Perhaps the biggest threat from volatile financial markets is
that the process of planning long-term infrastructure improvements
will be sidelined. There is a lot of freight to move around the
world. As long as the world population continues to increase and
barriers to trade continue to be dismantled by trade agreements, the
volume of freight to be moved will increase. In the maritime freight
sector, ocean carriers have recognized this and are shifting to
larger vessels. Ports have recognized this and have made efforts to
get their navigation channels dredged, air draft constraints removed
and have adequate freight-handling equipment. But it’s not enough.
It is necessary to look outside the gates.
When thinking about ports, or any hubs where freight movement
changes from one mode to another, it is important to think in terms
of gateways. A port gateway is the collection of waterways,
terminals, rail yards, roads, the equipment to hold and move cargo
such as chassis, railcars, containers, as well as the infrastructure
to store and cross-dock freight.
Like ports, railroads have also been making investments.
However, all freight movement involves draying at some point. Road
capacity has generally not been improved despite an uncountable
number of studies. Too often the analyses are focused on long term
trends and fail to pinpoint current bottlenecks to freight movement.
The notable exception is the recent report, Congestion Impact
Analysis of Freight Significant Highway Locations — 2015,
published by the American Transportation Research Institute. It
identifies, quantifies and ranks the locations of roadway congestion
that impacts freight movement.
Various federal agencies and advisory committees, such as the
Department of Commerce’s Advisory Committee on Supply Chain
Competitiveness, have also discussed the causes and consequences of
freight movement congestion. The focus has been on optimizing
improvements to operations in and around port areas.
Optimization can only go so far. It is necessary to think about
expanding intermodal transfer rail yards near ports as well as making
room for other industrial real estate such as distribution centers,
warehouses and cross-dock facilities. Growing freight volumes will
require more of these types of infrastructure and land uses outside
the gates of ports and marine terminals.
Rail and industrial land use expansions will be very difficult
to achieve given the increasing demand for real estate at and around
ports. Our planning tools have not kept pace with these developing
needs.
For example, a key component of expanding rail facilities is
grade separation. Grade separation projects are often not highly
ranked by transportation agencies, in part because the planning
processes and cost-benefit ratios used to prioritize funding do not
include the costs of congestion to supply chains.
However, the formulation of appropriate cost-benefit
methodologies to address the true cost of under-investing in at-grade
crossings and separations is advancing. Ali Rezavani, of Moffatt &
Nichol, wrote on this topic in a 2015 report, Benefit-cost
Methodology for Highway-railway Grade Crossing Safety Protocols as
Applied to Transportation Infrastructure Project Prioritization
Processes. In this report, he summarizes the efforts in assisting
the North Carolina Department of Transportation’s Rail Division in
developing a methodology for identifying and prioritizing safety
projects at highway-rail at-grade crossings.
Industrial real estate development activity around urban ports
has also been increasing. Major companies in this market report
occupancy rates around 95 percent or higher in major urban areas. At
these occupancy levels it is likely that costs will soon begin to
rise. Planning around port gateways has to factor in the need for
industrial real estate.
Ports are also trying to alleviate the effect of growing
volumes on local traffic by supporting the development of inland
ports. Inland ports involve train shuttles between the port and an
inland rail yard.
Beyond such long-term solutions it is also necessary to ensure
that there is sufficient equipment available to support freight
flows. U.S. exports, most of which originate in the Midwest, have
likely been hampered by empty container availability. The U.S.
Department of Agriculture has been trying to help by publishing the
Ocean Shipping Container Availability Report (OSCAR). OSCAR is
the aggregation of data supplied by ocean carriers on the locations
and availability of a range of containers, including 20-foot
containers, 40-foot containers, high cube and dry as well as
refrigerated containers. This has helped analysts identify areas of
chronic shortages and should inspire some market-driven solutions.
Development of road capacity, at-grade separations and
industrial real estate is a lengthy process involving permitting,
planning and often upgrades to ancillary infrastructure such as
electric power, water supply and so forth. Freight volumes will
continue to grow over time and, therefore, it is necessary to engage
in significant and connected infrastructure development planning now.
Twenty-first century ports will have an inland reach that we
are just now beginning to understand. We need 21st planning and
funding tools to make freight movements a national asset and not a
national liability.
Kemmsies is chief economist at Moffatt & Nichol, an
infrastructure engineering firm. He can be reached at (212) 768-7454,
or email at wkemmsies@moffatnichol.com.
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