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FAiluRE to ACt The economic impacTOf current Investment trends InAirports, inlAnd WAterWAys, And MArine portsInfrastructure

This report was prepared for the American Society of Civil Engineers by Economic Development Research Group, Inc.

The report was funded by a generous grant from the ASCE Foundation.

American Society of Civil Engineers1801 Alexander Bell DriveReston, Virginia, 20191-4400World Headquarters

101 Constitution Avenue, NWSuite 375 EastWashington, DC 20001Washington Office

[email protected]/failuretoact

Economic Development Research Group, Inc.2 Oliver Street, 9th Floor Boston, MA 02109

www.edrgroup.com

Publication was supported by the ASCE Coasts, Oceans, Ports & Rivers Institute (COPRI).

Copyright © 2012 by the American Society of Civil Engineers. All Rights Reserved.

2 American Society of Civil Engineers

★|Figuresandtables Figures1 U.S. Navigation System, Marine and Inland Ports

2 Nearly 80% of Domestic Air Trips Are Taken to or From the 15 Largest U.S. Metro Markets

3 Projected Growth Forecasts for America’s Trade Volume, 2011– 2041

4 Long-term U.S. Container Trade Forecast, 2011 – 2037

Tables1 U.S. Waterborne Freight through Marine

Ports — Imports and Exports

2 Effects of Failure to Invest in Airports, Inland Waterways, and Marine Ports, 2012 – 2040

3 Leading International and Domestic Air Freight Centers, 2011

4 Capital Expenditures by Airport, 2001 – 2010

5 Investment Gap Totals, Airports

6 Estimated Public Capital Investment Gap, Inland Waterways and Marine Ports

7 Hours of Scheduled and Unscheduled Delay on US Inland Waterways, 2009

8 Total Containerized Trade for U.S. Ports, 1980 – 2010

9 Net Impact of Airport Congestion on the U.S. Economy

10 Costs by Commodity of Using Under-Sized Vessels to Accommodate Shallow Harbors or Narrow Channels at U.S. Marine Ports

11 Land-Side Congestion Costs Accruing to Freight and Business Travel Using Airports, 2010

12 Land-Side Congestion Costs Accruing to Freight Using U.S. Marine Ports, 2010

13 Effects on U.S. Business Sales, GDP and Jobs from Congestion at Major Airports, 2012 – 2040

14 Lost Trade Due to the Gap in Airport Investments

15 Sectors Most Affected by Decline of Air Service in Jobs and Business Sales, 2012 – 2020

16 Lost Trade Due to the Gap in Inland Waterways and Marine Ports Investments

17 Effects of Failure to Invest in Inland Waterways and Marine Ports on U.S. Business Sales, GDP and Jobs, 2012 – 2040

18 Top Ten Sectors Most Affected by Decline of Waterborne Trade, 2020

19 Sectors Most Affected by Decline of Waterborne Trade in Jobs and Business Sales

Failure to Act: The Economic Impact of Current Investment Trends in Airports, Inland Waterways, and Marine Ports 3

The purpose of the Failure to Act report series is to provide an analysis of the economic impli-cations for the United States of continuing its current investment trends in infrastructure. The reports in this series assess the implications of present trends in infrastructure investment for the productivity of industries, for national competitiveness, and for households’ costs. The Failure to Act series analyzes two types of infrastructure needs:

★ Building new infrastructure to service increasing populations and expanded economic activity; and

★ Maintaining or rebuilding existing infra-structure that needs repair or replacement.

Every four years, the American Society of Civil Engineers (ASCE) publishes The Report Card for America’s Infrastructure, which grades the current state of 15 national infrastructure categories on a scale of A through F. ASCE’s 2009 Report Card gave the nation’s aviation infrastructure a D and gave its inland waterway infrastructure a D–. The infrastructure of marine ports was not graded in 2009, but will be part of the 2013 assessment. This report answers the question of how the condition of the United States’ airports, inland waterways and ports, and marine ports affect the nation’s eco-nomic performance. In other words, how does a D or D– affect America’s economic future?

★|PreFaCe

This report focuses on airports, as well as inland waterways and marine ports. Elements of airports include the surrounding runways and facilities, as well as the terminals. Elements of ports include the port channel depth, ter-minals, and equipment, including cranes and warehouses. For airports and ports, efficient access to and from port areas are important considerations.

This is the fourth report in ASCE’s Failure to Act series. The first report, Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation Infrastructure, encompasses highways, bridges, rail, and transit. The second report, Failure to Act: The Economic Impact of Current Investment Trends in Water and Wastewater Treatment Infrastructure, addresses the delivery of potable water and wastewater treatment. The most recent report, Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure, addresses electricity generation, transmission, and delivery. The final report will summarize the potential consequences of failing to invest in all of these critical infrastructure systems.


eXeCutiVesuMMarY

Air and waterborne transportation infrastructure spans the United States and the globe. These facilities are critical to the health of the U.S. economy, enabling the importing and exporting of goods, as well as global business travel:

★ The U.S. aviation system includes almost 20,000 civilian airports, although just 5,200 are open to the public. Of these, more than 3,300 are designated by the Federal Aviation Administration (FAA) as part of the National Plan of Integrated Airport Systems, including all 500 commercial service airports and 2,800 general aviation airports. Both air passenger and air freight services are concen-trated in a relatively small number of airports in major metropolitan areas. Roughly 80% of U.S. origin and destination traffic is in 15 metropolitan markets, and 70% of air freight tonnage originates at 15 metropolitan areas (nine metropolitan areas are included among the top 15 passenger and freight markets).

★ The U.S. inland port system consists of more than 12,000 miles of inland and intracoastal waterways, with about 240 lock chambers. More than 566 million tons move through the inland transportation system annually, more than half of which is coal and petroleum products. More than 70 million metric tons of grain, soybeans, and food are transported within the U.S. each year by way of the inland transportation system.1

★ The U.S. has more than 300 commercial marine ports, through which pass 2.3 billion short tons of cargo a year, and more than 600 smaller harbors. In 2010, 51% of the potential capacity of container yards in U.S. ports was fully utilized. The system accommodated more than 16,800 annual vessel arrivals.

Airports and ports cannot function without effective connections to the nation’s roads and rail systems. Virtually all cargo shipped by air arrives at and departs from airports by truck.2 Passenger transportation to and from airports is primarily by car, but also includes an increasing proportion of transit options (e.g., fixed rail and buses).3 Inland and marine ports rely on high-ways and railroads to transport cargo to ports for shipment and to distribute goods to market.

TheRoleofAirports,InlandWaterwaysandMarinePortsintheU.S.EconomyAirport services facilitate the transfer of pas-sengers and goods and function as gateways to economic globalization. Passenger and freight movements are concentrated in a handful of the thousands of airports in the national aviation system. Among the 3,300 airports that are des-ignated by the FAA as important to the national aviation system, 35 airports in the nation’s top 15 markets account for 80% of U.S. domestic passenger origin and destination movements, totaling 343 million trips. The FAA forecasts that enplanements in these 15 markets will increase 30% by 2020 and 121% by 2040.4 These projec-tions exceed enplanement forecasts at other commercial airports, which are predicted to increase 25% by 2020 and 93% by 2040. More important from the perspective of air traffic projections, commercial aircraft operations are projected to grow 17% through 2020 and 62% by 2040, including increases in the 15 major markets of 23% by 2020 and 86% by 2040.

As with passenger travel, freight shipments are concentrated in major metropolitan areas. By tonnage, 92% of international air freight tonnage is imported or exported through the 15 leading U.S. customs districts, and 70% of domestic air tonnage originates in 15 key metro markets


(nine metro areas are among the top 15 for both air passenger and freight markets).

In the United States, the system of inland waterways and marine ports play a vital role in both the domestic and international transpor-tation systems. In 2010, the cargo transported on these waterways was valued at $152 billion. For the inland waterway system, this includes approximately 56% of all crude petroleum, 15% of all coal, and 24% of other fuel oils, which alone affect the efficiency of all economic sectors that rely on energy. Other commodities with signifi-cant shares moving by water include 22% of basic chemicals, 18% of agricultural products, and 19% of nonmetallic minerals.

By 2020, traffic on inland waterways is expected to increase by 51 million tons of freight from 2012, an overall 11% increase. By 2040, this increase is expected to exceed 118 million tons above 2012 levels, an overall increase of 25 percent.

The marine ports system is especially impor-tant for America’s international trade, with nearly 800 million tons (70% of U.S. imports in 2010), valued at more than $944 billion (approxi-mately 50% of all imports by value), arriving in the U.S. by water (see Table 1). These imports

included 86% of America’s crude petroleum imports as well as the majority of 28 other com-modities imported to the U.S. The U.S. depends heavily on waterborne trade for its growing export markets, especially agricultural products, manufactured goods, and, increasingly, the exporting of energy and refined petroleum prod-ucts. In 2010, more than 76% of U.S. exports (by tonnage), valued at $469 billion (approximately 35% of total exports by value), were transported by water for foreign markets.5

Trade volume for marine ports is expected to double by 2021, and double again shortly after 2030. Even if global growth slows due to economic problems in Europe, our major trading partners are a diverse set of countries in Asia and Latin America, and the growth forecasts are indicative of long term trends that will require major investments in our marine ports.6

TheInvestmentGapAirportsFor commercial airports, the Airports Council International-North America (ACI-NA) and the FAA publish projections of five-year spending needs, and the FAA tracks both private and public actual expenditures in its Form 127 reports.7

TonnAGE(MIllIonS) VAlUE(TRIllIonSoF2010dollARS)

Imports 798 0.94

Percent of total imports 68.8 49.2

Exports 580 0.47

Percent of total exports 76.5 35.4

TOTAL 1,378 1.41

Percent of total trade 71.9 42.2

sourCeFreight Analysis Framework (version 3), Data Tabulation Tool, July 2012 (http://faf.ornl.gov/fafweb/Extraction4.aspx).

TAblE 1★ U.S. Waterborne Freight through Marine Ports — Imports and Exports


Extending the trends of needs and spending from these sources shows an annual capital gap of about $2 billion through 2020 (roughly $13 billion in need and $11 billion in expenditures per year) and $1 billion annually from 2021 to 2040 ($12 billion in need to $11 billion in expenditures, assuming spending through 2020 does not fall lower than recent trends).

In addition to construction needs, congestion relief is being proposed through the Next Gen-eration Air Transportation System (NextGen), which is expected to transform the management and operation of the air transportation system in the United States, moving from the current ground-based radar system to a satellite-based system. NextGen is designed to minimize delays by reducing the time aircraft sit on the ground. Multiple uncertainties may affect the timing and ultimate costs of NextGen, including constantly changing technologies. At present, the most widely accepted projected cost for NextGen is $31 billion, in addition to the approximately $9 billion that has already been invested between 2003 and 2011.8

InlandWaterwaysandMarinePortsThe greatest threats to the performance of the inland waterway system are the scheduled and unscheduled delays caused by insufficient fund-ing for operation and maintenance needs of locks governing the traffic flow on the nation’s inland system. A total of 90% of locks and dams on the U.S. inland waterway system experienced some type of unscheduled delay in 2009. According to the U.S. Army Corps of Engineers, maintaining existing levels of unscheduled delays on inland waterways, and not further exacerbating delays, will require almost $13 billion in cumulative investment needs by 2020, and an additional $28 billion by 2040. Current funding levels can sup-port only $7 billion by 2020, and an additional $16 billion by 2040. Roughly 27% of these needs entail the construction of new lock and dam facil-ities, and 73% are estimated for the rehabilitation of current facilities.

In many cases, private and public investment by port authorities and non-port entities enables the ports simply to maintain existing conditions to fulfill customer needs and requirements. However, many commercial ports are also planning improvements. Port authorities are planning on spending a combined $18 billion through 2016 on infrastructure improvements for water terminals, while their private-sector terminal partners anticipate spending a combined $27.6 billion for a total of nearly $46 billion. This is more than $9 billion per year, of which more than one-third would be spending by the port authorities themselves.9 Although this investment would make up the majority of funding for ports, the maintenance of existing navigable channels and waterways and the abil-ity to accommodate the increasing size of cargo vessels requires dredging, a portion of which must be funded by the public sector through Congressional appropriations to the U.S. Army Corps of Engineers. A key challenge for marine ports in the United States, particularly on the East Coast, will be their ability to handle the large “new-Panamax” cargo ships that will start service with planned expansions of the Panama and Suez Canals.

To accommodate anticipated growth in trade and domestic waterborne traffic, total public investment needs are expected to exceed $30 billion by 2020. This includes both navigational dredging and operation and maintenance needs for both marine dredging and inland waterways and marine ports. It does not include private sector investments to improve the port facilities themselves or improving connections to surrounding roads and rail systems to reduce congestion experienced by trucks entering and exiting port facilities. By 2040, these needs are expected to reach $92 billion.10 The U.S. will be left with a funding gap of nearly $46 billion if current investment trends continue, based on the annual budgets for navigational purposes


that have historically been appropriated to the U.S. Army Corps of Engineers by Congress.11 About $16 billion of the funding gap is expected to accumulate by 2020, with the additional $30 billion projected to accumulate from 2021 to 2040.12 More than 61% of the identified need and funding gap are intended for marine navigation and operations and maintenance, and about 39% for inland waterways.13

EconomicImpactsThe U.S. economy relies on low transportation costs for its exports to offset higher wage levels and costs of production when compared with its competitors. Greater costs to export goods will affect the nation’s ability to compete in global markets for goods produced in the U.S.

Although this is already happening in a limited number of industrial sectors today, these effects could magnify in the future. If current needs and investment trends for U.S. airports, inland waterways, and marine ports continue over time, the nation’s competitiveness will erode, affecting its ability to sustain well-paying jobs, especially in export sectors. In addition higher costs will be incurred for imports, which will increase costs of materials to businesses, thereby increasing cost of production, and for consumer products sold to households, which eventually will erode their disposable income. These effects are reflected in significantly lower projected levels of U.S. exports, business sales, GDP and disposable personal income throughout the economy, culminating in a loss of jobs. Table 2 summarizes

InLAnd WATErWAyS AIrPOrTS And MArInE POrTSAnnUAlIMPAcTS 2020 2040 2020 2040

GDP – $47 – $70 – $95 – $255

Jobs – 350,000 – 358,000 – 738,000 – 1,384,000

Business Sales – $87 – $179 – $183 – $517

Disposable Personal Income – $53 – $53 – $117 – $269

Exports – $11 – $62 – $43 – $142

cUMUlATIVEloSSES 2012–2020 2021–2040 2012–2020 2021–2040

GDP – $313 – $1.21 trillion – $697 – $3.3 trillion

Business Sales – $580 – $2.7 trillion – $1.3 trillion – $6.5 trillion

Disposable Personal Income – $361 – $1.1 trillion – $872 – $3.7 trillion

Exports – $54 – $708 – $270 – $1.7 trillion

noteLosses in business sales and GDP reflect impacts in a given year against total national business sales and GDP in that year. These measures do not indicate declines from 2010 levels.

sourCesEDR Group and LIFT model, University of Maryland, INFORUM Group, 2012.

TAblE 2★ Effects of Failure to Invest in Airports, Inland Waterways, and Marine Ports, 2012 – 2040 (in billions of 2010 dollars, unless otherwise indicated)


the economic impacts for 2020 and 2040, and the cumulative impacts expected during the periods 2012 – 20 and 2021 – 40. Total impacts through 2020 and 2040 are discussed below.

AirportsThe economic impact of congestion at major air-ports will have significant effects on the national economy due to delays in cargo movement and business travel, assuming that capital spending remains consistent through 2040, as it has been since 2001 (about $10 billion annually in 2010 dollars). The broad impacts on the U.S. economy would represent cumulative losses from the national economy of $54 billion in export value and $580 billion in overall business sales by 2020, rising to $762 billion and $3.3 trillion by 2040; lower levels of gross domestic product (GDP) are expected to amount to $313 billion by 2020 and $1.21 trillion by 2040; and losses in disposable personal income will total $361 billion by 2020 and $1.49 trillion by 2040 (all in $2010). Overall, the U.S. economy will end up with 350,000 fewer jobs than it otherwise would have by 2020.

Over time, domestic freight movement and business travel will likely shift from relying on air to surface transportation modes to partially adjust for the declining efficiencies and higher costs of air transportation.14 However, this will lead to higher costs for those commodities that are shipped by air, both in terms of out-of-pocket expenses and time,15 which will mean particularly hard times for all industries that require same-day freight delivery. As a consequence of congestion, the direct cost of air transportation is projected to be 6% higher in 2020 and 9% higher in 2040 than would be the case with the initial investment.16

InlandWaterwaysandMarinePortsSimilar effects are felt within the inland water-ways and marine ports sectors. If America only maintains its current level of investment in these systems, the losses to its economy will increase shipping costs annually. By 2020, lost value of exports will be $270 billion and will

rise to almost $2 trillion by 2040. Roughly $1.3 trillion in business sales will be lost by 2020, rising to $7.8 trillion by 2040. The cumulative loss in national GDP will be about $700 billion by 2020 and reach $4 trillion by 2040. Disposable personal income will be lost, with losses pro-jected at almost $872 billion through 2020 and $4.5 trillion through 2040. With this reduction in production, income, and spending, there are projected to be 738,000 fewer jobs in 2020. By 2040, the job losses will grow to almost 1.4 million — jobs that will be lost due to the lack of U.S. competitiveness in global trade and because the nation’s households and businesses will be spending more for commodities that arrive by marine ports and are transported to market via inland waterways.

conclusionAmerica’s airports, inland waterways, and marine ports link the nation directly to the global economy, and link regions of the United States together. These three infrastructure systems support the nation’s ability to export, to efficiently move goods internally and to expand our high-end service sector through widespread business travel. These functions are critical to the U.S. economy, and depend on the efficient and cost effective operation of these networks. Each of these systems require that the investments needed to sustain competitive transportation costs are well coordinated among the many interdependent modes of transporta-tion needed to keep the entire U.S. supply chain operating efficiently, and to ensure that our strong service sectors can efficiently and cost-effectively make use of international and long distance business travel. However, as has been demonstrated in this report, inadequate and unbalanced investments in essential commercial transportation infrastructure have become an enormous drag on the productivity and competi-tiveness of the U.S. economy.


introduCtion

This report illustrates the continuing importance of airports,

inland waterways, and marine ports for efficient cargo

movement within the United States and for the importing and

exporting of goods. In addition, this analysis also highlights

the importance of aviation for business travel.

1

America’s networks of airports, inland waterways, and marine ports share several characteristics. Airports and marine ports function as international gateways that enable U.S. industries to export and import goods from abroad. In addition, airports and inland waterways provide alternative modes to surface transportation for transporting goods throughout the country, relieving some of the congestion burden on our highways.

Air transportation is more often used for high-value and low-weight goods or commod-ities that require just-in-time delivery. This mode of real-time delivery is employed for goods required for manufacturing processes (e.g., parts for an automobile assembly plant) or for perishable food for same-day sales. Inland and intracoastal waterways are often better suited for bulk commodities that can be transported at lower costs than if placed on trucks or railcars. Certain commodities

that can absorb longer transportation times are shipped in bulk or bundled into containers and shipped across oceans, while high-value, lower-weight cargo or goods that require fast delivery are sent via air freight. Both systems also move passengers, although inland and ocean passenger transportation is not part of this study.

This report’s economic analysis is based primarily on documentation of freight and air passenger movement from the Freight Analysis Framework (U.S. Federal Highway Administration), the Foreign Trade Division of the U.S. Census Bureau, the U.S. Bureau of Transportation Statistics, and the FAA. Data on the needs of airports and waterborne ports were developed from data provided by the FAA, the Airports Council International-North America (ACI-NA), the U.S. Army Corps of Engineers, and the American Association of Port Authorities.


StudyobjectivesandlimitationsThe purpose of this study is to survey the economic effects of current investment trends in America’s airports, inland waterways, and marine ports.

Throughout the report, infrastructure invest-ment needs and investment trends are projected, and potential gaps are identified where needs are likely to exceed investment levels. It is difficult to predict future levels of capital spending because a wide range of factors will exert an influence during the coming decades. The analysis given here focuses on a “trends scenario,” which assumes that the investments needed and made for airports, inland waterways, and marine ports will continue in the next decades at essentially the same levels as in recent years. The data given for airports are based on data collected by the FAA and ACI-NA. The data given for inland waterways and marine ports are primarily from the U.S. Army Corps of Engineers. In addi-tion to public sources from combinations of federal, state, and local jurisdictions, investments come from a mix of private-sector sources and user fees, including airlines, airline passengers, and shippers.

The capital gap is the difference between the level of dollars invested in infrastructure under a trends scenario and the level of investment required to replace, expand, or improve infra-structure as demand grows and facilities age or require modernizations and new capacity. Failure to carry out needed investments can result in higher costs in moving saleable goods to markets, higher costs for goods required for production processes by U.S. manufacturers, and higher costs for business travel for all economic sectors (airports). In turn, these impacts will make U.S. goods and services more expensive and less competitive internationally, driving up the costs of consumer items for U.S. households, as well as cutting GDP and eliminating jobs.

As part of the Failure to Act series, this report focuses on the economic consequences of not making needed investments in airports, inland waterways, and marine ports as they affect productivity throughout the United States, global competitiveness, and hence the nation’s long-term job and income growth. This analysis does not consider the short-term impacts of those money flows associated with spending on the construction, installation, and operation of additional infrastructure, though they also affect patterns of jobs and incomes for workers.

This report, along with other studies in this series does not give special attention to jobs required to operate infrastructure systems, which is especially important when discussing airports. Typical jobs in airports include airport management, airline employment and airplane services, on-airport freight handling, terminal retail and services, security, and ground trans-portation. Economic impact studies are routinely conducted on behalf of airport authorities, state departments of transportation and national organizations for airports and airport systems. Recent studies conducted at different airports across the country by different consulting firms, using similar but not identical methodologies show that 20,000 to 60,000 jobs are located on major airport grounds. These studies also docu-ment the extent that air travel supports tourism by analyzing visitor spending. In addition, multiple national studies of impacts have been published over recent years. For example, a study sponsored by the ACI-NA estimates the impacts of commercial aviation to be more than 1.2 million jobs, including those generated by visitor spending.17 Other studies sponsored by NASAO and FAA estimate overall impacts of general aviation and civil aviation, including aircraft manufacture and parts.

Finally, this study discusses regions and metropolitan areas, but it does not name or rank specific airports or inland or marine ports.


oVerVieWoFairPorts,inlandWaterWaYs&MarinePorts2

The U.S. airport system accommodates almost 735 million passenger enplanements and moves $1.1 trillion in cargo. The FAA pre-dicts that the U.S. airport system will carry more than 1 billion passengers by 2024, and the Federal Highway Administration predicts that the value of air freight will grow to $4.5 trillion by 2040 (in 2010 dollars).19

An intricate system of waterways ties inland ports to marine ports and provides one of the most cost-effective ways of mov-ing a wide variety of freight within the lower 48 states and between the U.S. and all of its major trading partners (see Figure 1). Inter-connecting rivers form a marine highway network in the heart of the nation, from the Gulf ports to the Great Lakes. For example, the Mississippi River connects inland ports as far away as Pittsburgh and Saint Paul to the ports on the Gulf of Mexico. Intracoastal waterways provide a system of navigable canals, lagoons, rivers, sounds, and bays that

connect ports from Boston to Brownsville, Texas. In 2010, an estimated 566 million tons of goods were moved on the U.S. inland waterways and 2.3 billion tons of freight were moved through U.S. marine ports.20 Interna-tional trade underscores the importance of U.S. waterborne transportation; more than 70% of traded commodities by weight are and imported or exported through marine ports.

Airports, inland waterways, and marine ports cannot function without effective con-nections to roads and rail systems. Virtually all cargo shipped by air arrives at and departs from airports by truck, and passengers’ access and egress are also by surface transportation. Passenger transportation to and from airports is primarily by private automobiles and taxi-cabs, but also includes a variety and increasing proportion of transit options.21 Inland and marine ports rely on highways (for trucks) and railroads to transport cargo to ports for ship-ment and to distribute landed freight.

Airports and waterborne transportation are the critical piece of

the national transportation system that enables overseas trade and,

for airports, fast long-distance travel. The contribution of these

systems to international trade is critical for the national economy.

Exports alone supported approximately 9.7 million jobs in 2011,

as every billion dollars of exports supported 5,080 jobs in the U.S.18


AirportsThe FAA designates public use airports that are important to the national system as the National Plan of Integrated Airport Systems (NPIAS), and these airports are eligible to receive grant money under the FAA’s Airport Improvement Program. The NPIAS airports include all commercial service airports. Noncommercial service airports are known as nonprimary and include general avi-ation (GA) and reliever airports. Noncommercial GA airports account for more than three-quarters of the NPIAS airports, and in 2010 accounted for less than 1% of total system passengers.

America’s 2,800 noncommercial airports play an important role in the national airport system by accommodating pilots in small aircraft sepa-rately from large commercial airline aircraft at congested commercial facilities. GA airports are included in the NPIAS if they have sufficient activity and are at least 20 miles from the nearest NPIAS airport. The 269 reliever airports in the NPIAS provide pilots with attractive alternatives to using congested hub airports and also provide access to the surrounding area. GA airports are particularly important for rural areas, given that

FIGURE 1★ U.S. navigation System, Marine and Inland Ports

sourCeInstitute for Water Resources, US Army Corps of Engineers, “U.S. Port and Inland Waterways Modernization: Preparing for Post- Panamax Vessels,” June 20, 2012.

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they are the closest sources of air transportation for approximately 19% of the population.22

The FAA forecasts that enplanements (individ-ual trips) will increase by 28% by 2020 from 2010 totals and 110%, more than double at all commer-cial airports, by 2040 from 2010. However, growth in the 15 largest passenger markets is expected to increase by 30% by 2020 and 121% by 2040, while enplanements at other commercial airports are cumulatively are predicted to increase by 25% by 2020 and 93% by 2040. More important from the perspective of air traffic congestion, commercial aircraft operations are projected to grow 17% by 2020 and 62% by 2040, including 23% by 2020 and 86% by 2040 at the 15 major markets.23

In other words, it is expected that more pas-senger trips will be taken and more airplanes will be in the air, although given the higher trends for passengers than for commercial operations, it appears that more people will fly per aircraft than is now the case. Moreover, though this growth will be national, it will be especially pronounced in the current major market areas that are already saturated. Even with an increase in on-time per-formance, this means that capital investments will be needed to update and expand terminal facilities, enhance ground circulation within airports, provide for vehicle and transit access and egress to airports, and increase runway sizes to allow for heavier fully loaded takeoffs, in addition to maintaining current facilities.

Similar to passenger travel, freight shipments are concentrated in major metro areas. By tonnage, Table 3 shows the 15 most heavily used customs districts in terms of air freight, as well as the 15 largest metro areas for origins of domestic air cargo. Note that air cargo activity is more concen-trated for international shipments than domestic ones, with 92% of international air freight tonnage being imported or exported through the 15 leading U.S. customs districts and 70% of domestic air ton-nage originating in the key metro markets. These customs districts and metro cargo markets include Alaska and Hawaii due to the long shipping dis-tances required for domestic cargo, as well as the location of these two states as refueling stopovers

and interim destinations for transporting goods internationally to Asia.

Projections indicate that air freight tonnage will increase nationally by 54% from 2010 through 2020 and by an additional 94% from 2020 through 2040, for a total growth rate of nearly 200% from 2010.25 These projections indicate that more cargo flights will be needed, which will add to congested conditions; passenger and cargo-only planes may be heavier, requiring longer runways for take-offs, and more truck traffic will be required to transport goods to airports for loading and from airports for deliveries.

InlandWaterwaysandMarinePortsIn the United States, the system of inland water-ways and marine ports play a vital role in both the domestic and international transportation systems. In 2010, nearly 1.9 billion tons of bulk freight and almost 43 million TEUs moved on the U.S. water transportation system.26 Notably, approximately 56% of all crude petroleum, 15% of all coal, and 24% of other fuel oils are trans-ported over the nation’s inland waterways, which affect the efficiency of all economic sec-tors that rely on energy. Other commodities with significant shares moving by water include 22%

InlandWaterwaysandMarinePortskeyFacts

★ TheU.S.inlandportsystemconsistsofmorethan12,000milesofinlandandintracoastalwaterwayswithabout240lockchambers.Morethan566milliontonsannuallymoveintheinlandtransportationsystem,morethanhalfofwhichiscoalandpetroleum.Morethan70millionmetrictons(12.6%)ofgrain,soybeans,andfoodaretransportedwithintheU.S.eachyearbywayoftheinlandwaterwaysystem.24

★ TheU.S.ArmycorpsofEngineersdredges300commer-cialharbors,throughwhichpass2.3billionshorttonsofcargoayear,anditalsodredgesmorethan600smallerharbors.In2010,51%ofthepotentialcapacityofcontaineryardsinU.S.portswasfullyutilized.Thesystemaccommodatedmorethan16,800annualvesselcalls,withareservevesselcallcapacityof23,994calls.


METRo-AREAAIRPoRTS,IFMoREThAnonEAIRPoRTISInAPARTIcUlARMETRo-AREA

PhoEnIx

lASVEGAS

dEnVER

ATlAnTA

SEATTlE

loSAnGElES

boSTon

nEWyoRk

oRlAndo

MIAMI

chIcAGo

WAShInGTon,dc

dAllAS/FT.WoRTh

hoUSTon

SAnFRAncIScobAyAREA

METRoMARkETS AIRTRIPS(InMIllIonS)

Boston (boS,MhT,PVd) 20.2

New York (lGA,JFk,EWR,ISP,SWF) 39.1

Washington (dcA,bWI,IAd) 27.7

Atlanta (ATl) 18

Orlando (Mco,SFb) 21.9

Miami (Fll,MIA,PbI) 22.4

Chicago (MdW,oRd) 26.4

Houston (hoU,IAh) 13.8

METRoMARkETS AIRTRIPS(InMIllIonS)

Dallas (dFW,dAl) 19.3

Denver (dEn) 18.8

Las Vegas (lAS) 22.2

Phoenix (Phx) 16.4

Los Angeles (lAx,onT,SnA,bUR,lGb) 35.5

San Francisco (SFo,SJc,oAk) 26.5

Seattle (SEA) 15

noteIncludes 2011 outbound + inbound domestic o&d passengers excluding duplication between the top 15 markets.

sourCesU.S. Department of Transportation, O&D Database, Database Products Inc., CY 2011. Graphic and calculations courtesy of ICF SH&E.

FIGURE 2★nearly 80% of domestic Air Trips Are Taken To or From the 15 Largest U.S. Metro Markets


of basic chemicals, 18% of agricultural products, and 19% of nonmetallic minerals.

Overall domestic water transportation trans-ported freight valued at almost $152 billion in 2010 (in 2010 dollars). By 2020, freight value

of domestic shipments on inland waterways is expected to increase by $18 billion, an overall 12% increase. By 2040, this increase is expected to be $26 billion above 2010, an overall 17% increase in constant value. 27

noteInternational and domestic data cannot be added due to double counting if shipments between domestic points lead to, or result from, international cargo flights. Metro markets and customs districts may include multiple airports.

sourCesU.S. Census Bureau, Foreign Trade Division, aggregated by WISERTrade and the Bureau of Transportation Statistics, T-100 Domestic Cargo Database.

InTErnATIOnAL

cUSToMSdISTRIcT AIRTonS

New York City 1,298,000

Chicago 1,110,000

Miami 1,002,000

Los Angeles 968,000

Cleveland 611,000

New Orleans 446,000

Savannah 412,000

Dallas/Fort Worth 341,000

San Francisco 331,000

Houston/Galveston 234,000

San Juan 210,000

Great Falls 194,000

Anchorage 167,000

Philadelphia. 139,000

Seattle 119,000

Subtotal 7,580,000

Other Districts 645,000

TOTAL 8,226,000

Percent of 15 Leading Districts 92%

dOMESTIc

METRoMARkETS AIRTonS

Memphis 1,763,000

Louisville-Cincinnati 1,184,000

Los Angeles 577,000

Anchorage 537,000

Indianapolis 424,000

New York 351,000

San Francisco 316,000

Washington 187,000

Chicago 155,000

Dallas 145,000

Philadelphia 143,000

Miami 133,000

Atlanta 131,000

Honolulu 129,000

Phoenix 104,000

Subtotal 6,277,000

Other Metro Areas 2,680,000

TOTAL 8,957,000

Percent of 15 Leading Metro Areas 70%

TAblE 3★ Leading International and domestic Air Freight centers, 2011


In 2010, more than 76% of America’s interna-tional exports reach global markets though marine ports. Nearly 585 million tons of freight leave the nation’s shores by water, valued at $469 billion (or 35% of America’s exports by value). Effectively, all of America’s exports in commodities such as coal, fuel oils, gasoline, and crude petroleum are shipped by water. Including these fuels, maritime is the primary mode of export for 25 of America’s export commodities. In addition, roughly 71% of bulk imports by tonnage arrive in the U.S. by water, valued at more than $944 billion (approximately 50% of all imports by value). These imports include 86% of America’s crude petroleum imports, 100% of its fuel oil and coal imports, and the majority of 28 other commodities that it imports.28

By container weight in total trade (exports and imports), the leading marine ports in 2011 were Los Angeles/Long Beach, New York /New Jersey, Savannah, Houston and Oakland. However, if all commodities are considered, bulk oil shipments in particular are more commonly handled by ports along the Gulf of Mexico. The leading ports for all total weights (volume of trade) are Houston, Los Angeles/Long Beach, New Orleans, New York/New Jersey and Corpus Christi.29

The inland waterways and marine ports sys-tems mutually support the trade of commodities among global markets, with the marine ports serving as gateways and transfer points to high-way, rail, and inland water systems. The inland systems transport goods within the U.S. (espe-cially agricultural commodities from America’s Midwestern states), as well as provide access to the marine ports. It is estimated that 346 million tons of goods were transferred from inland waterways to marine ports in 2010, primarily for export. When a commodity goes from the inland system to the marine system, a transfer must be made from one vessel to another at the marine port. For this reason, delays on inland systems can affect the ability to move freight effi-ciently through marine ports. Similarly, using smaller vessels at marine ports can impose costs on goods moved through the inland waterway systems. Figure 1 illustrates these two systems.

ShippingCommodities transported over water are shipped as bulk commodities, specialized cargoes, or in containers (measured in twenty-foot equivalent units, TEUs).30 Goods shipped on inland water-ways are primarily bulk, while cargo shipped through marine ports is a mix of dry and liquid bulk, containers, and other cargoes (e.g., roll-on/roll-off cargoes, like automobiles, and general or project cargo, like steel and heavy equipment). Inland shipping is primarily dry bulk com-modities (agricultural products, coal, iron ore, coal, grain, and other minor commodities). Tanker shipping, also considered bulk, involves the transportation of crude oil petroleum, and other petrochemical products. Specialized ships designed to carry liquefied natural gas are becoming more prevalent as markets for this fuel expand. Roll-on/roll-off vessels carry automo-biles, trucks, and increasingly more specialized self-propelled vehicles, agricultural equipment, and military vehicles. Finally, the containerized cargo shipping industry primarily involves the transportation of consumer goods and inter-mediate or finished industrial goods, and is generally higher in value per ton shipped than bulk commodities.

The U.S. Army Corps of Engineers plans construction investments for inland waterways and tracks commodity shipments for 17 districts that operate and maintain assets. A total of 51% of the bulk tonnage on the marine ports system moves through ports in the Gulf Coast region. Nearly a quarter (23%) moves through ports in the North Atlantic region, and 12% moves through the South Pacific region (which includes California). The South Atlantic and Great Lakes regions combined account for less than 10% of marine trade in the United States. Nearly half (46%) of the tonnage on the marine system is petroleum and petroleum products. Other sig-nificant bulk commodities moved on the marine port system include food and farm products (16%) and crude materials (other than fuels). All the other commodity groups collectively account for approximately 26% of marine tonnage.


tHePotentialinVestMentgaP3

AirportsAs shown in Table 4, expenditures at commer-cial airports have been relatively constant during the past decade, at about $10 billion nationally. These expenditures represent revenues drawn from all sources — including federal, state, and local governments, passenger facility charges, airport revenues, and capital bonds.

The recent history of the grants given by the FAA’s Airport Improvement Program (AIP) documents that total annual grants to reliever and other GA airports ranged from $790 million to just above $1.6 billion (in 2010 dollars) during fiscal years 2005 – 11. Within this period, grants to commercial airports averaged about $3.2

billion annually, which is less than one-third of the capital spending levels reported by airports to the FAA on Form 127, as noted above.31

capitalInvestmentneedsThe FAA forecasts capital investment needs for NPIAS airports in five-year increments based on AIP-eligible projects. Additionally, ACI-NA augments the FAA’s capital needs projections for large, medium-sized, and small hub air-ports by incorporating investment needs other than AIP projects. ACI-NA accepts the FAA’s estimates for non-hub commercial, reliever, and other GA airports that are part of the NPIAS. Capital aviation needs in this report

Based on identified needs, annual spending patterns

projected by agencies, and trends extended from recent years,

cumulative funding gaps for airports, inland waterways,

and marine port infrastructure were identified:

★ For airports, the gap is estimated at a little over

$39 billion through 2020 (including nextGen), and

grows to $95 billion through 2040.

★ For inland waterways and marine ports, the gap is

estimated at almost $16 billion through 2020, and grows

to $46 billion through 2040.


are based on the more comprehensive ACI-NA estimates, which include projects ineligible for AIP funding and otherwise eligible projects not submitted for funding.32

Capital needs include access, airfield capacity, airfield standards, new airports, airfield recon-struction, safety, terminals, and security. The five-year capital need is assumed to be $76 billion, or averaging about $15 billion a year (in 2010 dollars). Nearly half the total need is required by the 29 large hub airports. In all, the 138 hub airports will require about 71% of capital financing in the next five years, while the 3,194 other NPIAS airports will require the remaining 29%.33 Larger airport hubs foresee significant needs for terminals first, followed by improvements to airfield capacity, and then for the reconstruction of facilities. Investments

for general aviation airports, however, center on needs to meet FAA design standards, as well as reconstruction.34

The first step in estimating the capital spend-ing gap for commercial airports is to look at the difference between the needs documented by the ACI-NA studies for the years 2005–15 and the capital spending trends reported by the FAA. Capital gaps average about $2 billion a year when these needs and investment trends are projected through 2040, not including the additional investments that will be required for NextGen technologies (see Table 5). These projections include the construction and maintenance needs of airports, projects to improve airfields, and addressing congestion and travelers’ comfort with air-side and land-side investments. In addition to construction, NextGen will increase the air traffic

HUB dESIGnATIOnyEAR lARGE MEdIUM SMAll non-hUb ToTAl

2001 7.6 1.8 0.8 0.7 10.8

2002 7.0 2.2 0.9 1.0 11.1

2003 6.4 2.0 0.9 0.7 10.1

2004 6.1 1.9 1.0 0.8 9.8

2005 6.1 1.8 0.9 0.9 9.6

2006 6.0 1.9 1.0 1.1 9.9

2007 6.8 2.2 1.0 1.1 11.1

2008 6.0 2.2 1.0 1.1 10.3

2009 6.3 2.3 1.1 1.5 11.2

2010 6.3 2.2 0.9 1.4 10.9

Annual average 6.5 2.1 0.9 1.0 10.5

noteActual expenditure trends are available only for commercial airports. Data sets of aggregate capital spending, such as the FAA Form 127 reports, are not assembled for reliever or GA airports.

sourCeFAA Form 5100-127, Annual Operating and Financial Summary; calculations by the EDR Group.

TAblE 4★ capital Expenditures by Airport, 2001– 2010 (in billions of 2010 dollars)


capacity of congested metropolitan areas while minimizing needs for new runways and airports.

NextGen is expected to transform the man-agement and operation of the air transportation system in the United States, moving from the current ground-based radar system to a satellite-based system. The new system will use more accurate Global Positioning System technology to replace the existing ground-based radar air traffic control (ATC) system. Among the antici-pated benefits of NextGen are:

★ Air travel will be more predictable, because the system will reduce delays by cutting the time aircraft sit on the ground or are held in the air. Delays will also be reduced because the system will better monitor weather conditions around the country in real time, allowing for more flexibility in rerouting aircraft around weather problems.

★ The system will allow ATC and pilots to better identify risks, assess alternatives, and avoid hazards.

The current FAA implementation plan calls for implementation to be completed by 2025. By 2020, NextGen is also expected to reduce delays by 35% over what will occur if nothing is done.35 Implementing NextGen will require investments by both the public and private sectors.

Multiple uncertainties affect the timing and ultimate costs of NextGen. First, technologies keep improving and costs keep changing. Second, the degree to which the benefits of the NextGen will be realized will depend on when aircraft operators decide to install NextGen-related equip-ment and the technologies that are available when it is installed. Third, the decision of private-sector carriers to install this equipment will depend on (1) the projected return on investment, which will be affected by the unknown costs of equipage, installation, training, and operation; (2) the lack of information about an incentive plan to help defray costs or help with installation and training; and (3) uncertainties concerning timelines for imple-mentation of the ground infrastructure needed for NextGen and confidence in the true benefits that will accrue to carriers.36

“TrAdITIOnAL” cAPITAL InvESTMEnT ToTAl PRoJEcTEd nExTGEn nEEdSAboVE cAPITAl PRoJEcTEd InVESTMEnT AnTIcIPATEdyEAR SPEndInG nEEdS GAP nEEdS FUndInG

2020 10.7 13.0 – 2.3 – 2.2 – 4.5

2040 10.8 12.3 – 1.5 – 0.6 – 2.1

cUMULATIvE TOTALS

2012 – 20 95.1 114.0 – 18.9 – 20.2 – 39.1

2021 – 40 213.7 249.6 – 35.9 – 20.2 – 56.1

2012 – 40 308.8 363.6 – 54.8 – 40.4 – 95.2

sourCesFAA Form 127, FAA NPIAS Report to Congress, ACI capital needs surveys, U.S. Government Accountability Office, and NextGen Institute, FAA. Extended trends projected by EDR Group.

TAblE 5★ Investment Gap Totals, Airports (in billions of 2010 dollars)


A major challenge for the NextGen program has been the inability to establish a clear, detailed estimate of the cost of the system from planning through implementation, including components of the project to be implemented after 2018.37 The best estimates to date of the investment required from the public and private sectors for NextGen is the very large range of $40 billion to $160 billion, with $40 billion through 2025 being an estimate with which most analysts would agree (made up of $20 billion from the public sector and $20 billion from the private sector).38 The $40 billion includes about $9 billion already invested between 2003 and 2011.

Spending for NextGen is estimated to require at least $31 billion between 2012 and 2025 (in 2010 dollars), which amounts to about $2.2 billion a year if allocated evenly within this time frame. In addition, about $600 million, roughly 2% of the initial cost, is assumed to be needed each year from 2026 through 2040, for mainte-nance and software upgrades. Table 5 illustrates the total gap between anticipated funding, the capital needs projected by airports, and Next-Gen. Annual additional needs are about $4.3 billion from 2012 to 2020 and fall to less than $3 billion from 2021 to 2040, based on the assumption that the capital development for NextGen will be completed by 2025.

InlandWaterwaysandMarinePortsTo accommodate anticipated growth in water-borne traffic, future spending needs that have been traditionally public sector are estimated to total approximately $30 billion by 2020 and $92 billion by 2040. This includes navigational and operations/maintenance needs for both marine dredging and inland waterways. Funding gaps of almost $16 billion by 2020 and $46 billion by 2040 are expected to result from the difference between these estimated requirements and the annual budgets for navigational purposes that have historically been appropriated to the U.S. Army Corps of Engineers by Congress.39,40 As shown in Table 6, more than 61% of the identified need and funding gap are intended for marine

navigation and for operations and maintenance, with about 39% for inland waterways.41 It is important to note that this table does not include improvements to port facilities that are funded by the private sector, which is generally held as confidential and proprietary information.

InlandWaterwaysThe greatest threats to the performance of the nation’s inland waterway system are delays caused by insufficient operation and maintenance of the facilities. When a lock or dam reaches a state of poor repair, waterborne traffic must stop more often to allow for more frequently scheduled maintenance. Although this delay imposes some level of cost on industries that rely on waterborne commodities, the greatest cost is imposed when an unscheduled delay (due to equipment failure or a deficiency beyond routine maintenance) occurs. Unscheduled delays inter-rupt business operations in entire supply chains dependent on waterborne shipments. With adequate investment, these delays are prevent-able. A total of 90% of locks and dams on the U.S. inland waterway system experienced some type of unscheduled delay in 2009.42

Table 7 shows the scheduled and unscheduled delays imposed by deficiencies on the U.S. inland waterway lock and dam infrastructure in 2009. Note that the over 19,000 hours of scheduled and unscheduled service interruptions on inland waterways averages 52 a day, and that of the nearly 156,000 total hours of delays due to these interruptions, nearly half are unscheduled. Unscheduled delays are especially costly because vessel operators are unable to anticipate and offset the costs of these incidents.

Based on trends in data from the U.S. Army Corps of Engineers, maintaining existing con-ditions and levels of unscheduled delay on the nation’s inland waterways will already require almost $13 billion by 2020 and an additional $28 billion by 2040. Current funding levels can support only $7 billion through 2020 and an addi-tional $16 billion through 2040. A total of 27% of these needs entail the construction of new lock


EstimatEdNEEd EstimatEdFuNdiNg uNFuNdEd

2012 – 2020

Inland Waterways 12.7 7.2 – 5.5

Marine 17.6 7.2 – 10.4

TOTAL 30.2 14.4 – 15.8

2021– 2040

Inland Waterways 28.2 16.0 – 12.2

Marine 33.5 16.0 – 17.5

TOTAL 61.7 32.0 – 29.7

TOTAL 2012 – 2040 92.0 46.4 – 45.6

SourceS Inland Marine Transportation Systems (IMTS) Capital Projects Business Model, Final Report, Revision 1, prepared by IMTS Capital strategy Team, April 13, 2012; U.S. Port and Inland Waterway Modernization Strategy: Options for the Future, presented at Marine Board Spring Meeting, May 15, 2012. Long-term trends are based on annual needs, appropriations and funding estimates for inland waterways and marine ports over 20 years.

Note Numbers may not add due to rounding.

tablE 6 ★ Estimated Public Capital Investment Gap, Inland Waterways and Marine Ports (in billions of 2010 dollars)

Factor cY2009

Number of Scheduled Delays 6,532

Hours Delayed Due to Scheduled Delays 81,882

Number of Unscheduled Delays 12,494

Hours Delayed Due to Unscheduled Delays 73,689

TOTAL Number of Delays 19,026

TOTAL Hours of Delay 155,571

Source U.S. Army Corps of Engineers. Calculations by EDR Group. These data reflect 184 locks with data available for an origin and destination matrix.

tablE 7 ★ Hours of Scheduled and Unscheduled Delay on US Inland Waterways, 2009


and dam facilities, and 73% are estimated for the rehabilitation of current facilities. The needs are not expected to increase sharply or exponentially, but will peak after 2020, when critical age and capacity thresholds are likely to be reached. The deterioration of America’s inland waterway infrastructure is well documented. Key factors presented by Inland Waterway Users’ Board of the U.S. Army Corps of Engineers, include:

★ While the design life of our locks and dams is generally 50 years, the majority of our locks have exceeded that — many are more than 70 years old.

★ The United States Maritime Administration projects dramatic growth of domestic freight volumes, which will compound the congestion problems on the nation’s already overcrowded highway system, driving industries to our inland waterways system to find competitive alternatives for moving their goods.

★ Enormous project cost overruns and delays in project schedules have greatly strained the Inland Waterways Trust Fund balance. Meanwhile, the billions of dollars in benefits foregone by virtue of not having the use of completed projects continue to escalate.

MarinePortsNavigable channels serving U.S. marine ports require significant investments that are likely to increase over time as vessels involved in interna-tional trade double or triple in size. The effects of a failure to invest in these vital links to America’s global trading partners could jeopardize these key trading relationships. In 2011, China and Japan accounted for nearly 20% and 7% of U.S. maritime trade, respectively, and they are this nation’s two largest waterborne trading partners in value of goods. America’s leading Latin American trading partners are Mexico, Brazil, and Venezuela, which together account for 10% of total U.S. maritime trade. Germany, the United Kingdom, and Russia are this country’s largest European maritime partners, accounting for a combined 9% of the value of U.S. trade. The two other nations among

the top 10 U.S. trading partners are South Korea and Saudi Arabia. Altogether, the top 10 trading partners account for more than $925 billion in trade through waterborne commerce, or 54% of total U.S. maritime trade.43

America’s trade volume is expected to double by 2021, and to double again shortly after 2030 (see Figure 3). In the next decade, total U.S. exports are expected to surpass imports for the first time in a generation. Even if global growth slows due to economic problems in Europe, the major U.S. trading partners are a diverse set of countries in Asia and Latin America, and the growth forecasts for trade with them are indica-tive of long-term trends that will require major investments in U.S. marine ports.

Thus, the demands of the nation’s growing trade volume will exceed the capacity of its cur-rent port infrastructure. From 2012 to 2020, it is estimated that 25% of the capital investment needs of U.S. ports will be for port expansion, and 75% for the rehabilitation of existing assets.44 By 2040, the cumulative total for maintenance and rehabilitation of assets is estimated to account for 83% of all needs.

TrendTowardslargerVesselsThe performance of today’s U.S. marine ports is most likely to be affected by the increasing sizes of vessels, which may outpace the funding available for operations and maintenance requirements to sustain even the current state of good repair, and the necessary deepening of navigable channels. This is particularly true for container ships — those that transport the fastest-growing segment of international shipping, as measured by both the size of the vessels involved and the value and volume of the cargoes they transport. Although containerization has been a factor in international trade since the early 1970s, growth in contain-erized traffic accelerated after 1980. Trends in international container trade that emerged between 1990 and 2000 are shown in Table 8.

Many factors are likely to require increased investment in the nation’s marine ports infra-structure. Global trade patterns continue to


change, with new centers of production emerging as the economies of international trading part-ners evolve and mature. Future trade patterns and the operational changes required by larger vessels will alter vessel deployments and ship-ping patterns. Decisions about routing will be influenced by changing demand for shipping ser-vices, development of major new transshipment

ports, and by the expansion of the capacity of waterways that are strategically important to U.S. trade, like the Suez and Panama Canals. Although the largest of the newer classes of vessels will not call on all U.S. ports, the aver-age size of vessels — especially those involved in transporting containerized cargoes — will likely increase significantly in the future and affect the

FIGURE 3★ Projected Growth Forecasts for America’s Trade volume, 2011– 2041 (as of the first quarter of 2012)

sourCeU.S. Army Corps of Engineers, U.S. Port and Inland Waterways Modernization, June 2012.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000Imports

Exports

2041203920372035203320312029202720252023202120192017201520132011

IMPoRTS ExPoRTS

U.S.REGIon 1980 1990 2000 2010

North Atlantic 2.6 2.67 4.09 6.61

South Atlantic 1.75 3.85 8.95 10.62

Gulf Coast 0.58 0.82 1.69 2.82

North Pacific 1.02 2.41 3.59 4.23

South Pacific 2.49 5.77 12.06 17.98

TOTAL 8.44 15.53 30.39 42.26

sourCeAmerican Association of Port Authorities, July 2012. AAPA also provided 2011 data, which shows 42.7 million TEUs.

TAblE 8★ Total containerized Trade for U.S. Ports, 1980 – 2010 (millions of TEUs)


operations at most of the major U.S. ports that currently handle containerized cargoes. All of these factors will require that U.S. ports invest in the capacity required to support changes in global trade patterns emerging in the 21st Century. These trading patterns will be supported by ever-larger container vessels.

Today, the U.S. ports in southern California — primarily the San Pedro ports of Los Angeles and Long Beach — and the South Atlantic ports — dominated by Savannah, Hampton Roads, and Charleston — transport the majority of containers that move through U.S. ports. Similar geographic trends are expected to persist even when the expansion of the Panama Canal is completed in 2015.

The expansion of the Panama Canal is likely to influence the size and port call patterns of con-tainer vessels serving the U.S. East Coast ports. For some ports on the U.S. marine system, the canal’s anticipated widening is expected to lead to even larger ships, with post–Panama Canal expansion (new-Panamax) vessels exceeding

13,000 TEUs. Even larger container vessel sizes will also have an impact on the U.S. West Coast ports — especially those in the South Pacific.

Since 1970, vessel sizes have increased, affect-ing the requirements for both channel width and harbor depth in U.S. ports, and this trend is expected to continue with the introduction of new-Panamax vessel dimensions. Container ves-sels that can pass through the expanded Panama Canal will be limited to approximately 13,000 TEUs, with fully laden drafts of about 50 feet (their current draft limits are about 39.5 feet). However, container vessels of up to 18,000 TEUs are expected to begin calling at the U.S. West Coast ports, where draft restrictions due to the Panama Canal are not a factor. Also, westbound trade between Southwest Asia — a growing source of U.S. imports — and the U.S. East Coast ports will likely use the Suez Canal, which already accommodates vessels in the 14,000 – 15,000 TEU range between Asia and Europe.45

Although vessels this large are expected to call at only a limited number of U.S. ports, the

FIGURE 4★ Long-Term U.S. container Trade Forecast, 2011– 2037 (in loaded TEUs)

sourCeU.S. Army Corps of Engineers, U.S. Port and Inland Waterways Modernization, June 2012.

0

10

20

30

40

50

60

70Loaded Exports

Loaded Imports

20372035203320312029202720252023202120192017201520132011

loAdEdIMPoRTS loAdEdExPoRTS


proliferation of larger vessels as an efficient means of global water transportation points to the importance of port capacity for efficient trade at all U.S. ports. Shipping costs per ton are significantly lower when freight can be delivered on a larger vessel, because large vessels are more cost-effective to operate, especially in light of rapidly increasing fuel costs. For this reason, even U.S. ports handling vessels much smaller than new-Panamax ones will be sensitive to their capacity to handle ships of a size adequate to most efficiently deliver freight to and from U.S. markets. Orders for very large vessels — those over 10,000 TEUs — are already being delivered to vessel operators. Smaller, fuel-inefficient vessels are being retired from service.

These trends are expected to continue and will require all ports providing container services to be equipped to handle vessels of increased size. If ports are not equipped with appropriate chan-nel depth, berth capacity, and gantry and crane capacity to accommodate larger vessels, the costs of shipping products to and from the U.S. will increase, diminishing the competitiveness of U.S. industry and ultimately having adverse impacts on the national economy. This is particularly important to U.S. ports because the larger ves-sels can call on ports in Canada, Mexico, Central America and the Caribbean, that currently have the capacity to handle these larger vessels. Containers can then be moved to US markets by rail (in the case of Canada and Mexico) or by smaller ships (in the case of Caribbean ports) to deliver goods to the United States.

The U.S. Army Corps of Engineers has assessed the current capacity of major U.S. and Canadian ports in terms of their maximum estimated capacity for handling container vessels.46 Although most U.S. West Coast ports are able to accommodate vessels in the range of 7,000 – 13,000 TEUs, 2010 data indicate only five Atlantic ports and one Gulf port are able to accommodate vessels of more than 5,000 TEUs, only two are currently able to accommo-date vessels of 7,000 TEUs or larger, and none

were able to handle the maximum-sized new-Panamax container vessels fully laden once the Panama Canal is expanded. Since 2010, several ports have been taking steps to prepare for new ship sizes, and there have been reports of larger ships, though probably not fully laden, entering selected east coast ports. Other factors that are important for ports to be able to accommodate ships of 5,000 TEUs or larger include intermodal freight considerations, proximity to popula-tion centers, and management that develops and implements strategies for modernization.47

The sources of funding for ports are diverse, with private investment by port authorities and non-port entities contributing significantly to enable the ports simply to maintain existing conditions to meet customer needs and require-ments. Port authorities themselves are planning on spending a combined $18 billion through 2016 on infrastructure improvements for water termi-nals, while their private-sector terminal partners are looking at spending $27.6 billion, for an aggregate total of nearly $46 billion. This is more than $9 billion a year in combined infrastructure investment, of which more than one-third will be spent by the port authorities themselves.48 Although this investment makes up the majority of funding for ports, dredging will be required to maintain existing navigable channels and water-ways, as well as to accommodate these larger vessels. Dredging is usually partly or completely paid for by the U.S. Army Corps of Engineers.49 For this reason, shortfalls in the Corps’ capital programs pose a significant threat to the perfor-mance of the marine port system.

Public funding for the marine system has been stagnant in recent years despite the significant local revenue sources that support the operation of U.S. ports and given the increasing demands on and needs for the marine ports. Funding for marine ports declined 15% from 2010 to 2012, and is expected to increase only briefly in 2013 because of funding from the American Recovery and Reinvestment Act.


CostsinCurreddue toaFailuretoaCt

Assuming that America’s needs for air and waterborne

transportation continue to grow, and that investment trends

continue, costs for U.S. industries and households will be

approximately $34 billion due to airport congestion and $59

billion due to deficient inland waterways and marine port

infrastructure in 2020. By 2040, these costs are expected to

rise to $63 billion for air transportation and $82 billion for

inland waterways and marine ports (in 2010 dollars).

4

AirportsThe U.S. commercial aviation system is con-gested in key metropolitan areas and requires significant capacity expansion to meet the passenger and air cargo growth projected through 2040. In this respect, there are two options: to build new capacity in major markets; or to fund NextGen, the advanced-technology solution to increase and maximize airport capacity. This analysis is based on the NextGen solution, which is in the early stages of implementation by the FAA.

Under current investment levels, congested conditions will lead to the following impacts:

★ Costs to airlines, including fuel, crew costs, extended wear and tear on aircraft, and therefore higher maintenance costs;

★ Cost to passengers based on delayed and canceled flights and missed connections, and increased investment in buffer time to account for this decreasing reliability;

★ Costs to passengers who do not take trips due to increased delays and decreased reliability; and

★ Costs to shippers and receivers of cargo due to delays. These costs are particularly important to firms that rely on just-in- time deliveries.


The FAA released a study on impacts that docu-mented the national cost of airport congestion at $32.9 billion in 2007, including $28.9 billion in direct costs and an additional $4 billion in indi-rect GDP impacts.50 These costs were adjusted to a base of $21.9 billion in 2010 (in 2010 dollars) using the following steps:

★ Indirect GDP was recast as direct business costs by multiplying the 2007 ratio of total output to GDP. This brought the total to $36.3 billion.

★ Dollars were adjusted to the 2010 dollar value, which brought the total to $38 billion in 2007.

★ Only economic transactions were counted. Therefore, 48% of passenger costs were included, which is the estimated proportion of business travel.51 The value of personal travel was not counted. Second, the cost of not taking trips, also known as “welfare costs,” were zeroed out under the assumption that business travelers will not avoid trips. These steps brought the total to $24.8 billion in 2007 (in 2010 dollars).

★ Air travel has decreased during the recent economic downturn. From 2007 to 2010, operations have decreased by almost 12%. This adjustment was made to lower the estimated cost of air congestion on economic transactions in the U.S. to $21.9 billion.

The cost of congestion, assuming trends extended in investments, was adjusted to 2040 on the basis of the FAA’s Terminal Area Fore-casts (TAFs). The costs between 2010 and 2040 were adjusted using two factors from TAFs to represent the costs of airport congestion under trends extended: the overall national increase projected for operations; and the overall rate of increase for the 15 largest air markets in the U.S. (encompassing 35 airports), compared with all other commercial airports in the nation. The estimated costs of airport congestion, excluding nontransactional impacts, will rise from $24

billion in 2012 to $34 billion in 2020 and is expected to reach $63 billion by 2040 as conges-tion worsens under current trends (see Table 9).

InlandWaterwaysandMarinePortsFailure to invest in inland waterways and marine ports has already created a situation where ves-sels must wait out unscheduled delays on inland waterways, or where undersized vessels must be used to accommodate shallow harbors or narrow channels at U.S. marine ports. These inefficien-cies disrupt business operations and increase costs. They also force businesses to incorporate scheduled delays into operations attributable to insufficient capacity for passing through locks, or the need to run multiple loads of cargo in smaller ships than would otherwise be preferable. For the users of inland waterways, these effects will be exacerbated over time if current trends are extended. Delays are estimated to have imposed $33 billion in costs on U.S. products in 2010, and these costs are expected to increase to nearly $49 billion (in constant 2010 dollars) by 2020 and to $68 billion by 2040.52 Coal and petroleum products (including fuels) are expected to incur the majority of these costs, adding to the already increasing costs of those energy sources.

In addition, businesses relying on marine ports face increased costs from importing goods for direct sales or for use in production pro-cesses, and reduced business sales from exports to international markets. The need to use under-sized ships to accommodate shipping through shallow harbors adds to the costs of U.S. busi-nesses’ imports and exports, and therefore to the costs of consumers. Additional costs for traded products due to shallow harbors are estimated to have been about $7 billion in 2010 ($3.8 billion in added import costs, and $3.3 billion in export costs),53 and are expected to increase to $9 bil-lion by 2020 and to $14 billion by 2040 (in 2010 dollars), as shown in Table 10. Petroleum and petroleum products are expected to account for about one-third of these total added import and export costs.


SEcToR 2007 2010 2012 2020 2040

Airlines – 8.69 – 7.67 – 8.37 – 11.86 – 22.08

Passengers – 8.39 – 7.41 – 8.08 – 11.45 – 21.32

Industries other than Airlines (Cargo) – 7.75 – 6.84 – 7.46 – 10.57 – 19.68

TOTALS – 24.83 – 21.91 – 23.90 – 33.87 – 63.08

sourCesFAA, US Travel Association, calculations by EDR Group.

TAblE 9★ net Impact of Airport congestion on the U.S. Economy (in billions of 2010 dollars)

2020 2040 ToTAl ToTAlcoMModITy IMPoRTS ExPoRTS TRAdE IMPoRTS ExPoRTS TRAdE

Coal, Lignite and Coal Coke – 274 – 879 – 1,153 – 459 – 1,096 – 1,555

Petroleum and Petroleum Products – 2,620 – 989 – 3,609 – 2,984 – 1,316 – 4,300

Chemicals and Related Products – 371 – 614 – 985 – 741 – 1,124 – 1,865

Crude Materials, Inedible Except Fuels – 625 – 437 – 1,062 – 1,256 – 688 – 1,944

Primary Manufactured Goods – 308 – 81 – 389 – 676 – 161 – 837

Food and Farm Products – 160 – 1,765 – 1,925 – 283 – 2,779 – 3,062

All Manufactured Equipment, Machinery – 80 – 61 – 141 – 162 – 115 – 277

Total Unknown or Not Elsewhere Classified – 10 – 12 – 22 – 11 – 34 – 45

TOTAL – 4,448 – 4,838 – 9,286 – 6,572 – 7,313 – 13,885

sourCeEDR Group calculations, based on U.S. Army Corps of Engineers Data, 2009; and Freight Analysis Framework forecasts.

TAblE 10★ costs by commodity of Using Under-Sized vessels to Accommodate Shallow Harbors or narrow channels at U.S. Marine Ports (in millions of 2010 dollars)


Landside Transportation Needs for Air and Port TrafficLandside transportation improvements are also needed to ensure the efficient movement of goods to and from both airports and marine ports. The 2011 Failure to Act report on surface transportation highlighted the costs that defi-cient highways, bridges, and other elements of surface transportation infrastructure impose on the U.S. economy. It needs to be noted that many of America’s highest-volume marine ports and most heavily trafficked airports are also located in some of its most congested cities (e.g., Los Angeles, Philadelphia, New York, and Baltimore–Washington). Delays in transportation lengthen the shipping process for moving goods to or from airports, marine ports and the nation’s inland waterway system, thereby increasing costs to shippers that are passed through to other busi-nesses or households. Tables 11 and 12 present a snapshot of congestion costs at major airports and marine ports in 2010.

Congestion near airports that affects the economic performance of U.S. industries is con-centrated near the nation’s major airport hubs, and adds costs to U.S. businesses of over $1 bil-lion in 2010, just accounting for major airports. Table 11 shows the impact of congestion on air cargo and business travel at the 15 largest air passenger regions in the U.S., and it adds impacts for five additional major airports. These impacts incorporate the total tonnage moved to and from airports, and 48%54 of air travelers, who are presumed to be business travelers minus the proportion of travelers who use transit services to go to the airport.55 Note that value of time for personal travel is not included, and this is why impacts do not appear to be severe at primary tourist destinations such as Orlando and Las Vegas. The data shown reflect minimal tolerable conditions and not free-flow traffic.

The issues and scale of ground congestion at marine ports is similar to airports. When cargo is delayed due to deficient connections to roads and railroads in port cities, supply chains and business operations are affected throughout the U.S., also threatening the price competitiveness of U.S. products abroad. Table 12 shows that an estimated $1 billion of ground congestion costs in 2010 accrued to cargo shipments entering and exiting the 16 largest port areas of the U.S.

Similar to the airport analysis, the congestion impacts are based on metropolitan conditions and the principle of minimal tolerable conditions reflected in the Failure to Act report on surface transportation. As indicated in Table 12, marine ports with the highest average values of cargo also tend to be those with the highest congestion costs. The Los Angeles metropolitan area, with the ports of Los Angeles and Long Beach, has the most congested seaports in America and shows the highest landside congestion costs. The Los Angeles and New York port areas combined account for 65% of the total landside congestion costs shown for the listed ports.

In 2010, deficient or congested surface trans-portation conditions resulted in a $795 billion impact on imports and $311 billion on exports. In Houston, Miami and Norfolk, the impact of surface transportation on exports to the ports exceeded the estimated impacts of imports com-ing from these ports. For all other major marine ports on the list the affected value on imports exceeded that of exports, and for LA-Long Beach and New York, the ratios of impacts by imports to exports is more than $3-to-$1 and almost $5-to-$1, respectively.


AIRPoRT/REGIon 2010GRoUndconGESTIoncoSTSAccRUInGToU.S.IndUSTRy

15 LArGEST AvIATIOn METrO MArkETS

New York City 239

Los Angeles 179

Miami 172

Chicago 168

San Francisco 102

Atlanta 40

Dallas/Fort Worth 32

Boston 25

Seattle 20

Houston/Galveston 18

Phoenix 15

Denver 14

Orlando 8

Washington DC 4

Las Vegas 2

SELEcTEd OTHEr AIrPOrTS/rEGIOnS

Philadelphia 35

New Orleans 17

Memphis 14

Cleveland 6

Louisville - Cincinnati 6

TOTAL for 20 Airport regions 1,116

noteThe economic impacts of these ground delays are a portion of the Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation Infrastructure.

sourCeEDR Group Calculations Based on U.S. Department of Transportation, O&D Database, Database Products Inc., CY 2011; ACRP Report 4, Ground Access to Major Airports by Public Transportation, Transportation Research Board of the National Academies and FAA and the above referenced Failure to Act study.

TAblE 11★ Land-Side congestion costs Accruing to Freight and Business Travel Using Airports, 2010 (in millions of 2010 dollars)


Congestion Congestion CostsACCruing CostsACCruingPortMetroPolitAnAreAs tou.s.iMPorts tou.s.exPorts totAl

Los Angeles, CA CSA 339 104 443

New York, NY-NJ-CT-PA CSA (NY Part) 232 51 283

San Francisco, CA CSA 39 21 60

Savannah, GA CSA 33 18 51

Seattle, WA CSA 29 7 36

Miami, FL MSA 23 38 61

Baltimore, MD MSA 22 15 37

Houston, TX CSA 18 27 45

Charleston, SC MSA 13 8 21

New Orleans, LA CSA 11 8 19

Portland, OR-WA MSA (OR Part) 10 3 13

Boston, MA-NH CSA (MA Part) 10 4 14

Delaware 8 7 15

Mobile, AL CSA 5 1 6

Norfolk, VA-NC MSA (VA Part) 1 3 4

Jacksonville, FL MSA 2 1 3

TOTAL of Major Ports 795 316 1,111

Note The economic impacts of these ground delays are a portion of the Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation Infrastructure.

Source EDR Group Calculations Based on USDOT Freight Analysis Framework Data, 2010, Army Corps of Engineers Data, 2009 and the above referenced Failure to Act study.

tAble 12 ★ Land-Side Congestion Costs Accruing to Freight Using U.S. Marine Ports, 2010 (in millions of 2010 dollars)

Marineportswiththehighestaveragevaluesofcargoalsotendtobethosewiththehighestcongestioncosts.thelosAngelesmetropolitanarea,withtheportsoflosAngelesandlongbeach,hasthemostcongestedseaportsinAmericaandshowsthehighestlandsidecongestioncosts.


eConoMiCiMPaCts5

In the same timeframe, losses in dispos-able personal income will total $361 billion attributed to airport needs and $872 bil-lion attributed to inland waterways and marine ports. In the face of these dollars lost to the national economy, there is expected to 350,000 fewer jobs in 2020 due to unmet airport needs and 738,000 fewer jobs due to inland and marine port needs.56

AirportsThe economic impact of congestion at major airports will have significant effects on the national economy due to impacts on cargo movement and business travel, assuming that capital spending remains consistent through 2040, as it has been from 2001 (about $10 billion annually in 2010 dollars). The broad impacts on the U.S. economy, shown in

Table 13, would represent a cumulative loss of GDP totaling $313 billion by 2020 and $1.52 trillion by 2040. Overall, the U.S. economy will end up with an average of 350,000 fewer jobs than it would otherwise have had by 2020. And even with economic adjustments occurring in later years, the result would still be 358,000 fewer jobs in 2040.

Over time, domestic freight movement and business travel will likely shift from a reliance on air to surface transportation, such as trucks and trains, to partially adjust for the declining efficiencies and higher costs of air transporta-tion.57 However, this will mean higher costs for those commodities that are shipped by air, both in terms of out-of-pocket expenses and time, which will affect all industries that rely on same-day freight delivery. As a conse-quence of air-side congestion, the direct cost

By 2020, the broad impacts on the U.S. economy would rep-

resent cumulative losses from the national economy of $54

billion in export value and $580 billion in overall business

sales due to unmet airport needs, and $270 billion and

roughly $1.3 trillion in business sales due to unmeet needs

of inland waterways and marine ports. The U.S. is predicted

to lose $313 billion and $700 billion of GdP by 2020 due to

aviation, inland waterways and marine port impacts.


of air transportation is estimated to be 6% higher in 2020 and 9% higher in 2040 than would be the case with an initial investment.58

International cargo and will be particularly affected by increasing costs and inefficiencies, impairing U.S. competitiveness for businesses that sell to overseas markets that are only

reachable by air. These changes will also increase the costs of imports, which will affect house-holds, as well as manufacturers that rely on imported goods in production processes. By 2020, the failure to increase investment in airports is expected to cost the U.S. about $114 billion in trade, and will increase to $1 trillion by 2040 (in

AVERAGEyEARAnnUAlIMPAcTS 2020 2040 2012–2040

GDP – 47 – 70 53

Jobs (FTE positions) – 350,000 – 358,000 – 338,000

Business Sales – 87 – 179 112

Disposable Personal Income – 53 – 53 51

cUMUlATIVEloSSES 2012–2020 2021–2040 2012–2040

GDP – 313 – 1,209 1,523

Business Sales – 580 – 2,682 3,262

Disposable Personal Income – 361 – 1,128 1,489

noteGDP reflect impacts in a given year against total national business sales and GDP in that year. These measures do not indicate declines from 2010 levels.


TAblE 13★ Effects on U.S. Business Sales, GdP and Jobs from congestion at Major Airports, 2012 – 2040 (in billions of 2010 dollars)

yEARoRPERIod ExPoRTS IMPoRTS ToTAlTRAdE

2020 – 11 – 9 – 20

2040 – 62 – 15 – 77

2012 – 20 – 54 – 59 – 114

2021– 40 – 708 – 257 – 965

2012 – 40 – 762 – 316 – 1,079


TAblE 14★ Lost Trade due to the Gap in Airport Investments (in billions of 2010 dollars)


2010 dollars). As seen in Table 14, this lost value is roughly even between exports and imports through 2020, and then becomes significantly higher for exports by 2040, which is a primary reason that national loss of GDP will increase from an annual average of $35 billion from 2012 to 2020 to $60 billion from 2021 through 2040 (in constant 2010 dollars). This is because the loss of

exports affects the demand for — and therefore the production of — American-made products to a greater extent than goods that are imported.

Table 15 compares the impacts of job losses and business sales through 2020 by sector. Note that while job losses are heaviest in retailing, the cumulative loss of business sales falls most intensely on those business and professional

noteJobs have been rounded to thousands.


JOB IMPAcTS In 2020

PERcEnT loSS oFToTAlSEcToR oFJobS loSS

Retail trade – 94,000 27

New construction – 37,000 11

Other business services – 28,000 8

Finance & insurance – 27,000 8

Wholesale trade – 21,000 6

Trucking, highway & passenger transit – 19,000 5

Restaurants and bars – 19,000 5

Air transport – 17,000 5

Professional services – 13,000 4

Movies and amusements – 12,000 3

Manufacturing Sectors – 42,000 12

SUBTOTAL Leading 10 Sectors – 329,000 94

Other Sectors – 21,000 6

TOTALS – 350,000 100

cUMULATIvE BUSInESS SALES IMPAcTS, 2012 – 2020 (in billions of 2010 dollars)

loSSoF PERcEnT bUSInESS oFToTAlSEcToR SAlES loSS

Finance & insurance – 76 13

Retail trade – 47 8

Real estate and royalties – 29 5

Wholesale trade – 27 5

Trucking, highway & passenger transit – 26 4

Owner-occupied housing – 26 4

Air transport – 24 4

Professional services – 21 4

Computer & data processing – 20 3

Other business services – 19 3

Manufacturing Sectors – 107 18

SUBTOTAL Leading 10 Sectors – 424 73

Other Sectors – 156 27

TOTALS – 580 100

TAblE 15★ Sectors Most Affected by decline of Air Service in Jobs and Business Sales, 2012 – 2020


services that rely on air passenger transportation. Note that manufacturing is divided among 49 sec-tors and that the negative consequences of airport congestion are spread among them. Cumulatively, manufacturers are expected to lose more than $107 billion from 2012 through 2020, resulting in a loss of almost 42,000 jobs in that sector.

InlandWaterwaysandMarinePortsBy failing to invest in its inland waterways and marine ports, the U.S. is jeopardizing its ability to provide the low-cost transportation required to remain competitive in a global marketplace. The total effects on U.S. trade and national competitiveness in the global economy will be significant — $270 billion in exports by 2020 and almost $2 trillion in exports between 2012 and 2040. The greatest opportunities to grow the U.S. economy lie in gaining access to global mar-kets for the commodities and heavy industrial goods that the nation manufactures because selling goods (as well as services) abroad returns income from overseas consumers to the United States. As shown in Table 16, the losses in the value of export trade are nearly double the losses in import trade.

Maintaining low transportation costs is vital if the nation is to preserve the relatively high-wage jobs created by its export industries. The country’s

ability to offer competitively priced export products — whether manufactured goods, agricul-tural products, or sources of energy for a growing global middle class — will be affected by the con-ditions of nation’s ports and inland waterways.

Impacts from unmet needs in both inland waterways and marine ports are expected to result in an aggregate loss of business sales of $1.3 trillion by 2020 and $7.8 trillion by 2040. If the current level of investment in the nation’s water-ways persists, the losses to the U.S. economy will affect not only the nation’s output, but will also exacerbate a continuing loss of jobs. The toll from these losses will be reflected in declining national prosperity. America’s GDP losses will accumulate every year — reaching almost $95 billion in 2020 and more than $255 billion in 2040. The cumu-lative loss in national GDP through 2040 will be almost $4.0 trillion — driven by the nation’s erod-ing ability to keep transportation and shipping costs low enough to compensate for our higher wage levels and costs of production.

By 2020, there will be an estimated 738,000 fewer jobs if the U.S. maintains its current levels of investment (Table 17). By 2040, these job losses will be 1.4 million — jobs that will be lost due to America’s lack of competitiveness in global trade and because its households and businesses will be spending more for the goods

yEARoRPERIod ExPoRTS IMPoRTS ToTAlTRAdE

2020 – 42.8 – 20.5 – 63.3

2040 – 141.6 – 63.6 – 205.2

2012 – 20 – 270.1 – 157.4 – 427.5

2021– 40 – 1,711.8 – 775.6 – 2,487.4

2012 – 40 – 1,981.9 – 933.0 – 2,914.9


TAblE 16★ Lost Trade due to the Gap in Inland Waterways and Marine Ports Investments (in billions of 2010 dollars)


they import and the commodities they move within the U.S. on its inland waterways.

Over time, America’s lack of competitiveness will affect its ability to create well-paying jobs, especially in the export sectors that will increas-ingly depend on its ability to capture its share of the growing global marketplace. Higher costs for the imports consumed at the household level, greater costs to transport the wide array of imported intermediate goods that supply domestic manufacturers, and the nation’s ability to provide low transportation costs for exports that support jobs with significantly higher aver-age wages than in countries that compete with the U.S. for new and growing markets will even-tually erode the nation’s wages and disposable income. Although one can already see this happening in a limited number of industrial sectors, these effects will magnify rapidly in the future. By 2020, cumulative losses in disposable personal income will reach more than $872

billion. By 2040, U.S. households will have lost more than $4.5 trillion in disposable income.

The U.S. standard of living will also be affected as the cost of its imports rises. The rising costs of imports will affect more than just the consumer goods in retail and grocery stores. Most of the manufactured goods produced in this country depend on manufactured compo-nents that are imported — often on the same large container ships that bring in imported consumer goods. Manufacturers depend on these low-cost components to hold down the prices for their products — products that are sold in a global market. Substituting components means either raising costs to cover higher U.S. wages and passing them along to their customers, or absorbing all or a portion of these higher costs. For the consumer, higher import costs may mean shifting purchases to more expensive U.S.-produced products, but consuming less overall due to higher prices paid for necessities. Under any of these circumstances, the prices paid by

AVERAGEyEARAnnUAlIMPAcTS 2020 2040 2012–2040

GDP – 94 – 256 – 137

Jobs (FTE positions) – 738,000 – 1,384,000 – 911,000

Business Sales – 183 – 517 – 270

Disposable Personal Income – 117 – 269 – 156

cUMUlATIVEloSSES 2012–2020 2021–2040 2012–2040

GDP – 697 – 3,278 3,975

Business Sales – 1,335 – 6,496 7,831

Disposable Personal Income – 872 – 3,662 4,534

noteLosses in business sales and GDP reflect impacts in a given year against total national business sales and GDP in that year. These measures do not indicate declines from 2010 levels.


TAblE 17★ Effects of Failure to Invest in Inland Waterways and Marine Ports on U.S. Business Sales, GdP and Jobs, 2012 – 2040 (in billions of 2010 dollars)


U.S. households and businesses will increase, the range of products (or inputs into the manu-facturing process) will decline, and the overall competitiveness of the national economy, as measured by U.S. businesses’ ability to price their products at globally competitive prices, will be reduced, thereby reducing overall trade.

The effects of the expected decline in trade by sector are shown for 2020 in Table 18 for both exports and imports. Agricultural, petrochemical, energy, and the industrial products needed by growing nations are competitively produced in the U.S. and are seen as its greatest export oppor-tunities for the future. Overseas markets for these commodities depend on ocean transportation via a limited number of marine ports. And for bulk

commodities, most of the transportation from the point of production to the point of export is provided by the U.S. inland waterway system.

Many of these export opportunities depend on long-term supply contracts, especially for energy suppliers like coal and natural gas. Each of these major export markets requires that U.S. trading partners make long-term investments to receive and process what they will import (U.S. exports — or those of its competitors). Because long-term supply contracts, especially for energy, generally span a period of 10 years or longer, America’s ability to compete today has long-term impacts that are not recoverable with a quick-fix sometime in the future. In addition, agricul-tural exports are highly price-sensitive. For


ExPOrTS

SEcToR dollARVAlUE

Agriculture, forestry, fisheries – 3.6

Wholesale trade – 2.8

Aerospace – 2.8

Other chemicals – 2.0

Petroleum refining – 1.6

Air transport – 1.3

Meat products – 1.2

Drugs – 1.2

Agriculture fertilizers & chemicals – 1.1

Miscellaneous plastics products – 0.8

All Other Industries – 24.6

TOTAL – 42.8

IMPOrTS

SEcToR dollARVAlUE

Crude petroleum – 1.8

Apparel – 1.5

Drugs – 1.1

Motor vehicles – 1.0

Other chemicals – 1.0

Motor vehicle parts – 0.8

Primary nonferrous metals – 0.7

Metal products – 0.7

Agriculture, forestry, fisheries – 0.6

Miscellaneous manufacturing – 0.5

All Others – 10.7

TOTAL – 20.5

TAblE 18★ Top Ten Sectors Most Affected by decline of Waterborne Trade, 2020 (in constant billions of 2010 dollars)


commodities like these that are subject to annual or seasonal price changes, high transportation costs can threaten participation in export mar-kets for these goods if these costs eat up too much of the delivered price.

As U.S. economic growth is impeded by under-investment in infrastructure, the effects will ripple through the nation’s entire economy — not just those sectors directly affected by the lack of competitiveness. Table 18 shows how the effects

of reduced export trade and the costs for imported goods that will affect the entire economy — both the traded and untraded sectors. Because so much of the impact of the reduced global competitive-ness will be felt in reduced disposable income, the overall effects on the U.S. economy will show up in sectors that one does not usually associate with trade — areas like retail, with a loss of 110,000 jobs by 2020, and a loss in cumulative sales of $71 bil-lion between 2012 and 2020, as shown in Table 19.

noteJobs have been rounded to thousands.


JOB IMPAcTS In 2020

PERcEnT loSS oFToTAlIndUSTRy oFJobS loSS

Retail trade – 110,000 14.9

Other business services – 57,000 7.7

New construction – 53,000 7.2

Wholesale trade – 48,000 6.5

Finance and insurance – 48,000 6.5

Restaurants and bars – 40,000 5.4

Agriculture, forestry, fisheries – 40,000 5.4

Education, social services, NPO – 34,000 4.6

Professional services – 32,000 4.3

Other medical services & dentists – 31,000 4.2

All Other Industries – 247,000 33.5

TOTAL – 738,000 100

cUMULATIvE BUSInESS SALES IMPAcTS, 2012 – 2020

loSSoF PERcEnT bUSInESS oFToTAlIndUSTRy SAlES loSS

Finance and insurance – 136 10.2

Real estate and royalties – 78 5.9

Wholesale trade – 71 5.3

Retail trade – 71 5.3

Professional services – 53 4.0

Owner– occupied housing – 53 3.9

Agriculture, forestry, fisheries – 50 3.8

Other business services – 44 3.3

Petroleum refining – 38 2.8

Computer & data processing – 33 2.5

All Other Industries – 709 53.1

TOTAL – 1,335 100

TAblE 19★ Sectors Most Affected by decline of Waterborne Trade in Jobs and Business Sales (in constant billions of 2010 dollars)


ConClusion

Unlike other classes of infrastructure — such as highway,

transit, water treatment, and electricity — America’s airports,

inland waterways, and marine ports link the nation directly to

the global economy. The nation’s ability to export to countries

with growing economies and thereby participate in global

growth depends on competitively providing the essential

commodities and high-value manufactured goods that growing

economies need to supply their populations and industries.

6

Preserving the advantages of low-cost pro-duction of the goods that U.S. citizens and businesses need to enjoy a high quality of life and keep the costs of intermediate goods low depends on the same basic requirement: that the costs of transporting the nation’s imports and internally produced commodities to export markets are kept as low as possible. Each of these linkages requires that the investments needed to sustain competitive transportation costs are well coordinated

among the many interdependent modes of transportation needed to keep the entire U.S. supply chain operating efficiently, effec-tively, and equitably. However, as has been demonstrated in this report, inadequate and unbalanced investments in essential com-mercial transportation infrastructure have become an enormous drag on the productivity and competitiveness of the U.S. economy.

U.S. airports and water ports are the pri-mary means for competitively supplying the


nation’s vast array of imported goods to both consumers and businesses, as well as meeting the requirements for a technologically advanced service economy — and thus they are vital to the nation’s economic well-being and standard of living. The nation’s investments in its inland waterways and marine port systems are also vital to its ability to compete effectively in global markets as the demand for U.S.-produced goods, commodities, and services grows.

Through a combination of federal support from the Airport Improvement Program, state and local funding, passenger fees, and private investments, the U.S. airport system is main-taining a sufficient level of safety and security. However, air-side congestion is worsening, and the long-scheduled NextGen improvements have been delayed. For the calculations contained in this report, a $40 billion cost of public and private investment has been assumed, which is the primary factor in the capital investment gap and the key to mitigating congested conditions, along with maintaining traditional streams of airport infrastructure investments.

The national waterborne transportation system is really a “Tale of Two Systems” of inland water-ways and marine ports. Inland waterways rely primarily on public investment and has suffered from chronic underfunding, seriously affecting the nation’s potential to participate in a highly competitive global market for exportable commodities that will be in great demand in the future. This failure to adequately invest in a publicly managed inland waterway system affects the nation’s ability to export key commodities like grains, energy, and specialized manufactured goods. It also provides competing countries with an opening to capture market share, which in some cases is tied to long-term contracts.

Investments in America’s marine ports are dominated by public port authorities and private port operating companies. These investments are being driven by the need to respond to market forces tied to domestic economic activity and growing demand for U.S.-produced goods by developing countries and regions.

The nation’s port system is in danger of being non-competitive at several key ports in the Southeast and Gulf port ranges due to the slow and complex process of project delivery for critical dredging projects — especially those that will allow key ports to participate in offering services that depend on serving larger bulk and container vessels that will call on U.S. ports once the expanded Panama Canal opens in 2015. Other ports on the West Coast and Northeast will need to increase navigational capacity as operating economics dictates the introduction of larger vessels on global trade routes.

Moving goods to and from inland markets and airports continues to pose a significant challenge in some of the more congested U.S. metropolitan regions — typically those where the largest airports and marine ports are located. Freight bottlenecks associated with highway access are frequently within metropolitan areas or at key choke points like major river or rail crossings. These points require public-sector investments in highway system improvements that are increasingly challenged for other public trans-portation investment priorities.59

ResearchImplicationsofFederalPolicyandPrivateInvestmentTrendsCurrently, federal investments in highways, ports, various elements of the nation’s inland waterways, and the rail system are not evaluated or prioritized on a corridor basis. Public invest-ment decisions do not adequately take into consideration potential effects of the increased costs of transportation system inefficiencies being borne by the cargo owners, manufacturers, or consumers. For passenger transportation, simple measures like the value of travel time are used as surrogates for measuring user savings. But in highly complex supply chains — where inventory costs, equipment investments, labor productivity, return on investment, and other measures of effectiveness are more common — assessing the effects of federal investments in improving the efficiency of transportation


infrastructure requires a more nuanced and detailed assessment of the returns on public funding. To this end, several areas require further research:

★ Determining the sensitivity of shippers to the increased costs of transportation and assessing the effectiveness of investments in airports, marine ports, and waterways in influencing these costs.

★ Assessing the best available technology for NextGen with a framework for system maintenance and upgrades. This could be compared with how adequate future through-put at major airports can be achieved without implementing NextGen.

Moreover, highly detailed and complex data sources are available for examining the perfor-mance and needs of the airports, marine ports, and inland waterways and ports operating in the U.S. However, those that are publicly avail-able are often out of date, too abstract, and miss or try to fill in information about various com-modity groups (especially bulk commodities). Commodity-specific data on domestic air cargo are not readily available. These factors make comprehensive, data-based analyses difficult and challenging to undertake.

Even when information about the capacity, operations, current and future freight volumes, and potential deficiencies of the multimodal transportation system are developed, there will still be insufficient understanding of the effects of investment on improved system capacity and operations, or the consequences of cost savings attributable to these investments, to adequately assess the national or regional economic effects of such investments. Finally, there is a need to consolidate investments patterns to analyze past investments made for general aviation airports, which may be best accomplished by surveying state departments of aviation.

MovinggoodstoandfrominlandmarketsandairportscontinuestoposeasignificantchallengeinsomeofthemorecongestedU.S.metropolitanregions—typicallythosewherethelargestairportsandmarineportsarelocated.


commodity portion were estimated for the port regions by using the multimodal Freight Analysis Framework data.

Land Congestion. Economic costs of port-related traffic congestion were calculated using the Texas Transportation Institute’s Annual Urban Mobility Report Data, USACE port data regarding import/export tonnages, and Freight Analysis Framework data to estimate cost and ton levels for estimates of dollar per ton by commodity. Future values were forecasted by using the ground transportation cumulative truck congestion estimates developed from 2010 HERS-ST used for the Failure to Act surface transportation report.

Freight. The impact of degraded infrastruc-ture for each mode in this study is based on changes in generalized shipping costs, and is based on the framework of the TREDIS Freight Module (Transportation Economic Develop-ment Impact System). Generalized costs are calculated separately for bulk and containerized commodities, and they include marine shipping costs; inland truck, rail, and barge shipping costs; travel time costs for the inland moves (includ-ing delay from highway congestion and inland waterway deficiencies); and travel time penalties for intermodal transfers. Highway congestion in metro areas surrounding ports was derived from, and therefore has a slight overlap with, the findings in Failure to Act: The Economic Impact of Current Investment Trends in Surface Transpor-tation Infrastructure.

Economic Impacts. An economic model of the U.S. economy is used to calculate how households’ income and expenditure patterns, as well as business productivity, are affected and lead to changes in the nation’s competitiveness and economic growth. The results are provided in terms of long-term changes in jobs and income in the U.S. This study uses the LIFT model (Long-Term Inter-Industry Forecasting Tool), a national policy and impact forecasting system developed by INFORUM, a research center within the Department of Economics at the University of Maryland, College Park.

The following are the primary data sources and methods used in this study:

Airports. Needs were extrapolated from estimates for future needs developed by the FAA and the ACI-NA through 2015. The ACI-NA survey was used for hub airports because it is based on a survey of all needs reported by airport officials, while the FAA report is based on antici-pated AIP funding requests. ACI-NA, however, accepts the FAA estimates for commercial, non-hub, reliever, and GA facilities. The history of investment was gleaned from the FAA Form 127 database, which reports actual investments made at all commercial airports. These invest-ment levels include public and private funding sources. To complete estimates of capital investment needs, FAA documents and interviews were used to estimate the cost and schedule of NextGen. Combined, the 2010 FAA study of the cost of congestion, historical data on enplane-ments, and origin and destination movements and aviation forecasts is the basis for estimating the cost of the capital gap.

Inland Waterways. Data drawn from the Waterborne Commerce Statistics Center of the U.S. Army Corps of Engineers (USACE) were utilized for lock performance characteristics and specifics regarding through tonnages. USACE’s public domain database was used to supply O-D matrix by commodity to feed to network (supplied via the NTAD website, USACE web-site). Forecasted values were based on a two-part function using linear extrapolation of historical network unavailability hours out to 2025, and then instituting a logarithmic decay to simulate a decrease in demand as a result of steep increase in unavailability.

Marine Ports. USACE Waterborne Commerce Statistics Center data were used to break out bulk commodity tonnages and trips by draft for port regions. For container traffic, a port database developed by the Institute for Water Resources was utilized. Future values for bulk

★|abouttHestudY


★|endnotes1. U.S. Waterborne Commerce Statistics Center, “2010 Summary of Domestic and Foreign Waterborne Commerce,” May 2012.

2. Both the 2007 U.S. Commodity Flow Survey and the 2010 (provisional) Freight Analysis Framework link air freight to truck, and do not mention rail in the context of air cargo.

3. See Mathew Coogan et al., Ground Access to Major Airports by Public Transportation, ACRP Report 4, Airport Cooperative Research Program of the Transportation Research Board.

4. An “enplanement” is a passenger boarding. The FAA uses revenue passenger boardings (enplanements) and cargo data to calculate the apportionments that determine appor-tionment formula for the Airport Improvement Program.

5. Source: Freight Analysis Framework (FAF) (version 3), Data Tabulation Tool, July 2012 (http://faf.ornl.gov/fafweb/Extraction4.aspx). For 2010, FAF reported a total value of $146 billion in 2007 dollars, which is equivalent to $152 billion in 2010 value.

6. U.S. Army corps of Engineers, U.S. Port and inland Waterways Modernization: Preparing for Post-Panamax Vessels, June 2012.

7. As reported by airports to the FAA on Form 127, these expenditures represent revenues drawn from all sources — including federal, state, and local governments, passenger facility charges, airport revenues, and capital bonds. Although ASCE and FAA project needs for all airports, Form 127 accounts for spending only for commer-cial airports. Accordingly, needs and expenditures cited in this paragraph reflect commercial airports only, and do not included reliever and other general aviation airports.

8. US Government Accountability Office, Air Traffic Control Modernization Management Challenges Associated With Program Costs and Schedules Could Hinder NextGen Implementation, Report to Congressional Committees, February 2012. According to an alternate analysis, imple-menting the highest performance levels envisioned in the IWP for ground and aircraft capabilities by 2025 could increase NextGen’s costs significantly beyond the initial cost estimate of $40 billion (e.g., in some scenarios that require every aircraft to be equipped with extensive avionics in a shorter time frame, estimated costs can go as high as $160 billion). If the highest performance levels are implemented over the longer period, by 2035, the cost estimates would be lower, but still would be considerably higher than $40 billion.” Gerald H. Dillingham, Ph.D., Director of Physical Infrastructure Issues, US Government Accountability Office, letter to The Honorable John L. Mica and The Honorable Thomas E. Petri, November 22, 2010, Subject: Integration of Current Implementation Efforts with Long-term Planning for the Next Generation Air Transportation System.

9. American Association of Port Authorities, “U.S. Port Infrastructure Spending Survey 2012 – 2016,” June 2012.

10. The $92 billion is projected over 30 years. This is based on average annual needs estimated by the US Corps of Engineers assuming that a state-of-good repair is main-tained for the existing system. Given that substantial additional navigational dredging will be required, and that this will increase on-going operations and maintenance requirements, these estimates are very likely to be lower than required to maintain future improvements to the marine navigation system.

11. See the U.S. Army Corps of Engineers’ Civil Works budgets and five-year plans at www.usace.army.mil/Missions/CivilWorks/Budget.aspx.

12. The projections are based on the Corps’ estimates of annual additional needs from 2011 to 2020.

13. “U.S. Port and Inland Waterway Modernization Strategy: Options for the Future,” presented at Marine Board Spring Meeting, May 15, 2012.

14. This is assuming that the other modes are viable alternatives, and not functioning below “minimal tolerable conditions.”

15. Examples including rushing parts to repair broken (and therefore idle) equipment, incurring hourly crew costs over long distances, spoilage/breakage/insurance and packaging costs due to moving fragile goods (or expansive drugs) overland.

16. This cost increase is in real value after inflation. Source: LIFT model, University of Maryland, INFORUM Group, 2012.

17. CDM Smith, prepared for ACI-NA, The Economic Impact of Commercial Airports in 2010, January 2012.

18. U.S. Department of Commerce, March 12, 2012

19. Freight Analysis Framework, developed by Developed by the Center for Transportation Analysis in the Oak Ridge National Laboratory under funding from the Federal Highway Administration.

20. U.S. Army Corps of Engineers, June 20, 2012.

21. See Coogan et al., Ground Access to Major Airports; note that both the 2007 U.S. Commodity Flow Survey and the 2010 (provisional) Freight Analysis Framework link air freight to truck, and do not mention rail in the context of air cargo.

22. Source: NPIAS Report to Congress 2011-2015.

23. One takeoff and one landing equal two operations. Sources: FAA, “APO TAF Operations and Enplanements Data Summary, 2011-2040”; calculations by the EDR Group.

24. U.S. Waterborne Commerce Statistics Center, “2010 Summary.”

25. Freight Analysis Framework projections, Federal Highway Administration, U.S. Department of Transportation, last modified February 27, 2012, scaled to data reported by the Bureau of Transportation Statistics, 2001-11.


26. Weight with a TEU can vary greatly, depending on the commodity packed and the volume filled.

27. Ibid.

28. Source: U.S. Department of Transportation Freight Analysis Framework, 2010; calculations

29. Data from data from U.S. Census Bureau, Foreign Trade Division and provided through WiserTrade.com

30. TEUs are twenty-foot equivalent units, a unit of measurement equal to the space occupied by a standard 20-foot container; TEUs are used in stating the capacity of container vessel or storage area. American Association of Port Authorities, Glossary of Maritime Terms, available at www.aapa-ports.org

31. FAA, Grant History Summaries. www.faa.gov/airports/aip/grant_histories. In addition, a category “other” averaged $472 million per year, and includes block grants to states, grants to multiple airports, and miscellaneous. Some of this funding may also be channeled to airports.

32. ACI-NA also assumes a “real” 2% annual construction escalation factor, whereas the FAA’s NPIAS estimate is based on constant dollars without assuming that construc-tion costs will increase more than the general economy. However, Failure to Act analyses use constant dollars.

33. Source: Airports Council International - North America survey and FAA NPIAS, reported by Airport Capital Development Costs 2011 – 2015, Airports Council International-North America, February 2011.

34. Ibid.

35. Ibid., 19. Retrieved from the FAA’s Web site, www.faa.gov/nextgen/implementation/plan.

36. Ibid., 20.

37. Email correspondence from Heather M. Krause, assistant director, Government Accountability Office, to Susan Jones Moses, EDR Group, May 11, 2012.

38. Email from Michael R. Garvin Jr., executive director, NextGen Institute, FAA; May 10, 2012. The $160 billion figure comes from risk mitigation and is the estimate if everything goes wrong.

39. See the U.S. Army Corps of Engineers’ Civil Works budgets and five-year plans.

40. The Corps’ Inland Waterway construction projections are based on a yearly outlook from 2011 to 2030, but since the gap was not addressed in 2011, this study pushes the year to 2012-31 and holds these annual averages constant through 2040. Deep Water costs are estimated based on average annual expenditures for 2012 through 2020 as presented by the Corps in May 2012. The average annual public funding need is $3.2 billion, compared to the planned private sector investments of approximately $9 billion per year.

41. “U.S. Port and Inland Waterway Modernization Strategy.”

42. See www.ndc.iwr.usace.army.mil/lpms/ lock2011webunavail.htm.

43. Source: U.S. International Trade Commission, Bureau of the Census, assembled by WiserTrade (2011 data).

44. Inland Marine Transportation Systems (IMTS) Capital Projects Business Model, Final Report, Revision 1, prepared by IMTS Capital Strategy Team, April 13, 2012.

45. Source: U.S. Port and Inland Waterways Modernization: Preparing for Post-Panamax Vessels, Institute for Water Resources, U.S. Army Corps of Engineers, June 20, 2012.

46. Ibid.

47. Drawn from U.S. Army Corps of Engineers, U.S. Port and Inland Waterways Modernization, June 2012, which utilized 2010 data.

48. American Association of Port Authorities, Glossary.

49. The Army Corps of Engineers typically pays between 35 percent and 60 percent for channels dredged deeper than 45 feet, with the local port authority paying the balance. The local port authority pays all costs of dredging channels that are less than 45 feet deep under the Water Resources Development Act of 1986.

50. “Total Delay Impact Study: A Comprehensive Assessment of the Costs and Impacts of Flight Delay in the United States. October 2010,” sponsored by the FAA through its National Center for Excellence for Aviation Operations Research.

51. U.S. Travel Association, travel horizons, July 2009.

52. EDR Group calculations, based on U.S. Army Corps of Engineers data, 2009; and Freight Analysis Framework forecasts.

53. EDR Group calculations, based on U.S. Army Corps of Engineers Institute for Water Resources, Container Port Capacity Study, prepared by the Tioga Group, December, 2010 (updated, May 2012).

54. U.S. Air Travel Association.

55. Estimated in ACRP Report 4, Ground Access to Major Airports by Public Transportation, Transportation Research Board of the National Academies

56. Due to the overlap if impacts caused by ground congestion effects, the impacts of air and waterborne infrastructure are not added together.

57. This is assuming that the other modes are viable alternatives, and not functioning below “minimal tolerable conditions.”

58. The cost increase is in real value after inflation. Source: LIFT model, University of Maryland, INFORUM Group, 2012.

59. These issues were explored in an earlier report in the Failure to Act series on surface transportation (www.asce.org/failuretoact).

aBoUT eDR GRoUp

Economic Development Research Group, Inc. (EDR Group), is a consulting firm focusing specifically on applying state-of-the-art tools and techniques for evalu-ating economic development performance, impacts, and opportunities. The firm was started in 1996 by a core group of economists and planners who are specialists in evaluating the impacts of transportation infrastruc-ture, services, and technology on economic development opportunities. Glen Weisbrod, the president of EDR Group, was appointed by the National Academies to chair the Transportation Research Board’s Committee on Transportation and Economic Development.

The transportation work of EDR Group includes studies of the economic impacts of road, air, sea, and railroad modes of travel, including economic benefits, develop-ment impacts, and benefit/cost relationships. The firm’s work is organized into three areas: (1) general research on investment benefit and productivity implications; (2) planning studies, including impact, opportunities, and benefit/ cost assessment; and (3) evaluation, including cost-effectiveness implications.

EDR Group is a national leader in evaluating the economic development consequences of transportation projects and policies. The firm has undertaken several national-level research studies for the Transportation Research Board’s Cooperative Research Program, including NCFRP, that have investigated the relation-ship between freight infrastructure and economic development, including an assessment of the extent to which rail freight policies may help stem the deteriora-tion of existing highways, NCHRP Project 8-42, Rail Freight Solutions to Roadway Congestion: A Guidebook for Assessing Rail Freight Solutions to Roadway Congestion; Improving Return on Investment Evalua-tion for Transportation Projects, NCHRP Project 8-36 (62); and a study of methods for the monetary valuation of performance measures, NCHRP Project 8-42(61), Monetary Valuation of Quality of Life Impact.

Senior staff at EDR Group have conducted studies from coast to coast in both the U.S. and Canada, as well as in Hong Kong, Japan, Australia, England, Scotland, Finland, the Netherlands, India, and South Africa. EDR Group is also nationally recognized for state-of-the-art analysis products, including TREDIS (Transportation Economic Impact System). They are leaders in the evaluation of economic development opportunities and assessment of freight infrastructure impacts across the nation and the globe, helping public and private clients to prioritize their transportation and infrastructure investments in aviation, marine, and surface modes, as well as the study of inter-modal impacts and opportunities.

acKnoWLeDGmenTS

EDR Group wishes to thank Brian Pallasch and Emily Fishkin, as well as ASCE’s Committee on America’s Infrastructure, for the opportunity to conduct this research. We gratefully acknowledge the assistance of Jeffrey Werling, Ron Horst, and Doug Mead of the University of Maryland Economics Department. In addition, we wish to thank to thank Eliot Black and Robert Samis of the FAA, who pointed us to core aviation data sets, as well as Jane Calderwood and Liying Gu of the Airports Council International and Jeffrey Gilley of the National Business Aviation Association, who generously provided data gathered by their organizations. Research on NextGen was greatly assisted by Michael Garvin of the FAA’s NextGen Institute and Heather Krause of the U.S. Government Accountability Office. EDR Group would also like to thank Aaron Ellis, Scott Brotemarkle and David Sanford of the American Association of Port Authorities for sharing data and advanced materials.

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