LEONARD TRANSPORTATION CENTER FORUMPANEL: THE FUTURE OF GOODS DISTRIBUTION

AND INLAND PORTS IN THE INLAND EMPIREMay 4, 2007

Southern California’s Freight Movement

Challenge

Southern CaliforniaNational Freight Gateway

Value of Imports Moving Through the Los Angeles-Long Beach Ports

by Congressional District

Southern CaliforniaTransportation Today:

Texas Transportation Institute, 2005 Urban Mobility Report

SCAG Region 2030 Forecast Population

& Employment Growth (Millions)

20002030 Increase

Population 16.8 22.9 37%

Employment 6.8 10.5 54%

Like adding two Chicagos…

Population growth to 2030

Employment growth to 2030

• Federal policy supports global trade

• Export manufacturing jobs to overseas sources of cheap labor

• Import manufactured goods from overseas

• Price of imported goods fails to internalize transportation, environmental, and social costs

The Recipe

Competitive Position

Competitive Position

Competitive Position

1999 2005 2010 2020 2030

9.5

13.2

18.3

36.0

44.7

6.99.0

12.3

23.4

Original Est.

Revised Est.

In Million TEU’s

44% US Import Market Share25% US Export Market Share

Source: POLA, POLB

LA-Long Beach Projected Container

Growth

USDOT Freight DemandForecast to 2020

1,4371,437

6,1656,165

(TEUs in thousands)

20202020

20042004

HoustonHouston1,0101,010 2,1522,152

MiamiMiami

2,0432,043 3,3823,382

OaklandOakland

4,4784,478

15,83515,835

NY/NJNY/NJ

1,8091,8095,5665,566

VirginiaVirginia

1,7981,7984,3964,396

TacomaTacoma

1,7761,776 2,5572,557

SeattleSeattle

1,6621,662

9,4209,420

SavannahSavannahLA/LBLA/LB

59,42059,420

13,10113,101

From presentation by Jeff Shane, Under Secretary for Policy, USDOT, April 3, 2006

1,8601,860

6,6396,639

CharlestonCharleston

0 5 10 15

LA-Long BeachPorts

Port of Oakland

TEUs (millions)

Local

Out-of-region

CA Goods Mvmt. Action Plan and SANBAG

Serving the NationLocal vs. Interregional

Freight

0% 20% 40% 60%

O/D is Local

Transloaded; O/DoutsideRegion

37%

40%

23%

TransportedIn original container to/fromExternal O/D

Leachman and Associates LLC -Port and Modal Diversion for SCAG

Where’s It All Going?

Transloading of weekly shipments from Asia affords

large, nation-wide retailers an 18-20% reduction in their total

pipeline plus safety stock inventory compared to direct

shipping from Asia.

The Transloading Advantage

Assuming a 6% average error in nationwide one-week-ahead sales forecasts

Leachman & Associates LLC

So. Cal inland transloading & distribution facilities:1.5 B sq.ft. of roof = 15% of nation, 60% of west

coast

Ontario/ Mira Loma, San Bernardino and Riverside Counties. Ontario Airport for scale

Where will the next 1.5B sq. ft. go?

LOGISTICS: Economic Opportunity…(Dr. J. Husing)

Good Entry Level Pay

Defined Skill Ladder

On The Job Learning

Blue Collar

Heavy Use of Information Technology

Has To Be In Southern California

Logistics: Highest Blue Collar Avg. Pay Level

$40,439$43,871 $45,314

Construction Manufacturing Logistics

Source: Quarterly Census of Employment Wages, CA Employment Development Department, 2004

Exhibit 13.-Average Annual Wage & SalaryBlue Collar Sectors, SCAG Region, 2003

FOUND: A Replacement For Manufacturing

Left Unaddressed, Landside Congestion and Unhealthful Air Will Bring Port Growth

to a HaltBy 2025:

Trucks: Projected to nearly double

Trains: nothing will move without improvements

And key findings of the Leachman Port and Modal Elasticity Study are:

1.Inadequate landside freight capacity will strangle port growth absent major improvements

2.Port traffic is more likely to be diverted by failure to address landside congestion than from modest container fees used to improve reliable throughput

34,000

50,000

92,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2000 2010 2020

Source: Gill V. Hicks Associates, more recent data: 2005=54,600, 2030=142,000

Daily Truck Traffic to/from LA/LB Ports Will Grow

Dramatically

Inland Empire: Highest HHDT on-system mileage in California

Train Delays on Existing Trackage

Forecast Train Delay

(Year 2000 passenger trains and no system capacity improvements)

Year Train TypeAverage Delay per Train

BNSF Freight 31.9 minutes

UP Freight 30.4 minutes2000

Year Train TypeAverage Delay per Train

BNSF Freight 206.3 minutes

UP Freight 196.9 minutes2010

Source: Leachman and Associates Mainline Rail Study for SCAG

Intermodal Yard Capacity and Demand (Millions of Lifts1)

2001 2005 2010 2020

Total Demand

3.27 4.29 6.95 15.01

Capacity

4.56 5.882 5.88 5.88

Surplus(+)Deficit (-)

+1.29 +1.59 -1.07 -9.131 One lift = 1.85 TEUs 2 BNSF’s Commerce facility to added 200,000 Dec.

2002 and Pier 400 added 1.12 million lifts 2004Source: Gill V. Hicks and Associates

Community Impacts: grade crossing delay…

The Pollutants Freight Movement Creates are

Jeopardizing Our Health

The Region continues to have the worst air quality in the U.S.

Diesel Particulates…Diesel Particulates…

…comprise 71% of the major air pollutants

contributing to cancer risk in

the South Coast Air

Basin

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

Estimated Risk of Cancer from Airborne Toxics: Excluding Diesel

Cancers per million

Estimated Risk of Cancer from Air Toxics: All Emission Sources

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

Cancers per million

South CoastSouth Coast82%82%

Rest of CaliforniaRest of California18%18%

South CoastSouth Coast52%52%

Rest of NationRest of Nation48%48%

Population-Weighted Exposure Above NAAQS Based on2000-2002 AIRS Data

PM2.5 Disproportionate ExposureSouth Coast Air Basin

Source: California Air Resources Board Source: California Air Resources Board

SCAB Cases/Year due to PM2.5 *

Premature Deaths 5,400Hospitalizations 2,400Asthma & Lower Respiratory 140,000 SymptomsLost Work Days 980,000Minor Restricted Activity Days 5,000,000

•1999-2000 Air Quality Data

Source: California Air Resources Board

Recent CARB Assessment

of PM Health Effects

0

200

400

600

800

1000

1200

2002 2005 2008 2011 2014 2017 2020 2023

Off-Road

On-Road

Area

Point

PM2.5 Carrying Capacity (443)

8-Hour Ozone Carrying Capacity (114)

NOx Emissions Trend By Source Category and Carrying Capacity

How Are We Going to Attain PM2.5 Reduction Targets? How Are We Going to Attain PM2.5 Reduction Targets?

TONS PER DAY

2014 Baseline Reduction Needed

NO

VOC

SO

PM2.5

x

x

654

527

43

102

(31%)

(11%)

(57%)

(14%)

203

59

24

14

Percent

Draft 2007 AQMPDraft 2007 AQMP

Tons/Day

Target

AQMD Stationary Measures

CARB’s Strategy

Unknown

203

-6

-125

-72

2014 PM 2.5 Attainment

Draft 2007 AQMPDraft 2007 AQMP

Tons/Day

NO Target

AQMD Stationary Measures

CARB’s Strategy

AQMD Additional Measures

Unknown

383

-8

-139

-57

-179

2023 OZONE Attainment

x

Model Year Group

EMFAC2002 (g/mi)

EMFAC(wd) (g/mi)

Ratio (Ewd/E2002)

Pre-1975 to 1990

29.1 to 17.5

24.0 0.8 to 1.4

1991 to 2002 17.5 to 14.0

21.6 1.2 to 1.5

2003 to 2006 7.0 15.2 2.2

2007 to 2009 4.0 9.2 2.3

2010+ (w/OBD)

1.0 3.2 (2.7) 3.2 (2.7)

Reflects Base Emission Rates and Deterioration at 500,000 milesSource: California Air Resources Board 2006

HHD Diesel Truck NOxEmission Factor Comparison

Reduction Responsibility By Agency

VOC

84%

16%

Total Reduction =116 TPD

CARB/USEPA

District

NOx

98%

2%

Total Reduction = 383TPD

CARB/USEPA

District

$30 60 90 120 150 180 210 240 270 300 330 360 390 420 450 480

FEUs in millions

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

200

4 A

nn

ua

l Vo

lum

e

Container Fee (per FEU) in dollars

Total VolumeTrans Loading Volume$200

Minimal Decrease in Total Volume

Slight Increase inTrans Loading Volume

Assumption: Fees on inbound loaded

containers only

SOLUTIONS?Container Fees Used to Finance Congestion Relief

SOLUTIONS?Dedicated High-Speed, Clean, Grade

Separated Freight Corridors and Inland Ports

Solutions will require:• High-Level commitment to collaborate among

regional, state, and federal agencies (e.g., the MOU)

• Extensive private sector involvement and financing

• Community involvement (ultimately, support)

• A Win-win outcome:

- attainment of healthful air quality

- mitigation of community impacts

- private sector value in return for investment

Challenges Summarized• Finance – requires new funding, users and

beneficiaries must contribute• Environment – timely AQ attainment

despite 3x increase in shipping & freight throughput

• Performance – assure infrastructure benefits

• Communities – acceptance and support essential to progress

• Institutions – unclear implementation responsibilities, limited federal recognition

• Implementation – in one decade, not three

Efforts completed or in progress• Multi-county Goods Movement Action Plan

CTCs, SCAG, Caltrans• State Goods Movement Action Plan

California BTH, CalEPA• Emission Reduction Plan for Ports and Goods Movement in California

California Air Resources Board• San Pedro Bay Ports Clean Air Action Plan

Port of LA, Port of LB• Freight Movement Executive Roundtable

Execs. From shippers, railroads, trucking, CTCs, SCAG• Inland Empire Goods Movement Coalition / So. Cal. Leadership

Bi-county private sector group in alliance with LA and Orange Co. interests• I-15 Comprehensive Study (complete)

SANBAG, RCTC, Caltrans• I-710 Project Development

MTA, Caltrans, Gateway Cities• Port and Modal Elasticity Study (complete)

Leachman & Associates for SCAG• Mainline Rail Study (complete)

Leachman & Associates for SCAG• Logistics & Distribution: An Answer to Regional Upward Social Mobility

(complete) Dr. John Husing for SCAG

• Alameda Corridor East grade separations SANBAG, RCTC, Ontrac, ACE Construction Authority

What we ask…

• Participation in a collaborative process, convened by the transportation agencies, ports, communities, and the State and federal governments, to formulate and efficiently implement a strategy to address the challenges and grasp the opportunities facing the nation’s largest international freight gateway

PRINCIPAL CONVENORS

ROUNDTABLE

/

-

USDOT Congestion Strategy

FacilitationTeam

AdministrationSCAG

FEDERAL STATESCAGSCAG

Ports

Multi-County Freight Infrastructure Planning

Dialogue/ Facilitation/ Brainstorming

State GMAPProcess

Information management/sharing

Coordination of regional environmental studies

Transportation/Blue print/ Open-space Program

Regional Institutional implementation arrangements

Transportation/ Air Quality PartnershipTransportation/

W.Q. Partnership

Transportation/Blue print/community partnerships

Ontario Center/ I-10 Blue-print Demonstration Project

Projects in Process

CTCs

Southern California National Freight GatewayCollaborative Strategy

Way of working:

• Scoping• Respectfully

stitching together the quilt

• Promoting cooperation & collaboration regarding initiatives