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Congressional Testimony
September 9, 2002 Monday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 5269 words
COMMITTEE:
SENATE COMMERCE, SCIENCE, AND TRANSPORTATION
HEADLINE: CONGESTION AT INTERMODAL
TRANSPORTATION JUNCTIONS
TESTIMONY-BY:
JEFFREY N. SHANE, ASSOCIATE DEPUTY SECRETARY
AFFILIATION: U.S. DEPARTMENT OF TRANSPORTATION
BODY: STATEMENT OF THE HONORABLE JEFFREY N. SHANE
ASSOCIATE DEPUTY SECRETARY AND DIRECTOR, OFFICE OF INTERMODALISM U.S. DEPARTMENT
OF
TRANSPORTATION COMMITTEE ON SENATE COMMERCE,
SCIENCE, AND
TRANSPORTATION SEPTEMBER 9, 2002
Chairman Breaux, Chairman Reid, Ranking Members Smith and Inhofe, and
Members of the Committee: Thank you for inviting me to testify today on the
topic of "Freight and Intermodalism." I would like to commend your committees
for their continued leadership on these important issues and in supporting our
efforts to ensure the seamless
transportation of goods
throughout our country. I believe that ISTEA and TEA-21 have created a solid
framework for addressing the
transportation and logistics
policy issues currently facing our nation, and the lessons we have learned will
serve as important guideposts during the upcoming
reauthorization debate. Demands on our nation's
transportation system are growing faster than supply. While
statistics show that since 1970 our population has grown 40 percent and vehicle
miles traveled have doubled, the Federal Highway Administration's Highway
Statistics Manual indicates that our highway physical infrastructure has
increased by only 6 percent during that timeframe. In fact, according to the
Texas
Transportation Institute, the costs associated with
congestion in the 68 urban areas they studied totaled $
67.5
billion for 2000, including 3.6 billion hours of extra travel time and 5.7
billion gallons of fuel burned by vehicles sitting in traffic. Even after the
significant investments in surface
transportation
infrastructure under ISTEA and TEA-21, our
transportation
system is still experiencing rising levels of congestion that adversely impacts
the free movement of freight on our nation's roadways.
In 1998 (the
latest year for which data are available), the U.S.
transportation system carried nearly 4 trillion ton-miles of
freight valued at over $
9 trillion. Of this, shipments totaling
$
7.8 trillion were primarily domestic movements, with an
additional $
1 trillion representing international merchandise.
By the year 2020, forecasts predict that the U.S.
transportation system will handle cargo valued at over
$
28 trillion, of which $
24 trillion will be
domestic movements and over $
4 trillion will pass through our
nation's gateways.
Truck shipments accounted for 71 percent of total
tonnage and 83 percent of the value of U.S. shipments based on the 1998 data.
Trucks also make the vast majority of local deliveries, although the industry
also carries large volumes of freight between regional and national markets.
Water and rail also carry significant shares of total U.S. tonnage, but much
smaller shares when measured on a value basis. Air cargo shipments, on the other
hand, moved less than 1 percent of total tonnage but carried 12 percent of the
value of freight shipments during 1998.
To put these figures into a
broader context and provide a better sense of the challenges we must face, the
increase in the volume of freight being shipped on our nation's highways will,
by the year 2010, equal the total volume of freight currently carried on our
entire rail system in the average year.
One of Congress' principal goals
in establishing a unified, federal Department of
Transportation
(DOT) in 1967 was to facilitate coordinated
transportation
services across all modes while encouraging these services to be provided by
private enterprise whenever possible. Another goal was to ensure that the
connections between and among the
transportation modes function
smoothly while facilitating international trade and economic development. The
Department provides a common framework that meets the various needs of our
highway, marine, aviation and rail systems by ensuring greater coordination
among programs affecting different modes of
transportation
while increasing the connectivity of these modes.
The landmark
Intermodal Surface
Transportation Efficiency Act of 1991
(ISTEA) increased funding flexibility and emphasized intermodal planning. The
financial reforms of the
Transportation Equity Act for the 21st
Century (TEA-21) gave States and local governments vastly greater resources and
the flexibility with which to implement the intermodal solutions fostered by
ISTEA. Together, they have laid a sound framework for future federal surface
transportation programs and the intermodal strategies needed to
leverage and improve system management and utilization.
Although much
has been done over the past decade, the promise of intermodalism - the efficient
movement of freight and passengers through all modes of our
transportation system - has not yet been fully realized. As
bottlenecks grow and system congestion worsens, the Department increasingly will
be asked to facilitate projects that enhance freight
transportation efficiency.
Also, in the aftermath of
9/11 participants in the
transportation system have been called
upon to integrate security measures into their operations, and the Department
has initiated several programs to encourage that integration. For the freight
industry, this will require strong private sector involvement with the Federal
government empowered to foster cooperation across all modes through new
public/private partnerships.
Freight Movement and International Trade
Understanding future freight activity, both foreign and domestic, is
important for matching infrastructure supply to demand and for assessing
investment and operational strategies. The U.S. economy depends upon a wide
variety of products that move within state boundaries, through interstate
commerce, and to and from various parts to the world. Using data from its
Freight Analysis Framework (FAF), the Department has developed information on
current and projected freight flows, including a forecast of activity through
the year 2020.
FAF projects annual domestic freight volumes will nearly
double between 1998 and 2020, increasing from 13.4 billion tons to over 22.5
billion, which raises the question of which modes will carry these new
shipments. The FAF forecast assumes that growth in freight activity will be
captured largely by increases in air and truck shipments. Domestic air cargo
tonnages are projected to double, although its share of total tonnage would
remain fairly small. Movements by truck are expected to almost double over the
1998 to 2020 period, capturing a larger share of total traffic. Finally, while
both rail and domestic water shipments are projected to increase, their volumes
are not expected to grow as dramatically over the forecast period, mainly
because of slower demand growth in many of the key commodities carried by these
modes.
Since the 1970's, international trade has emerged as a major
component of the U.S. economy, as imports of consumer goods, petroleum, and
manufactured products have increased along with exports of raw materials,
agricultural products, and manufactured goods. This trend toward increased
international trade is expected to continue, as suggested by DRI/WEFA's
projection that over 30 percent of the U.S. economy will be tied to
international trade in goods and services by the year 2020, up from 23 percent
in 1998.
This projected growth in trade has led to concerns over
congestion at U.S. ports, airports, and borders entry points. International
trade, expressed in tons, is forecasted to grow at an annual rate of 2.8 percent
and more than double by 2020. While increases are expected for all regions of
the world, the largest growth will likely come in our trade with Mexico, Canada,
Asia and South America. Cargo trade with our NAFTA partners moves primarily by
truck and/or rail, and most international shipments of water and air cargo are
transferred to or from trucks, rail cars or barges after arriving in the United
States or before heading to export markets. Given the importance of trade to our
nation's economy, identifying ways to more efficiently move freight across our
borders will be critical in the years ahead.
NHS Intermodal Connectors
The condition of the existing
transportation system and
its connections directly affects the efficient movement of cargo. When Congress
created the National Highway System (NHS), it recognized the need to provide
adequate highway access to intermodal freight terminals. Intermodal passenger
terminals are generally well served by NHS connectors but infrastructure
connecting freight terminals to primary NHS routes is often in need of
improvement. NHS connectors are typically short, averaging less than two miles
in length, and are usually local, county or city streets that have lower design
standards than mainline NHS routes.
They typically serve heavy truck
volumes moving between intermodal freight terminals and mainline NHS routes,
primarily in major metropolitan areas. Despite the fact that connectors are less
than one percent of total NHS mileage, they are the "front door" to the freight
community for a broad array of intermodal transport services and options.
TEA-21 directed the Secretary of
Transportation to
conduct a review of the NHS connectors that serve intermodal freight terminals
and submit a report to Congress. The objectives of the review were to: (1)
evaluate the condition of NHS connector highway infrastructure to major
intermodal freight terminals; (2) review improvements and investments made or
programmed for these connectors; and (3) identify impediments and options to
making improvements to the intermodal freight connectors. The findings of our
report to Congress, dated July 2000, are especially relevant as we consider
reauthorization of TEA-21:
Intermodal connectors that
primarily serve freight terminals have significant mileage with pavement
deficiencies and generally exhibit inferior physical and operational performance
than other similar NHS facilities;
An analysis of investment practices
shows a general lack of awareness and coordination for freight improvements
within the State departments of
transportation and metropolitan
planning organizations (MPO) planning and programming process; and
Given
the pressing needs for passenger-related projects and the fact that many of the
benefits from an increased freight investment are received outside of the
investing jurisdiction, there is little incentive for local investment in
freight projects.
The ability to recognize and effectively address
connector needs within the context of our overall intermodal freight system are
important elements in preserving and promoting the substantial productivity
gains we have witnessed as a result of better supply chain management.
Multi-State and Cross-Border
Transportation Planning
End-to-end movements of commercial freight must be viewed within the
context of a
transportation system that is not bounded by state
or international borders. A regional perspective and decision-making capability
is required to provide effective coordination for the infrastructure planning
and investments that support these commercial activities. Recognizing that the
health of their economies depends upon efficient movement of goods along
regional
transportation system segments that often lie beyond
their immediate responsibility, several State and Provincial Departments of
Transportation have joined together to promote regional
transportation consortia. The following examples illustrate
this coordinated and complementary approach to regional
transportation planning and infrastructure development:
- I-95 Corridor Coalition (I-95CC): The geographic region represented by
the I-95CC consists of 12 States (ME, VT, NH, MA, CT, RI, NY, NJ, PA, DE, MD,
VA) and the District of Columbia. With a population of just over 67 million
people, it is home to nearly a quarter of the nation's inhabitants and a quarter
of the nation's jobs, but contains only 6% of the landmass of the nation. The
population density of the region makes efficient goods movements both essential
and extremely challenging in this largely urbanized environment. DOT
representatives from the 12 states and the District of Columbia have developed
an intermodal strategic plan for the I-95CC that is addressing freight
transportation needs within the context of the region's social,
economic, and environmental goals.
- Gulf/Rivers Intermodal Partnership
(G/RIP): In a cooperative effort of seven southeastern and Gulf state
departments of
transportation, regional planning entities and
four public port authorities, G/RIP works to improve waterside/landside
infrastructure investments through education programs for public planners. The
partnership uses the region's ports as classrooms in addition to periodic forums
with senior regional public and private sector policy makers to discuss topical
infrastructure issues.
- International Mobility and Trade Corridor
(IMTC): The IMTC is a coalition of over 60 U.S. and Canadian business and
government entities whose mission is to identify and pursue improvements to
cross-border mobility in the "Cascade Gateway", which includes four land border
crossings between British Columbia and Washington State. Two-way trade at the
Blaine, WA, border crossing alone was valued at more than $
35
million per day in 2000. Congestion and processing delays at the Blaine border
crossing result in over $
40 million in additional operating
costs annually - losses that exceed one day's revenue generated by this
commercial traffic. IMTC-sponsored projects are funded through bi- national
financial partnerships at federal, regional, and local levels.
TEA-21's
Record
Congressional support for the commercial movement of freight was
woven into many parts of TEA-21, helping to strengthen the nation's
transportation system through: enhanced stability and
flexibility of funding; the borders and corridors programs; and increased
application of new information technologies.
Stability and Flexibility
of Funding
TEA-21 revolutionized
transportation funding
through its budgetary firewalls and innovative financing provisions as well as
by providing record amounts for surface
transportation
programs.
The budgetary firewalls that were introduced created
confidence among grantees regarding program funding. As a result, states and
localities have relied upon these assurances and increased their funding levels
to match or even exceed federal commitments made in TEA-21.
The
Department sees its role as one of exercising leadership in convening public and
private sector parties to undertake innovative financing of major
transportation projects. One of the most impressive intermodal
success stories is the Alameda Corridor freight project.
The Alameda
Corridor is a multi-modal project that uses a mix of private funds and public
programs, including a $
400 million loan from the Department of
Transportation, to improve rail and highway access and to
reduce traffic delays in the critically important area of the Ports of Los
Angeles and Long Beach. The recently completed $
2.4 billion
project, which opened for revenue service on April 15, 2002--on time and within
budget--will have far-reaching economic benefits that extend well beyond
Southern California.
The funding flexibility created under ISTEA and
continued in TEA- 21 allows States and communities to tailor their
transportation choices to meet their unique needs. It enables
state and local decision-makers to consider all
transportation
options and their impacts on traffic congestion, air pollution, urban sprawl,
economic development, and quality of life. TEA-21's innovative credit program
has further augmented both the highway and transit programs. The
Transportation Infrastructure Finance and Innovation Act
(TIFIA) has provided almost $
3.6 billion in federal credit
assistance to eleven projects of national significance, representing
$
15 billion in infrastructure improvements. These loans, loan
guarantees, and lines of credit for highway, transit, rail, and intermodal
projects have encouraged private investment to strengthen
transportation infrastructure.
Despite these successes,
there are still areas where we can improve. For example, while freight
transportation projects are often regional or multi-state in
scope, funding is typically distributed through states and localities. Also,
conventional financing programs have provided funding for a wide variety of
projects focused on individual modes of
transportation, but
when dealing with major intermodal projects these programs have often proven
insufficient. Finally, because TEA- 21's programs are oriented towards the
public sector, it can be difficult to truly incorporate the needs of private
sector
transportation carriers and shippers in the planning
process.
The Borders & Corridors Program
TEA-21 established
the National Corridor Planning and Development and Coordinated Border
Infrastructure Program (also known as the "Borders and Corridors" program). Both
programs are financed by one funding source, which is authorized at
$
140 million annually from FY 1999- 2003. Due to the obligation
limitation provisions of TEA-21, awards the first three years averaged about
$
123 million, but based on the law's RABA provisions and
Congressional direction awards for the fourth year (FY 2002) will be nearly
$
480 million. Congressional designation (or "earmarking") of
projects in the Borders and Corridors program increased from 0% in FY 1999 to
about 50% in FY 2000 and 65% in FY 2001. Given this trend and the cost of
preparing full applications, in May 2001 the FHWA solicited 'Intent to Apply'
for FY 2002 in place of full applications with a provision that full
applications would only be requested if warranted based on that year's DOT
Appropriations Act. When Congress designated 100% of the funding for FY 2002,
FHWA did not solicit full applications and instead requested abbreviated
applications for projects designated by Congress. As a result, congressional
earmarking has prevented the Department from taking a strategic approach and
using the program to facilitate trade through targeted
transportation investments that maximize system efficiency.
Awards under the Borders and Corridors program have been as follows:
FY 1999 $
123.1 million
FY 2000
$
121.8 million
FY 2001 $
123.6 million
FY 2002 $
478.0 million
For some projects
construction is nearly complete or underway. One project that has essentially
been completed is near the World Trade Bridge between Laredo, Texas and Nuevo
Laredo, Mexico. Before this bridge was opened, traffic queues up to 4 miles long
were common on an existing bridge and traffic was grid locked for several miles
along I-35. Subsequent to its opening, trucks were diverted to the new bridge
leaving the existing bridge to serve autos, buses and pedestrians. The gridlock
has now disappeared and travel time has been reduced dramatically for trucks,
autos and pedestrians while improving safety and creating jobs.
Some
construction projects currently underway that are likely to be completed in the
next two or three years include the FAST (Freight Action Strategies) corridor in
Washington State and the Bridge of the Americas and the Paso del Norte Bridge
between El Paso, Texas and Ciudad Juarez, Mexico. In the FAST project, replacing
a number of highway/rail grade crossings with grade separations will improve
safety, relieve congestion and improve operation of the water ports and the rail
lines. In El Paso, a modest expenditure (about $
3 million for
each bridge) will improve physical inspection capacity on each bridge by as much
as 40%.
Other projects are at least three or more years from completion
including such important bottleneck relief projects as: the Ambassador Bridge
Gateway in Detroit, Michigan; the SR 905 connector to the border crossing south
of San Diego, California; and the Hoover Dam Bypass between Arizona and Nevada.
Finally, the future I-69 between Michigan and the Texas lower Rio Grande Valley,
which is more of a new access and economic development project, is probably more
than a decade from completion.
Application of New Information
Technologies
Any seamless
transportation system -
present or future - relies heavily on information technology. The same
information revolution that has swept through the private sector and increased
our nation's productivity must also be applied to our
transportation systems. "Smarter" systems have the potential to
dramatically reduce the barriers and costs that currently limit the ability of
passengers and freight carriers to operate across modes. They also will help us
to ensure safer and more secure freight
transportation
networks.
TEA-21 authorized a total of $
603 million for
Intelligent
Transportation Systems (ITS) research for fiscal
years 1998 through 2003, which has funded important research projects that
support freight movements by focusing on system optimization and more effective
use of existing infrastructure. These efforts also facilitate the integration of
the operational aspects of all of our
transportation systems,
while system construction projects address their physical connectivity.
Intermodal freight is a major emphasis of DOT's ITS efforts, and the Department
is currently conducting several ITS operational tests designed to improve the
efficiency and security of the inter-modal movement of freight.
For
example, the Chicago O'Hare cargo project uses a "smart card" and biometric
identifiers to identify the shipment, vehicle and driver during
transportation from the shipper to and through the air cargo
terminal. Another project, Cargo-Mate, has particular applicability to port and
container security, in addition to enhancing the efficiency of freight movement.
This system is designed to perform real-time processing of asset and cargo
transactions, provide for the surveillance of cargo movement to and from ports,
and provide an integrated incident and emergency response capability.
In
a cooperative venture between Washington State and British Columbia, under the
auspices of the International Mobility and Trade Corridor (IMTC), electronic
cargo seals are being deployed to demonstrate the use of low cost disposable
technology to track cargo movements and monitor the security of containerized
freight. This test will examine the use of a Congestion Notification System to
improve truck access to the Port of Tacoma. When these and related projects are
completed and the technologies deployed, the IMTC will have the first fully
operational bi- national electronic commercial vehicle operations (CVO) border
crossing system in North America.
The Department also is participating
in the International Trade Data System (ITDS), which will create a single
federal database for all international trade and
transportation
transactions. Expected to become operational in FY2004 at the nation's busiest
land borders, and at all land, sea and air ports of entry by 2006, ITDS will
extend the benefits of customs modernization across the entire federal
government. The ITDS and Customs' Automated Commercial Environment (ACE) are
being jointly developed so that taxpayers and federal agencies will have a
single system for processing international trade and
transportation information that will also serve as an important
tool in facilitating the transport of cargo.
Continued federal, state
and local investment in the development of new
transportation
technology has the potential to yield enormous operational benefits and give
transportation professionals much greater capacity to manage
increasingly complex systems.
Security Issues
The events of 9/11
have made us all realize that
transportation planning must also
make the security of freight shipments a top priority, in addition to the
system's safety and efficiency. As freight moves from one mode to another, from
ship to rail to truck for example, we must ensure that these modes and the
public are protected from terrorist attacks. The
Transportation
Security Administration (TSA) now oversees
transportation
security across all modes, with the most prominent of course being the new
requirements for aviation. However, TSA is also concentrating on sea, rail and
land shipments and the links between these modes when assessing possible
security threats. Intermodal connectivity is critical for national security, and
TSA is coordinating with the other modes in DOT, other federal agencies, and
industry to achieve the highest possible security levels for the transport of
goods.
Operation Safe Commerce (OSC) is an innovative public-private
partnership dedicated to enhancing security throughout international and
domestic supply chains while facilitating the efficient movement of legitimate
commerce. The overall objective is to provide valid recommendations and workable
solutions to legislators, regulatory agencies, the International Maritime
Organization and the World Customs Organization on how best to address the
critical issue of international cargo security. I serve as co-chairman of the
Executive Steering Committee that directs the OSC initiative along with the
Deputy Commissioner of the U.S. Customs Service, and have been very pleased with
the substantial progress we have made so far.
A recently completed
initial pilot test applied available technology to analyze the supply chain
security of a shipment from Eastern Europe to New Hampshire by equipping a cargo
container with onboard tracking, sensor and container door seals. This shipment
was monitored as it was transported through numerous countries, and the
jurisdictions of several Customs administrations, using various
transportation modes.
OSC proposes to develop and test
security practices to govern the packing, loading and movement of cargo
throughout several international supply chains. This effort will seek to
prototype various solution sets in order to test combinations of physical,
technological and logistical security practices that will best secure domestic
and international supply chains.
Operation Safe Commerce will attempt to
do this by addressing three key components to secure supply chain management.
First, it will demonstrate what is needed to ensure that a shipper exerts
reasonable care and due diligence in properly packing, securing and manifesting
the contents of a shipment of goods. Second, it will demonstrate various methods
to ensure that the electronic documentation accompanying a cargo shipment is
complete, accurate and secure from unauthorized access. Third, it will test
supply chain security procedures and practices, and implement enhanced manifest
data elements and container sealing procedures, to determine which applications
of information and technology are most effective in securing international and
domestic shipments.
Operation Safe Commerce will serve as a technology
and business practice "laboratory" to vet innovate solution sets that support
the objectives of other Federal initiatives such as the Department of
Transportation Container Working Group, the U.S. Customs
Container Security Initiative and Customs - Trade Partnership Against Terrorism,
and the Department's Intelligent
Transportation System and the
Borders and Corridors Programs.
These efforts will continue once TSA and
the United States Coast Guard transfer their missions and functions to the
proposed Department of Homeland Security. Secretary Mineta fully supports these
efforts to improve our Nation's homeland security, and if approved by Congress
the Secretary has pledged to fully cooperate with the new Department to ensure
that security over all modes of
transportation is enhanced.
Building on TEA-21
As we consider the
reauthorization of TEA-21, we continue to face many of the same
challenges that confronted the authors of ISTEA and TEA-21. Applying an
intermodal approach to these challenges enables us to extract the maximum amount
of capacity from our existing infrastructure through creative programs and wise
investments. Accordingly, intermodalism plays a large role in the core
principles and values that motivate the Department's preparation for TEA-21's
reauthorization. We will seek to do the following:
-
Preserve funding flexibility to allow the broadest application of funds to
transportation solutions, as identified by States and local
communities.
- Strengthen the efficiency and integration of the Nation's
system of goods movement by improving international gateways and points of
intermodal connection.
- Focus more on the management and performance of
the system as a whole rather than on "inputs" or functional components.
- Develop the data and analyses critical to sound
transportation decision-making.
- Foster the
development and deployment of technology, to support intermodal freight
security, productivity, and safety.
- Expand and improve innovative
financing programs, in order to encourage greater private sector investment in
the
transportation system, and examining other means to augment
existing trust funds and revenue streams.
Supporting the efficiency of
commercial freight
transportation continues to be a cornerstone
of the Department's vision for America's
transportation system.
ISTEA and TEA-21 legislation gave us many tools to bring this vision to reality,
and our experience has given us new ideas for programs that will get us even
closer to our goal of a seamless
transportation network.
Greater investments in
transportation infrastructure and wider
use of information technology will certainly be required to achieve this goal.
The Department looks forward to working with our partners in State DOTs,
metropolitan planning organizations, and private industry to apply innovative
funding strategies such as TIFIA and State Infrastructure Banks to develop
large-scale projects that might otherwise be beyond the financial means of the
individual stakeholders. We will also consider possible changes to the Borders
and Corridors Program that would encourage broader
transportation planning on the basis of economic regions and
export markets to ensure that our infrastructure investments are truly
integrated with regional and national business developments.
Private
industry has made it clear to the Department that reliable information on
product shipments is of critical importance to them. If our
transportation system is to provide adequate levels of service
for the freight industry and their customers, we must continue to apply
innovative technologies through the ITS Program and collect information on
commodity movements to provide a firm foundation for
transportation planning.
The Department will also work
with the private sector to formulate innovative approaches to providing
transportation solutions and develop the professional capacity
to apply these solutions to the challenges that confront us. We will consider
new ways to develop public-private partnerships that can leverage public
infrastructure investments and ensure that the private sector is more engaged in
our planning processes.
I am confident that working together, the
Administration, Congress, States and localities, and the private sector can
preserve, enhance, and establish surface
transportation
programs that will result in increased mobility, security and prosperity, as
well as more
transportation choices for all Americans.
Mr. Chairman and members of the committee, thank you again for the
opportunity to testify before you today. I look forward to responding to any
questions you may have.
LOAD-DATE: September 10, 2002