Goods MovementChallenges. Opportunities. Solutions

Goods MovementChallenges. Opportunities. Solutions

Hasan Ikhrata –Director of Planning & Policy Southern California Association of Governments

The Regional Planning Agencyfor Southern California

The Regional Planning Agencyfor Southern California

15th largest economyin the world

15th largest economyin the world

Shares the characteristics of many nations

Shares the characteristics of many nations

Experiencing Explosive GrowthExperiencing Explosive GrowthPopulation is expected to grow by more than

over the next two decades to 23 million

38%more than

today

6,000,000

9,000 lane miles of freeway9,000 lane miles of freeway

Long BeachSan Pedro

Hueneme

Nation’sGlobal Gateway for TradeNation’sGlobal Gateway for Trade

Four major airportsFour major airports

Ports handle one third of all container traffic in U.S. and nearly two-thirds of containers from Asia

Over 70% of imports pass through to other markets

9.5 13.2

18.3

36.0

42.5

Revised Est.

44% US Import Market Share

25% US Export Market Share

1999 2005 2010 2020 2030

6.99.0

12.3

23.4

Original Estimate

In Million TEU’s

Source: POLA, POLB

Total LA/Long Beach Container GrowthProjected to Triple in 25 Years

Total LA/Long Beach Container GrowthProjected to Triple in 25 Years

25.2

What Does the Logistics Infrastructure and Work

Force in the Region Offer Shippers That Other Destinations Don’t?

What Does the Logistics Infrastructure and Work

Force in the Region Offer Shippers That Other Destinations Don’t?

Exactly What Shippers WantExactly What Shippers Want

Goods Made in AsiaShipped in ContainersUnloaded at our PortsTransported on TrainsAnd by TrucksTo Distribution CentersTo Arrive at Retailers“Just In Time”

Just a Couple of Problems

Just a Couple of Problems

Highway CongestionHighway Congestion

Worst in nation since 19822000 2010 20252020

10%

20%30%

40%50%

60%70%

80%

Projected Growth

population

auto travel

truck travel

Rail CongestionRail Congestion

Source: SCAG Los Angeles - Inland Empire Railroad Mainline Advanced Planning Study

YearFreight Trains

per Day

2000

2010

2025

112

165

250

123% Increase

Estimated Risk of Cancer from Airborne Toxics: Excluding Diesel

Estimated Risk of Cancer from Airborne Toxics: Excluding Diesel

Source: SCAQMD, Multiple Air Toxics Exposure Study II, March 2000

Cancersper million

100-200

200-300

300-400

400-600

600-800

Source: SCAQMD, Multiple Air Toxics Exposure Study II, March 2000

Cancers per million200-300

300- 400400-600

600-800

800-1000

1000-1200 Over1200

Estimated Risk of Cancer from Airborne Toxics: Including Diesel

Estimated Risk of Cancer from Airborne Toxics: Including Diesel

What We Need To DoWhat We Need To Do

Build Dedicated Truckway SystemBuild Dedicated Truckway System

I - 71018.0

miles

East/West37.8

miles

I - 1586.0

miles

2 Lanes inEach Direction

Hobart

LATC

E. LA

Fullerton

Atwood

Pomona

Riverside

Colton

East-West Corridor

Alameda Corridor

184 center-trackmiles, 390 daily trains by 2025

Barstow

Indio

Future Improvements

Improve Rail CapacityImprove Rail Capacity

Mitigate Environmental ImpactsMitigate Environmental Impacts

The CostThe Cost

Dedicated Truck Lanes

Additional Rail Tracks

$20.2 Billion$6.0 Billion

$36.2 Billion$36.2 Billion

Environmental Mitigation $10.0 Billion

Can some of the new infrastructure be

financed with user fees?

Can some of the new infrastructure be

financed with user fees?

At what point would fees

and tolls used to finance

infrastructure divert

business elsewhere?

At what point would fees

and tolls used to finance

infrastructure divert

business elsewhere?

LA/LB

Dr. Robert C. LeachmanU. C. Berkeley

Leachman & Assoc. LLC

A Study to determine port

demand elasticity

September 2005

The Elasticity StudyThe Elasticity Study• Interviewed

– Importers– Steamship Lines– Port Terminal Operators– Railroads and Trucking companies– Logistics companies

• Analyzed current:– trade flows and steamship services– steamship, rail and dray rates– labor and management practices at ports– third party logistics operations

Study Conducted by Leachman and Associates LLC, September 2005

Most Cargo Coming to LA/LB Ports Passes Through to Other Markets

Most Cargo Coming to LA/LB Ports Passes Through to Other Markets

Los AngelesLong Beach

Locally consumed or

produced23%

Discretionary77%

(52% transloaded)

Deep Harbors and Landside Facilities Make LA/Long Beach the Preferred Destination

Deep Harbors and Landside Facilities Make LA/Long Beach the Preferred Destination

Vancouver, BCSeattle

Tacoma

Oakland

Los AngelesLong Beach

Houston

SavannahCharleston

Norfolk

NY/NJBrunswick

Post-Panamax ships are TOO LARGE to transit the

Panama Canal

Can’t accommodatepost-Panamax ships

Limited landside intermodal capacity

The Study AnalysisThe Study Analysis

• Distributed volume for 102 major importers among all regions proportional to their purchasing power

• Allocated import volumes among ports and modes as to minimize total transportation and inventory costsfor each importer

Study Conducted by Leachman and Associates LLC, September 2005

At what price point would using the

LA/Long Beach ports stop making sense?

At what price point would using the

LA/Long Beach ports stop making sense?

Study Conducted by Leachman and Associates LLC - Sept. 2005

If Fees on 40-foot Containers Were Applied….

If Fees on 40-foot Containers Were Applied….

Fees Imposed with NoInfrastructure Improvements

Fees Imposed with NoInfrastructure ImprovementsFEUs in

millions

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2004

Ann

ual V

olum

e

$30 60 90 120 150 180 210 240 270 300 330 360 390 420 450 480Container Fee (per FEU) in dollars

Total Volume

Trans Loading Volume

Fairly inelastic until fees in the $180 range

are introduced

Much more inelastic than

direct shipping

Container Fees Used to Finance Congestion Relief

Container Fees Used to Finance Congestion ReliefFEUs in

millions

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2004

Ann

ual V

olum

e

$30 60 90 120 150 180 210 240 270 300 330 360 390 420 450 480Container Fee (per FEU) in dollars

Total Volume

Trans Loading Volume

Congestion relief makes ports more attractive

At $200, volume is only 4.3% below No Fee:No Improvement Scenario

Trans-load volume is even higher

Estimated Private SectorLevel of Investment

Estimated Private SectorLevel of Investment

Dedicated Truck Lanes

Additional Rail Tracks

$60 - $70 per FEUplus $0.86 per mile

Total with Environmental

Mitigation ($10B)

Total Highway & Rail System

$15 - $30 per FEU

$120 - $130 per FEUplus $0.86 per mile

$160 - $170 per FEUplus $0.86 per mile

Investment Levels Fall Within Study Parameters for Acceptable Rate of Return

What are speed and reliability worth to

users of the system?

What are speed and reliability worth to

users of the system?

The Value of TimeThe Value of Time

$25 to $200 per hour depending on cargo

Trucking Industry Value of

time

FHWA Freight Management and Operations: Measuring Travel Time in Freight-Significant Corridors, www.ops.dot.gov/freight/time.htm

Travel Time In the Year 2030Travel Time In the Year 2030AM Peak Travel Planning Time* in Hours

Hours:

LA Business District

Ontario Victorville

2.0 4.7 7.6

*

% more time

Tim

e of

Day

(non

-hol

iday

wee

kday

s)

9 PM

5 AM6 AM7 AM

12 PM1 PM

5 PM6 PM7 PM

8 AM9 AM

10 AM11 AM

2 PM3 PM4 PM

8 PM

10 PM10 20 30 40 50 60 70 80 90 100 110

Buffer Time to ensure on-time arrival for most trips

Travel Time

Mobility Monitoring Program Texas Transportation Institute. FHA

Planning Time in 2030 Index by Time-of-Day

Planning Time in 2030 Index by Time-of-Day

In the Year 2030 with Truck LanesIn the Year 2030 with Truck LanesAM Peak Travel Planning Time in Hours

Hours:

LA Business District

Ontario Victorville

.5 1.5 4.8

Cash Value of Time Savingswith Truck Lanes

Cash Value of Time Savingswith Truck Lanes

AM Peak Travel @$73 per hour

Value:

LA Business District

Ontario Victorville

$103 $232 $305

Extra Trip

Potential 3.4 3.1 2.3

Railroads Will Receive Great Benefits from Capacity Improvements

Railroads Will Receive Great Benefits from Capacity Improvements

Hours SavedEn Route

Colton Crossing

*

BNSF Railway

Union Pacific

2.9

3.1

Percent Faster

59%

65%

Hours SavedIn Delay

2.9

3.0

Percent Reduction

86%

93%

BNSF RailwayUnion Pacific

2010Baseline

206197

2025 With Improvements

3014

Percent Reduction

86%93%

HoursSaved

2.93.0

Minutes Delay Per TrainMinutesSaved

177183

BNSF RailwayUnion Pacific

300285

2025 With Improvements

12499

Percent Faster

59%65%

HoursSaved

2.93.1

MinutesSaved

176186

Flow Time Per Train

Note: Without improvements nothing will be moving in 2025

Leachman & Associates LLC

2010Baseline

From Ports to Colton Crossing

Time Saved with Rail Capacity Improvements

Time Saved with Rail Capacity Improvements

1. The LA/LB ports offer shippers a competitive advantage

Quick SummaryQuick Summary

2. Transportation infrastructure improvements would offer rail, truck, and shipping companies significant cost and time savings

Good Jobs &Growing Sector

Good Jobs &Growing Sector

Path to Prosperity:The Right Kind of Jobs

Path to Prosperity:The Right Kind of Jobs

Southern California Based

Blue Collar

Good Entry Level Pay

Defined Skill Ladder

On the Job Learning

Tech Dependent

Logistics JobsLogistics Jobs

Wholesale TradeTruck Transportation

Transportation SupportCouriers

General WarehousingAir Transportation

Rail TransportationWater Transportation

In 2003 352,37354,50452,66230,09028,44225,4662,9521,789

548,278Source: Quarterly Census of Employment Wages, CA EDD, 2004

Total

Share of SCAG JobsShare of SCAG Jobs

0%

2%

4%

6%

8%

10%

12%

14%

16%% SCAG Jobs

Leisure and

Hosp.

9.6

Other Services

3.5

Educ. & Health

Services

10.6

Constr.

4.8

Prof. & Bus.

Services

14.1

Manf.

12.1

Logis-tics

8.1

Gov’t.

14.9

Financial Activities

7.5

Motion Picture

1.7

1 out of 12 jobs in 2003

Logistics PayLogistics Pay

Rail TransportationAir Transportation

Transportation Support Wholesale Trade

Water Transportation General WarehousingTruck Transportation

Couriers

In 2003 $55,344$51,655$49,829$46,892$40,988$37,938$37,449$34,049

Source: Quarterly Census of Employment Wages, CA EDD, 2004

$45,314 Weighted AverageTotal

Annual

Compared to Other SectorsCompared to Other Sectors

Average weekly pay for all industries is $749

0$

$200

$400

$600

$800

$1000

$1200

$1400

$1600$ Weekly Pay

Leisure and

Hospitality

$400

Other Services

$413

Educ. & Health

Services

$718

Constr.

$777

Prof. & Bus.

Services

$811

Manf.

$843

Logistics

$847

Gov’t.

$866

Financial Activities

$1194

Motion Picture

$1353

1 of highest paying

What Do We Need?What Do We Need?

Federal Involvement and Support

Private Sector Leadership

Political Leadership

THANK YOUTHANK YOU