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November/December 2004
Reliability: Critical to Freight Transportation
by Scott Johnson and Joanne SedorMoving commerce efficiently on the Nation's highways is vital to the economy, and FHWA is doing its part to help make that happen.
Moving commerce efficiently on the Nation's highways is vital to the economy, and FHWA is doing its part to help make that happen. Reliable freight transportation is vital to the Nation's economy. At any given moment, billions of dollars' worth of goods are being moved by truck, train, ship, or barge, or held in a yard for transport or distribution. In 2001, Americans spent more than $313 billion on goods and services transported over the Nation's highways.
Many efforts to improve the reliability and efficiency of freight transportation have been successful, but the transportation system faces challenges that, unless addressed, may jeopardize these key elements of freight transportation. When the transportation system becomes unreliable, freight-related businesses and their customers are affected in several ways. First, freight assets like trucks become less productive. Second, businesses will put more trucks on the road to meet their customers' needs. Third, costs associated with warehousing inventory that would otherwise be on the road will increase. Allowing transportation reliability to erode would add additional pressure to U.S. companies operating in an increasingly competitive market and would place more burdens on communities seeking to sustain their economic base and quality of life. Thus, when freight transportation underperforms, the economy and ultimately the American public pay the price.
In 2000, transportation-related goods and services accounted for nearly 11 percent of the U.S. gross domestic product (GDP). Source: Bureau of Transportation Statistics, Pocket Guide to Transportation (BTS-02-02), February 2002. "From a freight perspective, the quintessential requirement for succeeding in a global, just-in-time economy is the ability to plan trips, deliveries, and transactions down to hours and minutes—rather than days and weeks," says Daniel Murray, director of research for the American Transportation Research Institute. "This makes reliability one of the single most important performance measures from a private sector perspective."
Growing Freight Movement
The volume of freight moved by the U.S. transportation system has grown dramatically in recent decades and is projected to increase nearly 70 percent by 2020. The liberalization of trade policies, such as the North American Free Trade Agreement (NAFTA), internationalization of supply chains, and changes in transportation and information technologies have contributed to this increase in freight movement. As a share of the gross domestic product (GDP), U.S. exports and imports grew from 9 percent in 1960 to 23 percent in 2002. U.S. international trade is forecast to reach 37 percent of GDP by 2025. Much of U.S. trade is with NAFTA partners Canada and Mexico, followed by Japan, China, Germany, and the United Kingdom.
North-south traffic fostered by NAFTA has placed increasing demands on the domestic freight transportation system. According to the U.S. Department of Transportation's (USDOT) Bureau of Transportation Statistics, U.S. trade with Canada and Mexico has grown about 90 percent since NAFTA took effect in 1994. As a result, the Nation's highway and rail networks—initially developed for the traditional east-west trade—are now strained, especially at border crossings. In the future, trade with NAFTA and Latin American countries is expected to grow along both eastwest and north-south corridors throughout northern and southern border regions.
At the same time, improvements in the U.S. transportation system have not kept pace with growth in freight transportation. Truck vehiclemiles, for example, nearly doubled while roadway lane-miles increased only 2 percent between 1980 and 2000. Trucks carried about 71 percent of all tonnage and 80 percent of the value of U.S. shipments in 1998. Even with growth in airfreight, maritime, and rail services, the percentage of urban interstates carrying more than 10,000 trucks daily is expected to increase from 27 percent in 1998 to 69 percent in 2020. These dramatic increases are not limited to urban areas. Both congestion and truck volumes are expected to increase on rural interstate segments, although not to the same degree.
As demand for freight service grows, concerns intensify about capacity shortfalls and congestion. Congestion is a serious problem for freight transportation. Reliable, predictable travel times are especially important in a global economy where many goods are needed in tightly scheduled manufacturing and distribution systems. Late arrivals can have significant economic costs for factories waiting for parts to assemble and for carriers who miss guaranteed delivery times.
The unpredictability of freight transportation carries a pricetag. According to FHWA's The Freight Story: A National Perspective on Enhancing Freight Transportation, shippers and carriers assign a value to increases in travel time ranging from $25 to almost $200 per hour, depending on the product carried. The cost of unexpected delay for trucks adds significantly to these numbers. Hence, congestion increases freight costs and has a negative effect on the U.S. economy.
In addition to congestion and capacity issues, the events of September 11, 2001, heightened concerns about the vulnerability of the freight transportation system to terrorist attacks. Consequently, understanding and improving freight transportation security are high-priority issues among decisionmakers in the public and private sectors.
Meeting the Freight Challenge
The Federal Highway Administration (FHWA) has identified several key challenges facing the freight transportation industry:
- Analyzing transportation network demand and trends
- Mitigating congestion
- Improving operations
- Integrating freight in transportation planning
- Enhancing national security
- Building professional capacity
FHWA is working with other Government agencies and the private sector to address these challenges through several freight initiatives. These initiatives are key to enhancing freight transportation reliability and efficiency.
Roadway congestion like this creates problems for freight transportation in the United States, increasing freight costs and contributing to late arrivals of goods bound for factories and distribution centers. In the near term, congestion and capacity shortfalls may not shut down freight operations (the practical work of moving goods from a shipper to a carrier), but they can degrade the predictability and reliability of freight services. In the United States, the private sector is responsible for most freight operations. The public sector, however, also has a role through its ownership and management of the Nation's highway system, ports, and inland waterways, and its regulation and taxation of freight movement.
Understanding the dynamics of freight transportation—through the use of effective freight analysis tools, economic benefit-cost models, and other resources—is essential for matching infrastructure supply to demand, assessing potential operational strategies, and prioritizing investments. To that end, FHWA is conducting research and analysis on freight flows and commodity movements, developing analytical tools, measuring system performance, and examining the relationship between freight transportation improvements and the economy.
In partnership with other modal administrations, FHWA developed the Freight Analysis Framework (FAF), a database and analytical tool that captures freight flow data by mode and commodity. This information can identify points of congestion, highlight areas needing improvement, and assess operational strategies to keep the economy moving.
The Federal Motor Carrier Safety Administration used FAF to estimate the consequences of hours of service rules and air quality effects of allowing Mexican trucks to operate north of the U.S. border. The Maritime Administration also is using FAF to analyze the market potential of short sea shipping. In addition, several States have used FAF data and maps for a variety of purposes. The Indiana DOT, for example, used FAF forecasts to determine future growth in truck traffic on its transportation network, and the Ohio DOT used FAF information to develop its longterm plan.
FAF is now being updated to improve the timeliness of information and its consistency with the U.S. Economic Census data. FAF products, including freight flow maps for States and modes and detailed databases on traffic flows and commodity movements, are available at www.ops.fhwa.dot.gov/freight/freight_analysis/faf/index.htm.
In addition, FHWA has analyzed the benefits and costs of highway improvements and published its findings in Freight Transportation Improvements and the Economy (FHWA-HOP-04-005). The report, available for download at www.ops.fhwa.dot.gov/freight/freight_analysis/improve_econ/, documents a range of short- and long-term benefits for both shippers and carriers. Before FHWA conducted this study, only the benefits to carriers had been estimated.
Liberalization of trade policies and globalization of supply chains have contributed to growth in the volume of freight moving through U.S. facilities, such as the port at Long Beach, CA, where this vessel is arriving. According to FHWA's research, short-term benefits of an improved road network include immediate reductions in transportation costs due to decreases in transit time and improved reliability. Long-term benefits include efficiency gains and further cost reductions resulting from improvements in logistics and supply chain management and changes in a firm's output or location.
FHWA Freight Initiatives
- Conducting research on commodity flows and related freight transportation activities
- Developing analytical tools to measure system performance and examine the relationship between freight transportation improvements and the economy
- Conducting operational tests of ITS technologies
- Supporting the development of tools to evaluate infrastructure and operational needs at border crossings
- Promoting the development of standards for information exchange
- Certifying State compliance with Federal standards on vehicle size and weight
- Providing information on State vehicle size and weight enforcement activities, reporting requirements, and contacts
- Helping transportation and planning professionals develop the knowledge and skills they need to do their jobs effectively
FHWA's research suggests that the benefits found in current benefit cost models should be increased by about 15 percent. FHWA plans to continue its research on refining benefit-cost models to provide more accurate estimates of transportation improvement benefits. An improved model will be a major gain in analytical capability, helping decisionmakers plan and assess projects in a way that better recognizes the unique contributions of freight transportation to the economy.
As part of FHWA's efforts to improve freight transportation mobility and reliability, the agency evaluated the condition of the National Highway System's (NHS) freight intermodal connectors, which are vital links to ports and terminal facilities. The evaluation found that freight intermodal connectors are in relatively poor condition and do not receive adequate attention in transportation planning and programming processes. Examples of poor conditions include pavement deterioration, low bridge clearances, and inadequate turning radii for trucks.
Improving the condition and performance of the Nation's intermodal connectors is a key component of the proposed Safe, Accountable, Flexible, and Efficient Transportation Equity Act. The freight connector proposal dedicates funds from each State's NHS apportionment, while simultaneously increasing the Federal match from 80 to 90 percent to improve the condition and performance of freight connector roads between major ports and gateways and the interstate system.
Boosting Competitiveness Through Technology
In addition to developing freight analysis tools, FHWA stresses the need for using intelligent transportation system (ITS) technologies in freight transportation. The targeted use of ITS technologies in critical steps in the supply chain can boost the reliability and productivity of freight transportation, and improve global connectivity for domestic and international trading partners. In operational tests at the Chicago O'Hare International Airport and the New York City-JFK International Airport, ITS technologies, such as the Electronic Supply Chain Manifest System, reduced the time spent on processing manifests and transferring loads from one mode to another by 56 to 100 percent. Moreover, processing drivers at air cargo facilities was two to four times faster than using a manual, paper-based system. The time savings resulted in estimated cost savings per shipment of $1.50 to $3.50.
New Distribution Model
FHWA's Economic Effects of Transportation: The Freight Story cites how Ford Motor Company is taking advantage of transportation improvements by reorganizing its logistics to change the way it distributes vehicles to dealers. Traditionally, assembly plants ship finished vehicles directly to dealers, but only when a sufficient quantity of orders has been received to fill an entire railcar or truck. To shorten the average delivery time from the assembly plant to the dealer from 72 days to a goal of 15 days, Ford created what it calls "national mixing centers." These centers, located in Chicago, IL; Shelbyville, KY; Kansas City, MO; and Fostoria, OH, act as distribution centers by receiving all types of vehicles from assembly plants and then reshipping the correct number and type of vehicles by rail or truck to dealers. It is estimated that a vehicle is held at a mixing center for less than 24 hours before being shipped to a dealer.
ITS technologies are also important in the new environment of increased emphasis on security and safety, and the push for increased visibility in the transportation process. "Security and safety have always been a concern, but particularly now because of the potential for threats to the supply chain," says Michael Onder, leader of the Intermodal Freight Technology Team in FHWA's Office of Freight Management and Operations. The use of ITS technologies offers greater visibility and potentially a more secure supply chain.
Information about ownership and location of freight as it moves through the supply chain is essential to achieving the reliable, efficient, and secure movement of goods. Information provides the thread that binds individual operations into an efficient intermodal system.
In response to increased emphasis on security and the need to improve information sharing in the supply chain, FHWA has launched several intermodal freight technology initiatives. They include the testing of ITS freight technologies and development of models to simulate needed changes in infrastructure and operations at border crossings. FHWA's intermodal freight technology initiatives involve partnering with industry to conduct deployment tests that provide data on costs and benefits associated with the implementation of various products and practices. FHWA is partnering with border working groups to ensure that the technology development and deployment initiatives satisfy both transportation and security enforcement needs.
New Distribution Model
FHWA's Economic Effects of Transportation: The Freight Story cites how Ford Motor Company is taking advantage of transportation improvements by reorganizing its logistics to change the way it distributes vehicles to dealers. Traditionally, assembly plants ship finished vehicles directly to dealers, but only when a sufficient quantity of orders has been received to fill an entire railcar or truck. To shorten the average delivery time from the assembly plant to the dealer from 72 days to a goal of 15 days, Ford created what it calls "national mixing centers." These centers, located in Chicago, IL; Shelbyville, KY; Kansas City, MO; and Fostoria, OH, act as distribution centers by receiving all types of vehicles from assembly plants and then reshipping the correct number and type of vehicles by rail or truck to dealers. It is estimated that a vehicle is held at a mixing center for less than 24 hours before being shipped to a dealer.
The agency also is supporting a USDOT effort to use electronic seals (E-seals) on container shipments. The E-seal emits a radio frequency as it passes reader devices, displaying information about the container. In an operational test, FHWA affixed E-seals to track cargo between gateways in Canada and the Pacific Northwest. Using this technology in dedicated truck lanes on both sides of the border is expected to reduce truck delays by 800,000 hours per year. This reduction in delays can save an estimated $150 million annually in truck operating costs, including fuel, driver wages, and maintenance.
USDOT and FHWA have worked extensively with private sector partners, such as the Intermodal Freight Technology Working Group, to examine the physical movement of containers through a domestic supply chain and related information flows. Evaluation of container movements with industry partners pointed FHWA to information transfer on freight exchanges as an area where improvements in speed, accuracy, and visibility could reap significant rewards.
Many connector roads like this one between an interstate and freight port are in disrepair and require improvement to facilitate greater truck traffic. Opportunities also exist for preserving highway infrastructure and improving commercial vehicle safety through improved operations. In recent years, trade growth has increased the number of commercial vehicles on U.S. roadways and, indirectly, the potential demand for more productive and larger commercial trucks. Trucks move a majority of freight tonnage. In 2002, 7.9 million large trucks (trucks with six or more tires) were on the road, compared with 6.2 million in 1990, and trucks contributed to 7.5 percent of all vehicle-miles traveled in 2002.
"As a result, FHWA places a high priority on preserving the existing infrastructure through effective State enforcement of Federal vehicle size and weight standards," says Bob Davis, team leader of the Vehicle Size and Weight Program in FHWA's Office of Freight Management and Operations. State enforcement activity data, including citations issued to nonconforming motor carriers, help FHWA determine a State's level of enforcement effort and direct corrective action.
FHWA has found, however, that an inefficient reporting system and lack of technical resources to help States implement state-of-the-art enforcement and reporting practices hinders the effectiveness of enforcement efforts. An opportunity exists to improve the way data are collected. FHWA has identified several activities that will streamline State reporting and evaluation, including automating the reporting system and working with States to identify best practices.
Operational improvements cannot be made without the help of the people who operate the system. Educating a skilled and knowledgeable workforce is key to improving freight transportation performance. State highway agencies and metropolitan planning organizations (MPOs) have identified a need for additional freight transportation expertise. To meet this need, FHWA established the Freight Professional Development (FPD) Program to help State agencies and MPOs develop the skills and knowledge to address the challenge of growing freight flows on the Nation's transportation system.
"Today, transportation planners who have expertise in freight transportation are scarce," says Erik Johnson, senior planner for the Virginia Department of Transportation (VDOT). "FHWA has done an excellent job with the Freight Professional Development Program to provide the kind of information and education that State and local planners need."
The FPD Program educates professionals through training, technical assistance, and a Web-based resource library. Short courses, workshops, and seminars include Integrating Freight in the Transportation Planning Process, Engaging the Private Sector in Freight Planning, and Freight Data Made Simple. Information on training opportunities is available at www.ops.fhwa.dot.gov/freight/fpd. By working with the academic community, the program will encourage changes in transportation planning and logistics degree programs that will ensure the future availability of trained freight professionals in the public sector.
In addition, the program provides technical assistance to States and MPOs through efforts such as the "Talking Freight" Web-based videoconference series, a no-cost way for freight transportation professionals to broaden their knowledge and develop skills. Information on the monthly seminars is available at http://talkingopsandfreight.webex.com.
The "Freight Planning Peer Exchange" listserv, at www.fhwa.dot.gov/freightplanning/, provides a forum to share information on freight with more than 500 subscribers from the public and private sectors. In addition, the new Freight Peer-to-Peer Program puts freight experts in touch with freight practitioners who need assistance in specific areas. This program includes a database of freight experts in various disciplines and offers travel assistance to support the peer exchange.
"The number of public transportation decisionmakers who recognize the importance and champion the cause of maintaining the flow of goods through freight-focused transportation planning is few," says VDOT's Johnson. "I believe that the Freight Professional Development Program will have long-term benefits by making public officials more aware of the growing needs of freight transportation users."
Tracking the size and weight of commercial trucks at weigh stations, such as the one shown, to ensure that they comply with Federal standards helps preserve the Nation's infrastructure and keep vehicles moving safely. Future Directions
Developing more efficient operations and building a knowledgeable workforce are essential to optimizing national freight performance, expanding system capacity, enhancing the economy, and mitigating the effects of freight transportation on natural resources, neighborhoods, and people. Although operational improvements cannot obviate the need for investment in new capacity in all locations, it is an essential, cost-effective way to improve freight transportation reliability and enhance mobility, safety, and security.
FHWA is working to provide its transportation partners and customers with information and tools for effective decisionmaking, technology applications to garner greater system efficiencies, commercial vehicle size and weight resources to safeguard the infrastructure, and professional development resources to enhance the knowledge of transportation professionals. In the future, FHWA intends to expand its efforts in several areas.
Analyzing Transportation Demand and Trends
- Improve FAF methods to provide a more accurate and timely characterization of freight flows, and link the FAF database to a wider range of models to understand the relationships between public policies and freight flows
- Explore new data sources and forecasting methods to meet future requirements for freight analysis
- Develop performance measures for travel time and reliability to improve assessment of the performance of significant freight corridors and land border crossings
- Continue economics research—such as developing an improved benefit-cost model to provide more valid estimates of freight improvement benefits—to help decisionmakers plan and assess projects in a way that recognizes freight transportation's contributions to the economy
Boosting Competitiveness Through Technology
- Evaluate the costs and benefits of leveraging ITS technology in intermodal freight
- Explore opportunities to use industry and government champions to deploy best practices in freight ITS technology
- Research, test, and evaluate emerging technologies to facilitate the intermodal movement of goods
- Work with Federal inspection agencies to improve freight mobility and security at gateways
- Work with international partners to develop data standards to facilitate the movement of freight
Through the Freight Professional Development Program, FHWA offers training courses to help State and local transportation professionals like these acquire expertise in freight transportation issues and practices. Preserving Infrastructure
- Automate the State vehicle size and weight reporting system to reduce the time needed to develop and submit State reports and speed up the analysis and approval process
Building Professional Capacity
- Continue to develop and deliver professional development resources
- Develop an intermodal freight professional development program that includes freight-related training and technical assistance initiatives stemming from other USDOT agencies
FHWA, in partnership with its stakeholders, will continue to lead the development and deployment of multimodal solutions to ensure that the Nation's freight transportation system is reliable, efficient, and secure today and fully prepared for continued growth tomorrow.
Scott Johnson has more than 18 years of transportation experience in government and industry and is a transportation specialist in FHWA's Office of Freight Management and Operations in Washington, DC. His responsibilities include developing and delivering the FPD Program and assisting with freight policy. Previously, Johnson was with the U.S. Army Military Traffic Management Command (now known as the Military Surface Deployment and Distribution Command) and North American Van Lines.
Joanne Sedor is a transportation specialist in FHWA's Office of Freight Management and Operations. As a member of the Freight Policy and Operations Communications teams, she analyzes freight data and trends and writes about them for publications. Previously, Sedor worked at the Congressional Office of Technology Assessment as a project manager/ senior analyst in the Energy and Transportation Program. She focused primarily on energy issues, trends, and policy.
For more information on Office of Freight Management and Operations programs, visit http://ops.fhwa.dot.gov/freight/.
Other Articles in this issue:
Operational Solutions to Traffic Congestion
Regional Collaboration to Improve Safety, Reliability, and Security
Work Zones That Work by Carol Keenan
Putting Travelers in the Know
Reliability: Critical to Freight Transportation
November/December 2004 · Vol. 68 · No. 3
