What Is “National Economic Development” Benefits

December 22nd, 2012

When the Corps of Engineers considers a navigation project, the focus is on improving the net benefit to the nation that this project may generate.  As such, the Corps will develop a without project condition, which serves as a baseline for additional comparisons.  Once traffic flows, cargo, and costs are a developed, the Corps will begin estimating the benefit of various projects, including both their related costs and benefits, including changing traffic volumes and costs.  In this context, the Corps, with a focus on the net benefit to the nation, constructs estimates of the National Economic Development benefits from a project.   (For example, putting in a project in one location that will influence an existing Corps project would be seen as simply a transfer between regions, and not necessarily a net benefit to the nation if the Corps now must build, operate and maintain two projects were the one existing project was sufficient.)  

The use of the Benefit Cost Ratio is to demonstrate if there is actually a net benefit for doing a project, namely that the benefits being considered are better than the costs. (Basically, for every dollar invested in a project, the project will return an anticipated return, such as a BC ratio of 2 suggests that for every one dollar invested, the nation would receive two dollars in benefits.) However, the evaluation of Benefit Cost ratios alone may not necessarily result in the best project being built from a national perspective.   Based on the following figure from IWR Report 09-R 3 three projects are considered.  Most people would say that Project A, with the higher Benefit Cost Ratio, should be selected.  However, the Alternative A has both a relatively lower Benefits than the other alternatives, despite its lower cost.  Alternative C, with its higher benefits than either Alternative A or B, generates the largest net economic return, and would be selected by the Corps of Engineers.

  

In many ways, the Corps includes many of the same elements used in highway and other infrastructure projects, with the basic steps of estimating costs and benefits.  The differences center upon: the focus on national, rather than regional, benefits, managing not only the determination of what project is needed but the construction of that project at the same time, and the inability to consider as wide a range of benefits as is traditionally done in other infrastructure BC analysis.  In sum, the Corps studies tend to be more broad and complex than other infrastructure investments, especially given that the project estimates are used throughout the entire review process and once approved, determine the project’s scope and budget.

 

 

December 2012 What’s New

December 22nd, 2012

What’s News

 

Over the past few months, I made several presentations, ranging from importing cargo from China for a class at LSU, and a presentation for the University of Wisconsin on the importance of the Mississippi River http://www.ittsresearch.org/adobe/final%20for%20webinar%20on%20Mississippi%20River.pdf .

While at the AASHTO annual meeting, I spoke on the importance of Benefit Cost analysis for maritime studies and thoughts on linking corridor planning efforts to the proposed MAP-21 provisions.  http://www.ittsresearch.org/adobe/Can%20We%20Plan%20Together.pdf

ITTS submitted comments for the “Interim Guidance on State Freight Plans and State Freight Advisory Committees” as released by US DOT.  You can access all the comments on the guidance at http://www.regulations.gov/#!docketDetail;dct=FR+PR+N+O+SR;rpp=10;po=0;D=DOT-OST-2012-0168

I spoke at the Mississippi Water Resources Association (MWRA) on the value of waterways. http://www.ittsresearch.org/adobe/Economics%20of%20Waterways-mwra.pdf

Finally, work continues on organizing the ITTS/MAFC in Louisville, March 12-14.  I hope to see you there!!

Government, The Gas Tax and Fixing Potholes

December 21st, 2012

A recent 9 to 5 Cartoon lists two drivers in  a car, driving around potholes.  (http://www.gocomics.com/9to5/2012/10/20)  The punchline is that you can now adopt a pothole by contacting Lessgovt.org.  There are several things about the cartoon that I find intriguing.  One, the question of tolling and who owes a road, and secondly the costs associated with maintaining the roadway.  As discussed in many places, transportation suffers from the “Tragedy of the Commons”, where multiple users do not see how their individual actions can change the net use of a common asset.

Anyway, just a funny comic, but one that I think illustrates the tradeoffs we face when considering the fiscal cliff.

Some Articles of Interest…Dec 10th.

December 10th, 2012

To all…

1.  Here is a report from the Federal Reserve Bank in San Francisco that highlights the return on public spending in Transportation. http://www.frbsf.org/publications/economics/letter/2012/el2012-35.html They suggest that current multipliers for highway spending are too low, considering the long term effects that these projects have on local communities.  They suggest that multipliers should be higher than the tradition 1-1.5 used in economic models, suggesting that they should be more like 2 or higher.  The report they cite at the end of the article calls for the multiplier to be higher.  As the role of Benefit Cost analysis and Value Engineering remains an evolving tool at DOT, it will be interesting to see how these play out…

2.  The economic data remains mixed as the CASS Freight Index was down for November. (http://www.logisticsmgmt.com/article/november_cass_freight_index_data_sees_declines_in_shipments_and_pricing_fro/)  The irony is that throughout 2012, we have seen mixed economic signals, and recently the OECD revised their forecasts for 2013 downward.  While we should rejoice about 2012 ending, we may not necessarily be jumping for joy that 2013 is here…

3. MAP-21 called for more work on freight advisory councils.  Here is a nice plug for KY from inbound logistics.  http://www.inboundlogistics.com/cms/article/kentucky-racing-toward-logistics-leadership/ There is some need to figure out how to work with advisory groups, as the MAP-21 guidance recommends this for freight projects, but it unclear if they really considered the various nature of freight advisory councils at the state and local level.  Clearly, the role of state freight advisory councils were not necessarily the catalyst behind Georgia’s agreement to expand the Port of Savannah http://www.ajc.com/news/news/state-regional-govt-politics/deal-reed-say-savannah-port-expansion-a-priority/nTLzB/ .  And a recent commentary about how supply chains are becoming more important to a business’ bottom-line.  (http://blogs.dcvelocity.com/technology/2012/11/how-important-is-supply-chain-just-ask-apple-and-citi.html)

4.    Rail Intermodal trying to get under the 500 mile radius.  (http://www.dcvelocity.com/articles/20121116-ntermodal-struggles-to-crack-short-haul-market/?utm_medium=email&utm_campaign=Insider+2012+Dec+7&utm_content=Insider+2012+Dec+7+CID_f2f87f8a6a4007c67f45aa44c0b4e416&utm_source=Email%20marketing%20software&utm_term=Intermodal%20struggles%20to%20crack%20short-haul%20market) While rail intermodalism is growing, the question of can rail compete for shorter haul moves has been problematic. Traditionally, anyone said that rail can not be competitive for anything less than a day’s drive by truck, but there are some markets where short haul rail intermodal does exist.  For the Southeast, this is actually a reality, as Railroads have explored more intermodal terminal development in the region, especially tied to mainline container routings.

4.  Tolling versus fuel taxes?  The Reason Foundation came out with a new report that suggests this may not be as burdensome as first proposed and should be considered for future infrastructure funding.  http://reason.org/news/show/1013148.html

5.  The USDOT Office of Inspector General released its FY2013 Top Management Challenges.  While not necessary program based, they do show the direction that the OIG is hoping to move in 2013, especially regarding program oversight.  http://www.oig.dot.gov/sites/dot/files/DOTs%20FY%202013%20TMC.pdf

Here are the priorities…

•           Ensuring the Next Generation Air Transportation System Advances Safety and Air Travel

•           Enhancing FAA’s Oversight and Use of Data To Identify and Mitigate Safety Risks

•           Overseeing Administration of Key Transportation Assets To Ensure Their Success and Sustainability

•           Strengthening Existing Surface Safety Programs and Effectively Implementing New Safety Requirements

•           Maximizing Surface Infrastructure Investments With Effective Program Oversight and Execution of New Legislative Requirements

•           Adequately Overseeing Administration of High Speed Intercity Passenger Rail Grant Funds

•           Strengthening Financial Management Over Grants To Better Use Funds, Create Jobs, and Improve Infrastructure

•           Ensuring Effective Management of DOT’s Acquisitions To Maximize Value and Program Performance

•           Managing and Securing Information Systems To Efficiently Modernize Technology Infrastructure and Protect Sensitive Data From Compromise

 

6.  Some information on local deliveries.  Inbound Logistics describes how firms are starting to look at local deliveries beyond just rush hour concerns (http://www.inboundlogistics.com/cms/article/urban-delivery-getting-into-the-grid/) and the focus on integrated logistics means that firms are still trying to better manage expedited services to maintain costs and inventory levels (http://www.inboundlogistics.com/cms/article/expedited-transport-its-all-in-the-timing/).  This is different from this report about FedEx changing its business model (http://www.dcvelocity.com/articles/20121112-at-fedex-say-hello-to-the-next-40-years/?utm_medium=email&utm_campaign=Insider+2012+Dec+7&utm_content=Insider+2012+Dec+7+CID_f2f87f8a6a4007c67f45aa44c0b4e416&utm_source=Email%20marketing%20software&utm_term=At%20FedEx%20say%20hello%20to%20the%20next%2040%20years)

7.  Webinar

(SR500) NHI Innovations: GIS Tools for Linking Transportation and Natural Resource Planning

Date/Time:  12/20/2012 2:30 PM – 4:00 PM Eastern Time

http://www.nhi.fhwa.dot.gov/resources/webconference/web_conf_learner_reg.aspx?webconfid=25385

 

8.  I also found the following Patagonia recommendations for Christmas (http://www.lifeedited.com/patagonia-to-shoppers-dont-shop-if-you-dont-need-to/) :  Consider the following:

  1. Reduce. Do I need this?
  2. Repair. Can I fix what I already have?
  3. Reuse. If I can’t repair the thing I want to replace, can it be sold to someone who wants it or used somewhere else like a charity?
  4. Recycle. Can the materials of my old thing be remade into something else?
  5. Reimagine. Can we change global consumer habits to create a sustainable planet?

Does this sound like a good investment strategy for public infrastructure:

  1. Reduce: Deobligate state roads to local/private jurisdictions where appropriate
  2. Repair: Fix the system
  3. Reuse: Can we rehabilitate, put in ITS, etc., to improve throughput
  4. Recycle: Reusing materials and improving roadway assets
  5. Reimage: Can we find another use or mode that can work in this corridor?

 

9.          Department of Transportation is launching a new National On-Line Dialogue focused on the asset management requirements in MAP-21 for public transportation providers. The National Online Dialogue is open from December 12, 2012 to January 4, 2013 and can be accessed at http://tam.ideascale.com/

Questions to consider:

  • How should FTA define State of Good Repair?
  • What elements should be included in a Transit Asset Management Plan?
  • How will I know my Transit Asset Management Plan meets FTA requirements?
  • What triggers when I have to revise my Transit Asset Management Plan?
  • Should FTA tailor Transit Asset Management Plan requirements to accommodate different sized transit systems to avoid the “one size fits all” approach?
  • What kinds of technical assistance should FTA offer to aid transit agencies in meeting these requirements?
  • How should the requirement for state of good repair performance measures be implemented and integrated with the new MAP-21 performance-based planning process?
  • Other topics you believe should be considered as we prepare the TAM rulemaking.

10.  Finally, while I enjoy Christmas music, I get tired of hearing the same songs ad nauseam.  The following site contains Christmas Sharity materials (http://ernienotbert.blogspot.com/ with links to other sites) which are generally, older public domain versions. Although some are bad (you have been warned!), and some are quite good, you won’t hear these versions at every store or on the radio.

 

 

October 29, 2012 Articles of Interest

October 30th, 2012

  1. Article on Changing Supply Chains
  2. Talking Freight Webinar Notification
  3. Webinar on “Retailers Focus on Logistics in a Consumer-Centric Marketplace”
  4. Fuel prices driving more freight to rail
  5. Other Items
  1. Article in DC Velocity how the evolution of push logistics will transform supply chains in 20 years.  They discuss the changing focus on local deliveries, which both Amazon, Wal-Mart and others are experimenting with in certain markets, as well as increased focus on moving business to customers, which reduces the dependence upon store front purchases.  (Already seeing this in some sectors of same store sells over the past few years, which may mean that transportation planners may see transportation land use patterns change.)

http://www.dcvelocity.com/articles/20121029-get-ready-to-say-goodbye-to-the-supply-chain-as-we-know-it/?utm_medium=email&utm_campaign=Spotlight+Strategy+-+2012+Oct+30&utm_content=Spotlight+Strategy+-+2012+Oct+30+CID_29c388634e08c0e162a28715945e18b1&utm_source=Email%20marketing%20software&utm_term=Get%20ready%20to%20say%20goodbye%20to%20the%20supply%20chain%20as%20we%20know%20it

 

2.“Talking Freight Webinar Registration open”

 Registration for the November 14 Talking Freight seminar Freight Transportation’s Role in Economic Development is now available.

Date/Time: November 14, 2012 1:00 – 2:30 pm EDT

Registration: http://www.nhi.fhwa.dot.gov/resources/webconference/web_conf_learner_reg.aspx?webconfid=25428

Description: Efficient, safe, and secure freight transportation helps form the foundation upon our Nation’s economic strength rests. It allows businesses to move raw materials to factories and finished goods to and from markets all over the world. Freight transportation system is also important to economic development efforts, as cities and towns use their proximity to transportation facilities as a way to attract businesses and jobs. This seminar will include presentations from several States and regions, describing how they successfully linked freight transportation with economic development, the strategies they have used to support economic growth and jobs, and how they have determined what essential investments in freight infrastructure are needed to support and enhance the State or regional economy.

Presenters:

  • Tom McQueen, Georgia Department of Transportation
  • Trevor Brydon, Southeast Michigan Council of Government

If you have not yet participated in Talking Freight, I encourage you to do so. These monthly seminars, sponsored by the Federal Highway Administration, are held via web conference, which means that you view the PowerPoint presentations over the Internet while listening to the presenters over your computer or the telephone. There is no cost involved and you do not have to leave your desk to participate. More information about Talking Freight is available at http://www.ops.fhwa.dot.gov/freight/fpd/talking_freight/index.htm  Links to past presentations and recordings are available on http://www.fhwa.dot.gov/freightplanning/talking.htm.

Talking Freight seminars are eligible for 1.5 AICP Certification Maintenance Credits (for AICP members). In order to receive credit, you must attend the full seminar and login to the seminar with your full name or type your full name into the chat area during the seminar if you are in a room with a group of people. Visit the AICP web site for more information about AICP Certification Maintenance Credits.

 

If you have any questions, please contact Nicholas Kehoe, SAIC, 703-676-6872 or nicholas.p.kehoe@saic.com.

 

 3.Webinar –  “Retailers Focus on Logistics in a Consumer-Centric Marketplace”

Wednesday, October 31st. 2:00 PM – 3:00 PM EST

https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=531412&sessionid=1&key=46CFE69C9593AFEAF5B7451A43E099A3&sourcepage=register

4.  Scientific American reports on how high fuel prices are moving more freight to trains, which has been a major shift in growing domestic intermodal rail volumes over the past few years. http://www.scientificamerican.com/article.cfm?id=freight-rail-back-to-the-future

 5.  Other Items

  1. Savannah Harbor gets approval for federal dredging (will go to 47 feet).  (Another port trying to deepen to attract the expected traffic through the Panama Canal).
  2. Attached is a paper by the Bipartisan Council and the Eno Foundation about the Fiscal cliff and its potential effects on transportation budgets…Some policy stuff, but with the looming fiscal cliff, its worth discussing.
  3. I attached a call for abstracts for “LSU’s Center for Natural Resource Economics and Policy” to be held in New Orleans. (I serve “nominally” on the Board of Directors).
  4. Also, another call for abstracts for Smart Rivers.  ITTS worked with several of the previous Smart Rivers meetings (in Belgium, Louisville, Vienna and New Orleans).

 

Shipping Wars – Reality TV and Trucking Hit the Road

September 11th, 2012

Well, I have to admit, I am hooked on the show “Shipping Wars”, which runs on the AE network. http://www.aetv.com/shipping-wars.  Its interesting to see how people handle the rigors of being a driver, from the experienced driver to the rookies.

Its a pretty simple format:  drivers bid on loads at the beginning of the movie, they show up and pull the load where they need to go.  If they make money, based on fuel costs, delays, etc., people see the reality of supporting transportation. (We spend roughly 9% of US GDP on transportation, and we consume the equivalent of 2 semi’s full of stuff annually.)

When I watch the show, I tend to focus on the logistics side of the business: how do you pack the material, how to you related to your customers, and how to do you move these odd pieces where they need to go.

Well, its a lot of fun watching these people grip about each other…Kind of like high school drama…with real money involved.

Articles of Interest – July 16

July 10th, 2012

Maritime Update

Port of Charleston to fast track an inland port in Greer.  The dredging work for the Charleston Harbor maybe done on time and under budget.

North Carolina port logistics study reports on the benefits of investment in the Port’s maritime infrastructure will create jobs and opportunities for the state.   This would both generate new cargo opportunities for the state, as well as reduce transportation costs for the State’s shippers.  The full report is available online at www.ncmaritimestudy.com.

The ILA Contract Negotiations remain stalled.  The East Coast benefited from the West Coast lockout ten years ago, and with the Panama Canal expansion, the potential for more cargo through Southeast ports remains unclear until a new contract is signed.

Marine Highways are important, as discussed by Sean Connaughton, Secretary of Transportation for the Commonwealth of Virginia.

Freight Policy and Planning

Here is a writeup on the TIGER Grant for ports.

I found this interesting discussion on infrastructure by the British program, “Bottomline“.   here is the link to the MP3 file.

Transport Topics reports on the number of Truck Studies authorized by the MAP21 Bill, including studies on truck size and weight changes.

Logistics and Supply Chains

 U.S. carload freight remains sluggish according to the Association of American Railroads, but  intermodal traffic has increased.

Economics

The Atlanta Fed reported that manufacturing declined for the first time in 36 months.  You can see the trends here.

Reuters reports that the U.S. Federal Reserve official US will see continued economic malaise for the next two years.

 

Interesting Research:

Traffic Noise and Heart Attacks…

A new study found that living near noise traffic flows increases the heart attack risk.  The relationship suggests for every increase of 10 decibels of traffic noise exposure resulted in a 10 percent increase in heart attacks.

  • Citation in the Economist (which talks about rubberizing roads as a response)
  • Citation in the New York Times (which talks about causal relationships)
  • The article itself

 

State Wordcloud images

June 20th, 2012

I developed a set of wordclouds for each state, which I have used as handouts, in presentations, or in informal meetings as discussion starters. The images were developed for state freight statistic handbooks, but I thought I would share them before the handbooks are done later this year.  You can assess the images by going to the individual state summary.

 

The North South Trade Corridor

June 20th, 2012

Working with the Mid-America Freight Coalition, we developed a poster showing the importance of linking the Midwest and the Southeast into a single transportation corridor.  (You can download the 11X17 map here as an pdf format, which makes a great handout or poster for a breakroom, etc…)

The region is a critical driver in the US economy, accounting for roughly half the nation’s manufacturing, and contributing agriculture, energy and key economic drivers.   It is also interesting to see how may proposed interstate corridors link the two regions, including I-49, I-69 and I-73/74.

  •  Why develop this map?  The maps were designed to quickly convey the important of looking at the broader geography of linking corridors with various markets.  Normally, we discuss one corridor, or a national map, but such maps do not necessarily reflect the economic geography of the region.
  • And what do I do with these maps?  I use the maps in smaller presentations to discuss why we need to look at regional corridors as economic drivers.

In the next few months there are plans to more maps, including waterways, railroads, ports, airports, and other mega-region flows (Western U.S., Northeast) and to international markets.  As always, any suggestions or comments are appreciated!!

 

Martin Jacques- Understanding China

May 7th, 2012

I attended an afternoon session hosted by the World Trade Center where Martin Jacques presented his thoughts on China (while I did not see his talk at TED, here is the link. There were some interesting insights that I had not considered, such as:

  • China is not a national country in the Western sense, but a cultural country, routed in a prevailing civilization paradigm that transforms nationalism into something that is much broader and deeper than in the West. The implication is that overseas Chinese see China in much stronger terms than most expatriates do when they go overseas.
  • China is very diverse and depends upon decentralization to maintain its unity, something that they strive to maintain.  For example, look at Hong Kong, the one country, two system approach is still working.
  • China remains a developing country, which changes the relationship of economic flows to/from the region over the next thirty years.
  • State is seen as the guardian of the Civilization of the Chinese state, and has more power and authority than in the West as it is seen as more of a caretaker, and not an advisory/intruder.
  • Dr. Jacques mentioned his book, which he is now revising, as the Chinese State is so rapidly changing, institutionally, etc., but still in a very Chinese way.
  • We can never understand China fully by viewing it with a Western concept of democratic, economic and cultural norms, especially as the past two hundred years the legacy of Western imperialism has lead to a devaluation in the need to understand developing world cultures and norms.

You can view more informtion on his book “When China Rules the World: The End of the Western World and the Birth of a New Global Order”.