North American Freight Trends and Issues

Transcription

1 North American Freight Trends and Issues Global Insight World Economic Outlook Conference October 26, 2006 Andreas Aeppli

2 North American Freight Trends and Issues Freight, trade and economic growth Handling the capacity crunch Global Insight developments

3 Growth in Freight Demand is Expected to be Steady Major drivers consist of population, economic and growth in foreign trade, plus supply chain practices Shifts in supply chain practices have contributed substantially to traffic growth over the past 30 years GI forecast points towards continued growth in transportation demand slightly in excess of GDP growth Growth in truck volumes expected to outpace all other modes

4 Freight Tonnage Forecast by Mode, Net Freight Tons (in Billions) 35 Truck Rail 30 Water Other 25 Air With moderate economic growth at about 3 percent CAGR, freight tonnage may double by 2035 (preliminary forecast) Source: Global Insight, Inc., TRANSEARCH, 2004 Year

5 Trade Growth, 1997 to 2030 Value of U.S. Global Trade Compared to U.S. GDP Real GDP 25 Real GDP Trade Value Compared with GDP Year

6 Comparison of Truck Highway Units 2005 and 2035

7 Comparison of Rail Volumes and 2035

8 Major Freight-Truck Bottlenecks, 2004 Source: Cambridge Systematics, Inc., An Initial Assessment of Freight Bottlenecks on Highways, for FHWA, October 2005

9 Major Freight-Rail Choke Points and Congested Areas

10 The Increasing Cost of Our Transportation System Capacity constraints are present in all major modes; at present, these constrains are primarily located in metropolitan regions, but in the future they will become far more pervasive. Total logistics costs have been rising after bottoming out in In 2004 highway bottlenecks caused 240 million hours of delay and cost truckers $8 billion in lost time; urban Interstate interchange bottlenecks accounted for most of the delay about 124 million hours of delay at a cost to truckers of $4 billion From 1994 to 2006, fuel cost (in current dollars) has tripled Foreign trade is consuming capacity previously available to domestic producers

11 Estimated Highway and Transit Program Levels and HTF Account Balances Assuming Level Funding After 2009 Dollars (in Billions) Highway Program Transit Program 0-10 Transit Balance Highway Balance Source: Cambridge Systematics

12 How Do We Address Capacity Issues? With constrained funding, many strategies must be pursued: Expanded private involvement in infrastructure Adaptation of private supply chain logistics to changing circumstances The supply chain responds quickly to changing conditions; infrastructure cannot. While such changes usually happen all by themselves, they need to be understood and recognized from a micro and macro perspective. On highways, perhaps we can t afford to invest everywhere. Prioritize by creating a core network, similar to what the railroads have done: Optimize operations: continuous monitoring, maintain fluidity, improved maintenance strategies, etc. Understand and respond to trends and needs of economic sectors by core network segment, linkage to regional economy Generate revenues to support core network at top level

13 Freight Investment Payback

14 Filling the Gap With Private Investment? Private investment favors projects with clear, stable and immediate returns Though the sector is large, individual entities in the private transportation industry are small relative to capital requirements. Therefore the availability of capital is limited to very narrow activities. For large-scale solutions individual investment is insufficient. Cost of large investments must be shared by many users Broaden concept of proposed rail investment tax credit beyond railroads to cover other types of transportation infrastructure. There is a shared interest in freight transportation capacity, thus increasing revenue through user fees is a necessary part of the solution.

15 New Global Trade and Transportation Capabilities European Inland Trade Model (EITM) Connect international sea trade with inland movements within Europe. Scheduled for release in Domestic inland trade Connect overseas trade with inland traffic in the U.S. Hazmat Service Provide emergency planning agencies a picture of hazardous goods movements across all modes within a region

16 Andreas Aeppli Principal Global Insight, Inc. 24 Hartwell Avenue Lexington, MA