • Balance short-term constraints and longer-term implications, using data from decision-support systems

32. Freight Transportation, Investment, and Strategic Economic Development Transportation leadership you can trust. presented toSEMCOGSoutheast Michigan Council of GovernmentsDetroit presented byLance R. Grenzeback and Marwan MadiCambridge Systematics, Inc. January 23, 2009