How logistics facilitate an efficient freight transportation system 2013. U.S. House

[ It is alarming that at a time we are about to rollercoaster down the other side of Hubbert’s peak, continued growth is expected. Chairman Duncan states: “With our Nation’s population expected to exceed 400 million by 2050, freight volume is expected to grow by 60% in the next three decades”. I have yet to see one government or corporate document that doesn’t assume endless growth like this, and fret over the thousands of (lane) miles of new roads, bridges, and so on required. Although this hearing talks about efficiency — which does save energy– there is no discussion of funding and encouraging the transportation modes that save the most energy: ships and rail, and how to diminish the most wasteful: airplanes and trucks.  I’m interested in Congressional Hearings to see what our government is doing about the most pressing problems we face. First and foremost, civilization depends on heavy-duty freight transportation that depends on diesel fuel. Everything else is secondary to that, since the electric grid, buildings, and other objects need their components delivered.

Also below are two other hearings:

  1. House 113-32. July 26, 2013. How freight transportation challenges in urban areas impact the nation. House of Representatives. 68 pages.
  2. House 113-21. May 30, 2013. How Southern California freight transportation challenges impact the nation. U.S. House of Representatives. 106 pages.

Alice Friedemann ]

House 113-27. June 26, 2013 How logistics facilitate an efficient freight transportation system. House of Representatives. 84 pages

Today’s hearing examines the relation between logistics and a productive, efficient, and safe freight system. The movement of goods across the country may not always grab headlines, but the efficiency of freight transportation has a major impact upon the lives of every American on a daily basis. From the clothes we wear to the cars we drive to the food we eat, the freight transportation system impacts all aspects of our everyday lives. The logistics industry is valuable to the Nation’s freight system because logistics improve the efficiency of the supply chain. The logistics industry adds value to the supply chain by improving the planning, implementation, and control of the flow of goods from point of origin to point of consumption.

The U.S. freight system moves nearly $19 trillion worth of goods each year. These products frequently move back and forth between ocean vessels, highways, railroads, air carriers, inland waterways, ports, pipelines, warehouses, and distribution centers.

The logistics industry adds value to the supply chain by improving planning, implementation, and control of the flow of goods from origin to destination. Every Fortune 100 and 80% of the Fortune 500 companies employ at least one freight forwarder, also known as third-party logistics (3PL) provider to improve their operations. In 2011, domestic spending in the logistics and transportation industry was nearly $1.3 trillion, about 8.5% of the Nations GDP.


Some statistics: UPS has 100,000commercial vehicles and 560 aircraft delivering 16.3 million packages a day to 8.8 million customers in 220 countries.

A typical package flow (this one takes 4 days)

  • Get the package from its origin and drive it to the nearest local pickup facility, Bay Center near Los Angles
  • Scan, sort, and load onto a trailer with other packages bound for the nearest UPS HUB, Olympic in downtown Los Angeles
  • Add on another trailer (double-trailer configuration) and drive to the Chicago area consolidation HUB (CACH)
  • Unload and sort packages, put this one in a rail trailer to a nearby rail yard in Chicago
  • Load the trailer onto a railcar for its journey to Little Ferry, New Jersey
  • Transfer trailer from the train to a truck chassis and drive to Island City HUB in Queens, NY
  • Sort and truck to destination facility in Brooklyn on Foster Ave
  • Put the parcel in a brown package delivery truck and deliver to recipient in Brooklyn
  • The manufacturer in Brooklyn assembles his product with the part and calls UPS to deliver it to a customer in Cologne, Germany via Next Day Air Express
  • UPS would truck the package from New York to the Philadelphia Airport for its airplane ride to Cologne Germany
  • And then several more processing steps in Germany before the customer receives the package

Over the decades, America’s transportation infrastructure has been built in silos. Highways connected to highways. Railroads connected with railroads. Congress has tried to link them together, but it is still a patchwork. And America needs a freight system that is built like a network.

For highways, the simplest improvement is increasing the length but not the weight of each trailer from 28.5 feet to 33 feet in twin trailer configurations. This would allow freight to move more efficiently, reduce the number of trucks on the road, and would provide environmental benefits without compromising highway safety. Because we are not increasing the weight limit, there is no risk of further damage to highways and bridges.

Tracy Rossers, senior vice president of transportation for Wal-Mart Stores, Inc.

Walmart opened its first distribution center in 1970, using a system designed to quickly and efficiently replenish our shelves. Walmart logistics employs 77,000 associates at 150 distribution centers and 87 transportation offices. We run 6,200 trucks, 55,000 trailers, and we have 7,500 drivers in our private fleet operations.

Our fleet drivers log approximately 700 million miles per year, with the average truck driver logging more than 100,000 miles a year. [ 700,000,000 / 6.5 miles per gallon = 107,700,000 gallons of diesel]

Our distribution center network typically serves from 90 to 100 distribution centers and caters to the needs of specific stores within a 200-mile radius of those distribution centers. They move hundreds of thousands of cases each day, and our import facilities provide efficient methods of handling international merchandise.

Walmart also has nine disaster distribution centers strategically located across the country stocked with relief supplies.

We have set sustainability goals that include doubling our fleet efficiency by 2015 with solutions like cross-dock consolidations networks, lean routing, reduction of empty miles, and optimizing how merchandise gets loaded in our trailers. In 2012, we delivered 297 million more cases, driving 11 million fewer miles than in 2011. We continue to work with the trucking industry on a variety of innovative technologies, including hybrid and other advanced power trains, alternative fuels, aerodynamics, and advanced tire technologies.

With over 4,000 stores in the U.S. and locations in every State, Walmart is a user of all modes of transportation, from our ports to our rail networks to our highway infrastructure.

We have used technology with loading techniques in managing our loading techniques to get more cases per trailer. For us, one additional case per trailer can save us and our network about $680,000 over the course of a year just getting that one extra case per trailer.

Edward R. Hamberger, president and CEO of the Association of American Railroads

We have been reinvesting more private capital than ever before, $25 billion this year alone, 40 cents of every revenue dollar back into the infrastructure, and $500 billion in the last 30 years.

We recommend the following:

  • Continue to focus programs to improve the first mile and last mile connections where freight is handed off from one mode to another, from truck to rail or rail to truck, at intermodal terminals. Improving these connections will lead to large increases in efficiency and fluidity throughout the network.
  • Encourage more voluntary—and I emphasize voluntary—public-private partnerships for freight rail infrastructure improvement projects.
  • Defer consideration of any truck size and weight legislation until the congressionally mandated study from MAP–21 is completed next year [my comment: because longer and heavier trucks would shift cargo from rail to trucks, and rail is 4 times more energy efficient than trucks are].
  • Ensure that various freight modes pay their own way. That is to say, the ‘‘user pay’’ concept has worked very well for developing and growing the infrastructure in the country. We believe that the ‘‘user pay’’ concept should continue into the future. [my comment: This is because trucks only pay 80% of the damage they do to roads and bridges with the rest picked up by citizens, while rail has to pay 100% of their maintenance and operations]

Mr. Scott Satterlee of C.H. Robinson, on behalf of the Transportation Intermediaries Association

C.H. Robinson facilitates the movement of over 11.5 million shipments a year and relies on all the Nation’s freight capacity to manage our customer shipments on a daily basis. We do not own equipment with wheels. So we are mode-neutral when moving shipments. We monitor and qualify over 45,000 U.S.-based motor carriers for proper authority, valid insurance, and other data points. 82% of the carriers operate three or fewer trucks, and 98% of the carriers operate 25 or fewer trucks. Many of these companies do not have their own dedicated sales force, so companies like C.H. Robinson enhance their sales capabilities. We also have access to all Class I railroads for intermodal freight. We operate a series of gateways and consolidation centers for air freight and ocean freight and perform customs clearances as a licensed customs broker. Some shippers only use our services a handful of times when they need assistance finding a truck while other customers have fully integrated our services and even our people into their transportation departments.

In theory, transportation should be pretty simple. If you have a load you need transported, you locate a truck, you assign the truck, and wait for the freight to deliver. Unfortunately, many variables make the matching of a load with an available truck much more complex than that. For example, weather and traffic delays, equipment failures, changing regulation, lane capacity imbalances, business seasonality, and economic conditions all add tremendous complexity to the system. In addition, systematic problems, such as short lead times and heavy reliance on expedited services, excessive loading and unloading time, poor visibility to inbound or outbound freight, and securing surge capacity during busy seasons combine to add inefficiency to the country’s transportation system.

Property freight brokers and 3PLs like C.H. Robinson mitigate these factors that contribute to inefficiency by matching the right load to the right piece of equipment at the right time.

We encourage our transportation system to have built-in modal flexibility. An example of modal flexibility would be an increase in rail ramps across the Nation or a viable shortsea shipping program. Also, make sure trucking remains a great opportunity for the small- and medium-sized entrepreneurs. They provide the flexibility and service to keep our entire transportation system in equilibrium. Barriers for small carriers include California’s environmental regulations, which are significantly different from the rest of the country.

Industry needs help in addressing the growing rise of sophisticated cargo theft. Regional cargo theft task forces are under increasing budgetary pressures from law enforcement agencies but provide industry and consumers valuable deterrent to a costly problem. We would also like it if consistency was ensured between food safety regulations and cargo claims regulations. It is now common for a shipper to request the destruction of hundreds of boxes of food without clearly establishing proof of actual damage. 3PLs are often caught in the middle of a tension between freight cargo claims responsibility and food safety fears.

Mr. Mark DeFabis, president and CEO of Integrated Distribution Services

I represent members of the International Warehouse Logistics Association. The IWLA is the only trade association for warehouse-based third-party logistics providers. These are companies like mine that offer warehouse-based supply chain management services to other businesses across North America. Independent warehouses are a vital part of the economy. We best serve our customers by identifying efficiencies that allow goods and materials to move with more velocity from creation to the end consumer while navigating the legislative and regulatory waters that affect goods movement. We do all of this while constantly looking for ways to achieve efficiencies within the overall supply chain. And our success is evidenced by the fact that logistics costs as a percentage of GDP have fallen almost in half from 16.2% of GDP in 1981 to 8.5% in 2012.

Our unique position in the supply chain allows us to understand just how goods move across the country and exactly where the system needs to focus to ensure smooth commerce in the future. Today’s commercial freight is multimodal. And the warehouse-based 3PL is the point at which modal interchange happens. This is one reason IWLA members’ facilities are located near every major airport, seaport, harbor, railyard, interstate interchange, and why adequate access to these locations is imperative.

Velocity and security and accuracy within the supply chain are mission critical outputs. This is the reason that warehouse-based 3PLs provide a growing number of value-added services. These warehouses, once only big boxes where goods were stored, now may label, package, sort, blend, test, and save customers on transportation costs to speed the process. These same warehouses may also support made-to-order operations and handle returns processing and refurbishing of returns.

Warehouse-based 3PLs also play a key role in another growing segment of the economy, Internet commerce. This increasing amount of e-commerce sales means more shipments are being delivered directly to the consumer. This fact demonstrates that commercial freight does not just move on interstate highways but extends all the way to the residential doorstep.

Members of the International Warehouse Logistics Association ask the committee to consider the following:

  • Develop new approaches to infrastructure financing for all commercial transit modes. These can come via traditional revenue sources and through new sources, such as user fees, mileage-based taxes, and greater use of private investment.
  • Implement policies to ensure that revenue designated for commercial freight projects cannot be diverted in the same way that Highway Trust Funds are today.
  • Guarantee that fees that are collected on imports at the ports through the U.S. Harbor Maintenance Trust Fund are used for their intended purpose, dredging and maintaining the Nation’s ports and waterways. Also, with expansion of the Panama Canal, many ports will need dredging to accommodate the larger ships transferring through the canal.

As e-commerce grows, there are a number of services offered by UPS, FedEx, and the U.S. Postal Service for last-mile delivery for some of the lighter weight packages, all the way to residential doorsteps, and we need to figure out ways to do that more efficiently now that freight isn’t just on the highways

Mr. DUNCAN. Let me ask you something else I am a little curious about. I think about a year after 9/11, the FedEx people told me that they had spent about $200 million on security measures that they wouldn’t have spent otherwise, and it just really boggles my mind how much we have spent on the Federal level, the State level, all the local governments, and then all that the private companies have spent on security, and now we have this huge industry related to security. Is that spending, has it leveled off? I guess what I am thinking about, is a few months after 9/11, the Wall Street Journal had an editorial, and they said they noticed that all the departments and agencies were sending up requests for additional money for security and they said, from now on, a wise legislative policy would be that anytime the word ‘‘security’’ was mentioned, a wise legislative policy would be to give it twice the weight and four times the scrutiny, yet we are not doing that. The Congress votes for anything that has the word ‘‘security’’ attached to it. Then I go to these ports and I go to all these places and I see all the trucks have to stop and go through the machines and all that kind of stuff, and it just seems to me we have gone ridiculously overboard on all that stuff. But are your companies, or your association, what do you say?

Mr. ABNEY. Yes, I could answer for UPS, and the answer is that it continues to grow, and I wouldn’t tie it to just 9/11. I would tie it to all the terrorism activity that has happened throughout, and one of the areas that we are really working on and working with the Federal Government on is to take a risk-based approach. So while we deliver almost 16.5 million packages a day, most of those packages, we would have no reason to suspect. So with the technology that we have that can put various parameters in and tying it into the Federal Government system, we can zero in on those areas that are—have the most risk of security, and that would be a better use of the dollars and it would allow you to target versus this shotgun approach.

Ms. HAHN. Should we look at doing something really bold like really start to talk about opening our ports for off-peak cargo movement? I know in 2002, when I traveled to Hong Kong and Singapore and saw those ports operating 24 hours a day 7 days a week, I came back to Los Angeles and spearheaded what has been sort of an incremental program. It’s called PierPASS and it has been pretty successful in moving cargo off peak. It is now 4 nights a week, and you know, maybe 1 day on the weekend, maybe not. Wondering how that would impact logistics for all of you if you weren’t always trying to meet gates that were only open certain hours, and is that something we should look at as a policy for all of our ports in the country? I would like to hear your responses on that.

Mr. ROSSER. Our customers shop our stores 24 hours a day. And what we try to do in every decision we make is we start with what does the customer want, what do they expect, and then we work to solve their need. And as a consequence of our customers wanting to shop 24 hours a day, most of our stores are open 24 hours a day. And our distribution centers operate 24 hours a day and our trucks are running 24 hours a day, trains are running 24 hours a day, …[the upshot of his rambling testimony is that of course it would be a good thing to have the port open 24 x 7]

Mr. DUNCAN. Are there places, the Panama Canal or other places in the country where we really need to expand the rail capacity or the lines coming in, anything like that? Are there any particular places where you see that we may have a problem in the years ahead?

Mr. HAMBERGER. Freight railroads fully maintain and develop their transportation infrastructure. As a result, the freight rail industry is among the most capital intensive of any of America’s industries, annually reinvesting about 17 percent of its revenue back into capital investments in the rail network. A significant percentage of these expenditures is used to expand capacity to handle more rail volume more expeditiously. Investments considered each year by the individual freight railroads include:

  • adding new track to existing right-of-way, such as a second main line
  • adding or extending new sidings on existing right-of-way
  • constructing new intermodal or transload facilities
  • new, technology-based expansion, such as signaling dark territory
  • new locomotives that increase the horsepower capacity of a railroad’s fleet

Railroads evaluate a wide variety of factors in making these investment decisions—including present and future traffic demands (as determined by railroads working closely with their customers at ports and elsewhere) and the expected return on their private invested capital. Our Nation’s freight railroads are in a good position now, and are working diligently to be in an even better position in the future, to offer the safe, efficient, cost-effective service that their customers need no matter where those customers are, no matter what the freight is, and no matter where the freight is going. America’s freight railroads have reinvested $525 billion (including maintenance expenditures) since 1980—including $25.5 billion in 2012—to create a freight rail network that is second to none in the world. If there is any area where railroads could use assistance in developing the infrastructure necessary to support the Nation’s growth, it would be in having the ability to have an expedited environmental permitting process particularly as we need to add intermodal and other terminal capacity.


House 113-32. July 26, 2013. How freight transportation challenges in urban areas impact the nation. House of Representatives. 68 pages

The purpose of the panel is to provide recommendations to the committee on ways to modernize the freight network and make the United States competitive in the 21st century.

House Rep JERROLD NADLER, NEW YORK. New York is unique in certain respects. New York and New Jersey never built a rail freight connection across the Hudson River, cutting off all of the population centers on the east side from the mainland rail transportation network. As a result, New York City, Long Island, Westchester, and southern Connecticut are completely dependent on trucks.

There is an often-cited statistic that about 43% of intercity freight moves by rail in the United States. In our region, east of the Hudson, that figure is less than 1%. That means about 99% of all goods coming into the city come by truck, almost all of that across the George Washington Bridge.

There is a small percentage of rail that travels by barge where we literally float the railcars across the harbor between New Jersey and Brooklyn. The rail barges provide a valuable service, but they really represent the latest and pinnacle of 19th-century technology. The barges are subject to the tides and the weather and are generally insufficient for moving large quantities of freight by rail.

Our region’s complete dependence on trucks exacerbates all of the normal urban challenges New York City faces such as pollution, a disproportionate impact on low-income and minority communities, and a loss or degradation of underutilized rail transportation assets. But it also creates adverse impacts for the rest of the country. This bottleneck between northern New Jersey and New York causes congestion all along the I–95 corridor. It increases the cost of doing business throughout the global supply chain, and it places an artificial lid on economic growth in one of the largest economic centers and consumer regions in the country.

The Port Authority, along with FHWA, is currently completing the environmental impact statement for the Cross-Harbor Freight Movement Project, which is looking at a number of alternatives for improving goods movement across New York Harbor. It is no secret that I believe the evidence will show that the preferred alternative will be to finally build a rail freight tunnel connecting Greenville Yard, New Jersey, which we visited this morning, to the Bay Ridge line in Brooklyn, a portal which we also visited this morning. The Port Authority was created in 1921 specifically for this purpose, so I look forward to Mr. Foye’s update on this centuries-old project. We are about 100 years behind schedule,

Perhaps the several hundred billion dollar question, is how do we pay for necessary freight improvements? While there are willing private partners, it will not be nearly enough to meet the immense needs all around the country. State and local governments cannot shoulder the burden alone, nor should they, when interstate commerce is inherently a Federal responsibility. We will have to commit Federal funding, or else we will continue to have plans and projects remain on the shelf while our economy sputters.


The Port Authority operates the Nation’s busiest metropolitan airport system. Last year, that system handled 109 million passengers, with 1.3 million tons of international air cargo, and 750,000 tons of domestic air freight. We are the largest maritime port on the east coast, handling over 5 million containers, which is more than a 60% share of the North Atlantic market. Our six international bridges and tunnels handled 14.8 million truck crossings last year, and nearly half of them used the George Washington Bridge, a critical link on the I–95 corridor.

Our port assets and associated freight rail movements are critical to the health of our region and the Nation. Freight passing through our port can reach 20% of the U.S. population or more than 62 million people in fewer than 8 hours, and more than 30%, or over 94 million people, in less than 48 hours.

All of our facilities play a distinct role in the delivery of goods within the region and beyond. For example, the Red Hook container terminal in Brooklyn, in Congressman Nadler’s district, is the only international maritime terminal with a direct land connection to Long Island and is uniquely positioned to receive and distribute international cargo to the approximately 11 million residents east of the Hudson River. We work every day to meet the needs of the Nation’s largest consumer market. Any slowdown of operations can result in an economic blow not just to the regional economy but that of the Nation. Studies indicate that a closure of our ports for only a day would cost the Nation $1 billion a day.

Over the last 10 years alone, the Port Authority and our private-sector partners have invested approximately $2.6 billion to promote efficient movement of freight. Over the last decade, we have also provided more than $688 million in local matching funds for the harbor deepening project which will deepen the main harbor channel to 50 feet to improve navigational safety and pave the way for larger cargo vessels. Earlier this year, we broke ground on a $1.3 billion project to raise the roadway of the Bayonne Bridge in Congressman Sires’ district to increase the navigational clearance above the main harbor channel to 215 feet to accommodate the new generation of larger and cleaner cargo vessels. We have committed $600 million to the development of our ExpressRail intermodal network at our port terminals to support expanded on-dock service by long-haul railroad serving inland markets. ExpressRail reaches up to 90 million customers within 24 hours in markets throughout the Midwest and eastern Canada. Through this service, it takes only 10 days to move cargo from Hamburg, Germany, to Chicago by vessel and rail combined.

Today we have the capacity to handle more than 1 million containers at our on-dock rail facilities, and by the end of the decade we will have increased our capacity to 1.5 million containers.

We are modernizing float bridges and barges that will speed the service, as well as providing new low-emission locomotives for use in both States. But we were interrupted by damage from Super Storm Sandy this last October. This operation continues to grow. Sixteen-hundred rail cars were carried in the first half of this year alone, equivalent to removing more than 6,500 trucks from the area’s roads. This represents the volume equal to all of last year.

In the coming months, the Port Authority will approve a 10-year capital program that will invest billions of dollars in our freight infrastructure. In addition to the capital investment we are undertaking to improve the efficient movement of freight, we are implementing measures to ensure that our investments benefit truckers who use Staten Island crossings to access the Howland Hook facility, thereby improving the movement of freight at this facility. The Port Authority will also invest in an expansion of ExpressRail in Staten Island to enhance that facility’s competitiveness. Since 2000, we have made $375 million in Howland Hook alone.

Mr. COYLE, VP of Environmental & Sustainable Operations, Evans Delivery Company, Inc.

Evans Delivery Company is a national provider of trucking and transportation services, handling or transporting about 500,000 containers, intermodal containers per year. The New York and New Jersey metropolitan area presents some unique challenges for both motor carriers and shippers. The New York-New Jersey metropolitan area has some of the worst traffic congestion in the Nation. Congestion in the region increases freight transportation costs by $2.5 billion and slows the movement and delivery of nearly half-a-trillion dollars’ worth of goods.

William G.M. Goetz, resident vice president for this area with CSX Transportation.

CSX is a common carrier freight railroad providing surface transportation solutions for our customers. Our 21,000-mile rail network is the largest in the eastern United States.

You have heard from other cities about freight rail’s ability to shoulder more of the burden that would otherwise be on the Nation’s interstates. You may have seen or heard that one train can carry as many as 280 trucks, while a railroad can carry 1 ton of freight nearly 450 miles on a single gallon of fuel.

As environmental considerations eliminate older methods of waste disposal in this area, such as dumping waste in the ocean or into one big hole on Staten Island, waste found itself in trucks using those limited crossings I just spoke of. Frankly, some of it still does, but much less so in recent years. Today, all of the waste collected by New York City sanitation on Staten Island is loaded into containers that leave the region by train rather than by truck. And rather than consume highway capacity on the heavily used Goethals Bridge, Staten Island’s waste leaves the island on a train using an adjacent railroad bridge that had been unused for many years. Similar solutions are serving the Bronx and portions of Brooklyn.

Today, vessels calling at New York-New Jersey marine terminals discharge cargo for numerous destinations in North America that are loaded on rail cars within the marine terminal complex and leave the port on a train. They never see a New Jersey public roadway.

Using freight rail as a transportation solution has another benefit that was tested in 2011 and again in 2012, resiliency. In the aftermath of Hurricane Sandy, containers destined for the New York-New Jersey Seaport were diverted to other ports and promptly became stranded in those ports, with over 7,000 containers in Virginia and smaller numbers in Baltimore and Philadelphia. Moving them back here became a monumental challenge. Evacuation using special CSX trains brought thousands of containers back into this market for distribution here.

House 113-21. May 30, 2013. How Southern California freight transportation challenges impact the nation. U.S. House of Representatives. 106 pages.

The freight system in this region is truly multimodal, incorporating marine ports, border crossings, interstate highways, multiple Class I railroads, numerous State highway routes, air cargo facilities, intermodal facilities, and distribution and warehouse clusters. More than 43% of the Nation’s containerized imports enter the country through southern California and go all over the place. We heard yesterday that coming into the Ports of Long Beach and Los Angeles, that 75% of those goods go out to all across the Nation. They make their way to every State, every congressional district, supporting billions of dollars of local economic activity, and millions of jobs. The southern California freight (1) network tangibly impacts the lives of customers all across this Nation.

Replacing the Gerald Desmond Bridge, which we are told carries 15% of all the freight in the country, with its crumbling concrete and low clearances, with a $1 billion new span is clearly important to the Port of Long Beach in southern California, but it is also critically important to goods movement in the entire country.

Making the highway rail grade crossing investments of the Alameda Corridor-East project is important to the San Gabriel Valley, but without this investment traffic delays at crossings could increase by 300%, and that is a grave concern not only for southern California but to the manufacturers awaiting parts in Kansas City and elsewhere. These projects, both of which received large congressionally directed Projects of National and Regional Significance funding in 2005, clearly illustrate the catalytic role that Federal investments can play in financing freight projects. Moreover, it is extremely difficult for individual States to dedicate a significant part of their limited infrastructure investment resources to one of these high-cost projects because freight does not vote. We have often said this country is governed by a one-person, one-vote rule, but not a one-container, one-vote rule, and freight, as a result, sometimes gets short shrift. The cost of these projects are extremely high, often in the billions of dollars, and the benefits are diffuse. Thus, States are often unwilling to expend their limited Federal and State resources on these big-ticket investments, especially when voters are much more interested in seeing ribbon cuttings that will benefit them directly for things like highways, mass transit, and commuter rail. However, the Federal Government can weigh the broader job creation, economic, environmental and trade export benefits of these projects. It is for these reasons that I strongly support providing guaranteed Federal funding and a robust program of guaranteed.

With the Los Angeles region having the sixth largest economy in the world, southern California’s freight transportation challenges are the Nation’s challenges. Fortunately, the Nation is exceptionally well served by the complex and continually improving southern California freight system. The region’s seaports, airports, ports of entry, railroads, roadways, and intermodal yards, as well as trans-loading facilities and warehouses not only support the freight mobility that serves approximately 40% of the Nation’s international container shipments, but it also clearly is the greenest and the cleanest of any part of the national system, if not on the planet. This unparalleled freight volume that we have coming through southern California does indeed present challenges to the region, but also impacts the Nation. The State of California and the southern California region have been very proactive in addressing many of those challenges, resulting in reduced regional impacts and sustained benefits to the Nation. There is also a need for a stronger Federal presence, we believe, and a need for a greater level of Federal fiscal involvement in addressing the southern California freight issues as a result. We believe a dedicated source of freight funding is needed that does not siphon funding from other transportation funds that are also very important. As the ninth largest economy in the world, California has long recognized the need to support the freight industry so that our economy will continue to be a global leader. In 2007, the State issued a comprehensive State freight plan known as the Goods Movement Action Plan.

In 2006, Prop 1–B bond program devoted $2 billion to the Trade Corridor Improvement Fund. The bond funds attracted a wide range of additional private, local, regional and Federal funds, resulting in a current program of about 69 freight projects valued at about $6.5 billion, with the majority of those projects in southern California. The Trade Corridor Improvement Funds project included seven seaport projects to the tune of $1.3 billion; six railroad projects, about half-a-billion of that; about 28 railroad grade crossing projects, about $2 billion of that; and about 15 highway projects, to the tune of about $1.4 billion.

Scott Moore, VP public affairs, Union Pacific Railroad

Union Pacific is 151 years old and operates in 23 States on 32,000 miles of track.

When we talk about investing in infrastructure, our railroad last year spent about $3.7 billion, this year will spend about $3.6 billion. To give you an idea of what that may buy, last year we installed 4.1 million new railroad ties across our system and replaced over 1,000 miles of track, all the while continuing to invest in terminal facilities, as well as in new locomotives.

Our business in California is varied, but certainly intermodal is key. In our intermodal franchise, there are really two parts to it. There is the international container traffic which passes through the west coast ports primarily in 20-, 40-, or 45-foot containers. The domestic business includes container and trailer traffic traveling primarily in 53-foot containers. Additionally, less than truckload and package carriers with time-sensitive business requirements are also an important part of that domestic shipment. Union Pacific overall in our system, 54% of that intermodal traffic is international, 46% is domestic.

Much of this intermodal traffic flows through, in and out of the L.A. Basin. In our network, we operate 10 intermodal facilities, four of which are here in the L.A. Basin. Two of those, our intermodal container transfer facility by the port and our East L.A. yard, are two of our top-producing intermodal yards. The four L.A. Basin facilities combined just do over 1 million lifts. This compares to 4 million across our system, and compares to a second one in Chicago with 1.4 million lifts.

While we have a number of routes into and out of the L.A. Basin, our main corridor is what we call our Sunset Corridor. This line runs across Arizona to New Mexico to El Paso. Once in Texas, that line branches out, where we have the ability to serve Chicago via Kansas City, Memphis via Dallas, and New Orleans via southern Texas. We have invested well over $1 billion in the last 10 years, double tracking this line, L.A. to El Paso, and at the end of last year we were 70% complete.

Even with the expansion of the Panama Canal, we expect traffic to continue to increase into and out of the L.A. Basin ports.

In 2005, we worked with the Alameda Corridor Transportation Authority to develop a pilot here in Colton. It ultimately did not work. There wasn’t a business model to make it work. More recently, Mr. Ikhrata and SCAG did a study on that as well, and once again the economics don’t work. That sort of movement, because of the additional lifts, additional labor, consuming rail capacity, it cannot be price competitive today with a truck move.

Mr. Michael K. FOX. CEO Fox Transportation.

In the Inland Empire, there is 1.7 billion square feet of warehouse and distribution space. It is massive and it is growing. Each day we truck 10,000 containers to the Inland Empire.

In 2006, when the Long Beach and Los Angeles Port reached record numbers, we did more with the same number of vehicles and trucks than we do today. In 2006, there were five night gates. Today we only have four night gates. In 2006, the terminals were open during lunch and breaks. Now they close for 2 hours on those four night gates. That creates congestion in the terminals and a lack of productivity. In 2006, most terminals had wheeled operations where the containers were on the wheels waiting for the drivers, and that is what drivers do: deliver. They shouldn’t be sitting in the port terminals, and that is what they do today. Today it is a grounded operation at all terminals. That means as the containers come off the ships, they are placed on chassis, they are stacked, and drivers now must enter a port terminal at all 13 terminals, get in line to find a chassis, get in line to have a container stacked onto a chassis, get in another line to out-gate, and this takes about 2 hours as an average today. This is not the best utilization of the drivers’ time, and it certainly affects the supply chain. The near-term solution to this is to implement five night gates, Sunday through Thursday night. Sunday is when there is the least amount of traffic on our local freeway system, so we can deliver a lot of freight on Sunday night. In 2013, we are starting to approach the 2006 record year that was set by both ports.

In 2006, one truck could deliver four to five loads to greater Los Angeles. It could deliver three loads here to the Inland Empire. Today, volumes are approaching 2006 levels. That is the good news. The bad news is that that same truck can only do two loads to L.A.; it used to do five. It can only do one or two to the Inland Empire; it used to do three. And again, that is all because of decisions made by terminal operators.

It is not about labor, because it is the same labor force we had in 2006. It is about terminal operators making decisions to have less labor, close down for lunch, put containers on a grounded operation rather than wheeled, and only have four nights. All three of those areas can be changed immediately, and we can be more efficient as these volumes grow for the next few years. We can handle the volumes with the 9,000 trucks that are servicing the ports today. We don’t even really need 9,000 trucks. We need 7,000 trucks for today’s volume. As it grows, we will need the 9,000. But 5 years from now, that will not be enough trucks. Sending another 3,000 or 4,000 or 5,000 trucks to the port creates more congestion not only in the port terminal but on the freeways.

I think there is money that is being spent State and federally on our highway system. As a trucker, I am saying let’s stop spending money on the highway system. Let’s get the UP or the BN involved and have a daily shuttle train and take 500 to 1,000 trucks off the road going between the port and the Inland Empire daily.

Something that the committee should really look at, and that is the establishment of an inland port here in the Inland Empire. With the massive distribution network that we have here in the Inland Empire, we need an inland port.

And the answer is not sending more trucks into the port. That is not the answer. I am a trucking guy who says don’t send more trucks to the port. The answer is put the containers on a train that is located within the port complex, rail those containers to the inland port here in the Inland Empire, reposition our trucks from our trucking community out here and do local trucking. We can do a lot more trucking and a lot more deliveries if we are not wasting time on public highways and sitting in lines at the port terminals. It also creates more space for the port terminals, which they desperately need. I know we are talking about adding lanes on other freeways throughout the southern California area. In fact, the 710, we are talking about adding two lanes at the cost of $6 billion. We probably need the lanes, but at $330 million per mile and the time it takes to build those lanes, I think this is a much better way to use the money, and that is let’s utilize the various modes of transportation, get trucks off the freeway, clean up the environment, and have better utilization of our vehicles.

Mr. RICHMOND. Former CEO Alameda Corridor-East Construction Authority

The area that I work for is San Gabriel Valley in Los Angeles County, but the three other counties surrounding it are also involved in the same work that we are doing. Mention has been made of policy. There is clearly a policy in southern California to shift the modes out of the ports more in the direction of rail and away from truck, and that is a strategy that involves congestion relief, air quality improvements, and a whole lot of other related activities. But for us involved in the communities out there along the rail lines, there are some other effects that are resulting from that. Currently on that network that you see there, there are about 100 trains a day operating, and when we say trains, we are talking about typically a mile to 2-mile-long trains. These are not minor train movements. They are major. That is projected to grow to upwards of 250 trains a day with the increase in traffic coming through the ports. There are 131 grade crossings in that area shown on the map. So there are 131 places where the train basically stops cross-traffic to get through.

Jerrold NADLER, NEW YORK. Everyone seems to agree that State and local funding sources are not sufficient to do the freight projects that are necessary. Everyone agrees the freight projects must be funded on a multimodal basis. Everybody agrees that we need a significant Federal source of funding to supplement State and local efforts. Everybody agrees that that funding source should be available for freight and separate from the Highway Trust. And I think I heard everybody agree that it should be done on a competitive basis and not on a State formula basis.

Mr. FOX. Well, sometimes the most critical things are the most obvious things. There are two issues, near-term and long-term. Look, the ports were never more efficient than they were in 2006 when business was good. So that is part of the obvious answer to this, is that there was more volume that justified more labor. It justified having wheeled operations. The terminals are getting away from providing chassis. It is a very complex issue, and I don’t mean to oversimplify it. It is a very complex issue, no doubt about it. The bottom line here is there are so many stakeholders involved, the steamship lines, the terminal operators. I don’t think labor is even part of the issue at all. I think it is the people paying the bills. And if we don’t get the people paying the bills to correct the situation, as volumes grow we are going to have more congestion and the Panama Canal is going to start looking a lot better.

Mr. HANNA, NEW YORK. So implicit in what you are saying is that there is enough money to go around to allow this inefficiency to continue, and there is nobody invested in stopping it?

Mr. FOX. The different stakeholders are so focused on their own budgets that they are not looking long term at the big picture.

The deep channel ‘‘depth’’ where the larger ships can come in, very unique for this country, is a competitive advantage for Long Beach and L.A. I think there are 50- and 53-foot depths, and that is where the steamship lines went. They went to larger cargo vessels with many more containers, up to 18,000 TEUs, with less sailings. That is cost competitive. That creates immediate congestion when you dump 18,000 containers into a terminal.

For the long term, yes, it is complicated for the UP or the BN to provide a shuttle train to an inland port. But let me also say that based on the trucking rates, where they are today versus when the studies were done 10 or 15 years ago, that gap has come down quite a bit. There is not a big gap between trucking a container from the Long Beach Port or L.A. Port to the Inland Empire versus putting 250 containers on a train and amortizing that cost over 250 containers. That gap is shrinking. It is much smaller.

Mr. IKHRATA, executive director of the Southern California Association of Governments. Just to tell you how complex this is, the inland port issue was looked at several times. But remember that 80% of the truck traffic is not port related. It is due to manufacturing that ends up on the highway but goes to the warehousing. So that makes the concept much more challenging. If every truck that we are talking about is coming from the port, going in one route and going to the warehousing, that is one thing. But a lot of it is related to manufacturing along the freight corridors, so that makes the concept harder.

Ms. PRIMMER, Executive Director, Mobility 21. The Federal Government needs to take the growth of Canadian and Mexican ports very seriously. They pose a competitive threat to the U.S. west coast ports and the millions of jobs they support. However, the most effective response to this competition is for the U.S. to develop a national freight strategy with clear alignment at the State, local, and Federal levels. A national strategy was developed in Canada, and that is a big part of the reason why they have been so effective.


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