NAFTA at 20 Infrastructure Overview. Tamara A. Nelsen Senior Director of Commodities Illinois Farm Bureau

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1 NAFTA at 20 Infrastructure Overview Tamara A. Nelsen Senior Director of Commodities Illinois Farm Bureau

2 Overview U.S. infrastructure overview NAFTA s impact on trade and trade corridors NAFTA freight overview Trucking: NAFTA at 20 Rail: NAFTA at 20 Rail developments Challenges for NAFTA partners Opportunities for NAFTA partners NAFTA 2.0

3 U.S. Infrastructure Overview Freight movement increasing and projected to grow more, particularly around urban areas. Current freight movement hampered by: Other priorities (oil) Weather (low water, winter storms, high water) Slow public investment (WRRDA - FINALLY) Rail limitations (tracks, cars, locomotives) Trucking regulations and shortage of drivers Progress being made, but it will take time Class I railroads investing a lot of money Trucking industry working on drivers and weight limits Chicago and interline switching areas biggest choke points

4 NAFTA Elevated Importance of Trade Corridors Along the I-95 Corridor Coalition Land Borders (I-87, I-89, I-91) since 1995: 88.2 million trucks 7.3 million loaded rail cars 69.2 million bus passengers 1.2 billion vehicle passengers

5 NAFTA Created New Intercontinental Markets Rail Competing demands and priorities. Opportunities for partnerships. Trucking New export markets/more diverse commodities. Long-haul trucking routes become the norm. States and provinces developed interstate regulations (i.e., International Fuel Tax Agreement). Significant increase in interstate through traffic.

6 NAFTA Freight Overview (as of July 2014) U.S.-NAFTA freight totaled $101.1 billion via all major modes air, vessel, pipeline, rail, and trucks 5 th month in a row U.S.-NAFTA freight flows exceeded $100 billion. Trucks carry three-fifths of U.S.-NAFTA freight; the most heavily utilized mode for NAFTA partner trade. Trucks hauled nearly 59% of U.S.-NAFTA freight. Rail was the second largest mode, moving nearly 15% of all U.S.-NAFTA freight, followed by vessel (9%), pipeline (8.5%), and air at (3.4). Surface transportation modes of truck, rail and pipeline carried 82% of the total U.S.-NAFTA freight flows.

7 U.S. NAFTA Exports & Imports by Mode $ Billion (nominal)

8 Trucking: NAFTA at 20 Traffic on Major Truck Routes Current Traffic Projected Source: U.S. Federal Highway Administration

9 Rail: NAFTA at 20 Major Carriers and Lines Freight railroads enjoying a resurgence as traffic increased. Rail more fully integrated with seaport infrastructure. NAFTA has world s largest interconnected rail network (same rail gauge). NAFTA also spurred railroads to expand beyond their borders.

10 Rail Developments NAFTA helped fuel Canadian National and Canadian Pacific Railways expansion into the U.S. and BNSF into Canada. NAFTA enabled KCS to extend into Mexico by acquiring Transportacion Ferroviaria Mexicana. BNSF (Burlington Northern Santa Fe): total rail volume more than doubled with NAFTA launched first all-rail U.S.-Mexico service in May 2014 partnering with Ferromex 5-day/week service runs from Chicago to El Paso, then via a steel wheel interchange onto Ferromex s line to Guanajuato considering new intermodal services, but meanwhile goods move faster through customs than via trucking Manifests provided to Ferromex and Mexican and U.S. customs in advance, speeding the process UP (Union Pacific) also tapping growing U.S.-Mexico intermodal volume via partnership with Ferromex late in 2013 UP launched intermodal service between Chicago and Monterrey. UP s new $400 million intermodal terminal in New Mexico allows railroad to attract freight by truck across nearby border

11 Challenges for NAFTA Partners Economic decline and rise in fuel prices Initially resulted in lowered trade volumes Trucking companies adapt (less trucks carry more tonnage) Border staffing issues = bottlenecks Screening more complex since 9/11 Border staffing increasingly important as volumes increase Congestion on system (especially highways) Chokepoint in one state now affects all Need transportation investments for projects of regional and national significance

12 Opportunities for NAFTA Partners NAFTA partners should: Evaluate roads, bridges, border crossings to see where investments provide the biggest returns to border efficiency. Create a Joint Infrastructure Planning commission. Each national government should also form an international commission to study infrastructure needs at land borders and linkage corridors. (continued)

13 Opportunities for NAFTA Partners (continued) Facilitate legitimate cargo and travel: Focusing on illicit trade and activities overwhelms the border management process. A more efficient customs and border process in everyone s best interest. Canada-U.S. Beyond the Border (BTB) initiative has improved integration of customs activity. Need stakeholder support to accelerate deployment of next gen technologies to automate the boarder, including a single electronic customs window. One Window companies importing from or exporting to anywhere submit everything electronically using standardized forms. Single window computerized system so that companies don t have to file multiple forms deadline by president Obama. The system will also allow governments better monitoring of shipments and dealing with potential problems.

14 Opportunities NAFTA 2.0 NAFTA a clear success with much opportunity for further efficiencies via integration and standardization. Lacking a shared vision for NAFTA s next generation. Some ideas: Harmonized regional trade policy North America s collective interests best served by negotiating as NAFTA in multilateral negotiations. Being at same table negotiating TPP or WTO not the same as engaging in a coordinated regional strategy. Future coordinated law enforcement with future borders serving as data capture locations.

15 Thank you! Tamara A. Nelsen