The US freight system, the physical transport network in which trade moves, is the backbone of the nation's economy. Its continued vigor determines our position in the global economy-and we are losing ground.
Historically, the U.S. has been a world leader in freight system design and management, but in recent years it has become alarmingly apparent that investment to maintain and improve our aging transportation system has not kept pace with the burgeoning growth in freight flows. We face capacity constraints at virtually all major freight gateways and congestion and bottlenecks throughout the system as it approaches full capacity.
How bad is it? The American Society of Civil Engineers Report Card for America's Infrastructure gave the system a dismal D+. The tremendous strains put on the system by the marked increase in freight movements in recent decades, coupled with forecasts of continued explosive growth in the future, necessitate immediate and long term investment in our nation's transportation infrastructure.
During the past 25 years, the value of U.S. international trade has more than doubled, growing at an annual average growth rate of 3 percent bled. By the year 2025, the value of international trade moving into and out of the U.S. is expected to double yet again and to reach 37 percent of GDP. This will place unparalleled demands on our nation's already overburdened freight infrastructure. As supply chain resources are stretched thinner and thinner, it is no longer a question of 'if' we will reach a crisis point, but 'when.'

Many of our ports are over fifty years old and are showing signs of neglect and obsolescence. Meanwhile, ports throughout Asia and Europe are becoming more modern and efficient, hampering our competitiveness in the global economy. Our largest trading partner, China, is pouring hundreds of billions of dollars into new infrastructure to support its soaring exports, but we have not responded with corresponding improvements to our system to handle those imports.
Even more tellingly, our ports system is quickly reaching the saturation point. A 2005 analysis of container port capacity by Pennsylvania State University professor of supply chain management Michael Maroni concluded that “there isn't enough excess capacity system wide now-across all the ports-to handle any breakdown at any large port.” Failure at any one of the major U.S. ports will potentially overwhelm the system. It has been suggested that the U.S. needs to add capacity equal to the Port of New York and New Jersey every year to cope with a projected growth in import volume over the next several decades.
Many U.S. ports have narrow navigation channels, shallow harbors that don't permit access by deep draft vessels, which are growing in number in the worldwide fleet, congested truck and rail access routes, and severe space limitations on available land around the port for expansion. The size of cargo ships has increased considerably placing ports without sufficient draft at a competitive disadvantage. In fact, many East Coast ports cannot even handle the oil supertankers that are predominant today.
Admittedly, maintenance and expansion of navigation channels is a lengthy, complex and costly process, hampered by delays in the granting of permits, a plethora of environmental regulations, and conflicting stakeholder views (from conception to actually beginning the work on the Port of Oakland's channel deepening project took 20 years).
A survey of investment plans for ports throughout the nation shows that there is recognition of the problems and a need to address these problems, but plans to deepen or widen ports, and add significant highway mileage or railroad track fall predominantly into long term plans. There are projects that could be accomplished in the near term, which would go a long way to mitigating many of the congestion and capacity problems. Correspondingly, many ports have near-term plans to add terminals, modernize equipment, and add labor. The Port of Tacoma, for example, plans to spend $434 million over the next five years on capital improvements and expansion projects; the Port of Charleston, where 25 percent of the volume comes from Asia, is installing new cranes and other equipment to allow containers to be stacked higher.
In response to the 2004 crisis when large backlogs formed at the country's ports and railway terminals during the peak shipping season before Christmas, shippers, carriers and ports have made some significant changes to forestall a similar event. Ports and railway operators hired thousands of additional workers; retailers have adjusted shipping schedules and extended the peak buying season and diversified the points of entry for goods; trucking and rail companies have added new equipment to the fleet; and some major construction projects have been completed at western ports to alleviate portside congestion.


The World Shipping Council estimates that over 800 ocean freight vessels make over 22,000 calls at U.S. ports every year, or over 60 vessels a day at the nation's 145 ports. Up until 2004, only three North American ports-Los Angeles, Long Beach, and the Port Authority of New York and New Jersey-handled 2 million or more cargo containers annually. Since then, four more ports have reached that level. Western ports continue to dominate, but business in many other ports grew even faster last year as retailers diversified their ports of entry. The shift to alternate points of landing, along with extensive operational changes which included the addition thousands of additional dockworkers, extended cargo terminals hours on nights and Saturdays, and the levying peak hour fees on cargo, alleviated much of the congestion problems seen in earlier years at western ports.
All to the good, these moves, but they are short term fixes-fingers in the dike-and not enough. There are well grounded concerns that nationwide ports aren't making necessary investments to handle the heavier traffic and as a result the East Coast will experience capacity and congestion problems similar to those on the West Coast.
The solution is the development of comprehensive plan for investment in much needed upgrades to existing infrastructure and building of additional infrastructure, together with the leadership to implement the plans. To underscore the point, leadership is the key element to success. The first step will be identifying priorities and committing scarce resources to the projects with the greatest impact.
Intermodal
The successful movement of freight is very dependent on what happens beyond the ports along the nation's highways, inland waterways, railroads, warehouses and distribution centers, container yards and terminal facilities. These are the system's “choke points” and are responsible for chronic delays resulting in a huge economic cost. Landside access to U.S. ports, congestion on highways around major gateways, delays at border crossings, and congestion at major east-west rail interchanges affect the efficient movement of goods from, to, and within the United States.
The burden for addressing and solving the problems are often shouldered by local communities, which do not have the resources and influence to effect large scale changes or solutions. As is obvious, this is a prime example of why we need national leaders to formulate a comprehensive nationwide plan to address the myriad of problems with the intermodal freight system beyond the points of entry.
The Federal Highway Administration (FHWA) estimates that the volume of freight traffic on the U.S. road system will increase 70 percent by 2020. Already, truckers face huge challenges moving goods on the nation's highways. Truck vehicle-miles traveled on U.S. highways have nearly doubled in the last 25 years, yet roadway lane-miles have increased by only 5 percent. Clearly, our nation's highway system capacity is not growing in tandem with the demands being placed on the system.
Furthermore, conditions on U.S. roads have been worsening since 2001, with pavement conditions declining and urban highway congestion rising. A recent report concluded that over 50 percent of urban interstates are considered congested with nearly 8 per cent of the roads in poor condition.


The U.S. still enjoys the best highway system in the world, but the heavy demand being placed on it is overwhelming the investment in maintenance. More to the point, we are not adding the necessary capacity to meet demand. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)-enacted in August 2005-does not go far enough in providing the resources to determine the priorities for improving the nation's highway system and does not provide sufficient funding to make the progress needed to forestall the looming congestion crisis. What's needed is an evaluation of the entire system and then the use of funding to facilitate regionally-based solutions for freight gateways and to support projects of national or regional significance.
Improvements in this arena can be accomplished in the short term and provide great economic benefit with priority placed on projects that will improve landside access to ports and reduce congestion in the areas around the ports; provide better access to warehouse and terminal facilities, both at ports and throughout the distribution system; provide relief from the constraints of limited east-west rail interchanges; and remove barriers to efficient rail movement on the East Coast.
The demand for improved intermodal access to ports will only rise with increased global trade, particularly at containerized ports in urban areas. Of particular concern is the condition of local roads for accessing ports, rail access to ports, and at-grade rail crossings.
Increasing, the availability of truck-only or truck by-pass lanes for access to ports has the dual benefits of reducing congestion and wait time while also increasing the safety of the highways in urban areas around ports. Limited resources should be targeted on improving and expanding existing intermodal connectors to capitalize on efficiency improvements made by ports. Solutions that make better use of infrastructure already in place, such as peak pricing to spread the loads throughout the day and extended hours for terminals, will mitigate congestion and reduce transit times for all shipments.
Most major ports are located in urban areas that have grown up around them. Over the years, land for use as terminals, container yards, and other support functions has been priced out of the market, forcing terminals to locate some distance from the port. Generally, the infrastructure is not in place to efficiently serve this model. Dedicated highway connectors and dockside rail connectors are non-existent or inadequate.

Railroads

Railroads moves about 50 percent of all international cargo in the U.S. Despite heavy investments in recent years in equipment and additional labor, average train speed is falling. Slower trains mean higher costs and more congestion.
Major issues at the ports include a lack of adequate access at ports and improperly sized terminals. On-dock rail terminals like the recently completed Express Rail Elizabeth at the Port of NY/NJ dramatically increase the efficiency of rail and reduce the reliance on short haul truckers. Funding should be directed to facilitating more of these terminals to capitalize on the benefits of using rail to move freight form the docks. The primary benefit is the reduction in highway congestion.
One of the major choke points for rail is the limited number of east-west interchanges for moving rail across the country. Theses interchanges are located through the mid section of the country in major urban areas for which they were not originally designed. Major investment is needed to create high speed rail freight corridors with grade separated rail crossings to alleviate highway congestion and improve efficiency and safety. Terminals and distribution warehouses are heavily clustered around these interchanges introducing yet another layer of bottlenecks. Reversing the trend over the last two decades to consolidate warehousing and distribution at a single point and constructing more regional hubs will help to alleviate the problem.
Freight railroad on the East Coast corridors face some unique impediment to efficient performance. Funding needs to be directed to remove vertical barriers to double-stack trains to take advantage of more efficient container movement. Bridges and other infrastructure on the East Coast were not designed to accommodate the taller profile of double-stack cars. In addition, much of the corridor tracks are shared with passenger rail trains, which generally have the right of way. This has the impact of slowing freight movements during peak times. Railroads need to be given incentives to invest in double tracking to avoid the conflict. wt

Sidebar 1 : The Need for a National Approach

Much of the funding available for infrastructure improvements is under the ultimate control of local and regional transportation authorities and governments. While no one disagrees that such entities are in a position to evaluate the infrastructure needs of facilities in their locale, it is critical that the decision-making process become more focused on a total system approach.
Our infrastructure needs have become so dire and funding so scarce that we cannot afford to make spending decisions in a vacuum.
Leadership on a national level needs to be instituted to see that priorities are set that will make the best use of what is available to curtail the decline in our transportation system. Investment decisions should be made to maximize the benefits of improvements that will reduce the bottlenecks and the freight exchange points throughout the system in the next three years. This includes projects dockside and throughout the system, such as improved highway and rail port connectors, more dedicated freight corridors with grade separations or truck only lanes, better use of terminals and freight hubs, relocation and diversification of distribution centers, encouraging the use of alternative landing points, and building up the local infrastructure to ensure that this does not simply shift the congestion choke points.
This will take leaders with vision.

Sidebar 2: L.A.-Long Beach OffPeak Program Provides a Model for Other Ports

In the last ten years, the Pacific Coast ports of the U.S. have seen dramatic growth, resulting in the severe congestion at Los Angeles/Long Beach (the largest U.S. gateway), which climaxed during the peak season of 2004. One significant response has been the OffPeak program implemented last year by Los Angeles and Long Beach. This successful initiative offers a good example to other U.S. ports of how to make use of existing infrastructure while improving freight transit time, eliminating costly bottlenecks, reducing environmental strain and surrounding gridlock.
The causes of the congestion may be several: lack of space in the port areas, poor production on the piers, and railroads unable to handle the volume of imports.
These issues become more accentuated with the increasing deployment of large vessels carrying over 8,000 TEUs (cost effective for the ocean carriers but an added burden on most terminal infrastructure). Compounding these structural problems is a shortage of truck drivers.
The ports of Los Angeles and Long Beach needed a solution that would reduce congestion without time-consuming and costly development (the expense of port infrastructure is largely left to the States and municipalities with little direct federal involvement). In an effort to address congestion and improve air quality around the ports, terminal operators at Los Angeles and Long Beach established PierPASS in 2005, a program which charges a premium (in the form of a traffic mitigation fee) for most cargo movement during peak hours, meaning that trucks are increasingly moving at night in faster-flowing traffic.
Thanks to the success of the PierPASS program in Los Angeles and Long Beach, the container traffic increase in 2005 was handled better than expected since the program effectively shifted 40 percent of pickups and deliveries to off-peak hours.
In January 2006, PierPASS, Inc. announced that more than a million truck trips have been diverted from peak daytime traffic since the start of the OffPeak program on July 23rd, 2005.
Shifting the hours of cargo operation means utilizing the structures already in place, eliminating additional daytime traffic, and reducing the need for major port expansion decisions. The program is an excellent example of the way in which ports can make better use of the infrastructure already in place.
However, it is not the ultimate solution to avoid delays and congestion-that rests on infrastructure improvements, adequate trained labor, an increase in productivity on handling cargo at terminals, the establishment of off-dock container yards, and increased railroad presence in the immediate port areas to improve the speed of delivery of cargo destined inland. - Enrico Salvo, Chairman, Carmichael International Service