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Date: Nov. 21, 2002
Contacts: Barbara J. Rice, Deputy Director
Corbin Arberg, Media Relations Assistant
Office of News and Public Information
(202) 334-2138; e-mail <>

For Immediate Release

Publication Announcement

Better Use of Freight Transportation System, Smarter Investments
Are Key to Avoiding Traffic Bottlenecks

The U.S. freight transportation sector has long enjoyed almost continuous increases in productivity, contributing to the country's success in global trade and propelling the United States to become the world's largest unified market where economic transactions occur unimpeded by borders or other barriers. As the economy boomed in the 1990s, however, every segment of the freight transportation system began to show signs of stress. Shippers experienced congestion and delays on highways and railroads, and at airports, border crossings, and ports. Industry representatives sounded alarms that the system was becoming inadequate to meet the demands of more freight traffic, and that investments in infrastructure were not keeping pace.

The nation's freight transportation system is not headed for breakdown in the foreseeable future, says a new report from the National Academies' Transportation Research Board, but significant local bottlenecks require attention. When one portion becomes clogged, the effects can reverberate throughout the system, causing additional delays and lost productivity. But building more roads, airports, ports, and railroads will not alone produce the optimal solution, especially since construction projects will become more difficult and expensive in the future. Keeping up with growth in the most efficient manner requires making better use of what exists and targeting dollars to fund projects with the biggest payoffs. The key step to maintaining and improving the capacity of the nation's freight system is developing a comprehensive national policy to promote better management and investment decisions.

Too often, government decisions on spending, regulatory, and operational questions are approached piecemeal -- concerns are addressed narrowly and implications considered only for the short run, said the committee that wrote the report. Providing adequate freight capacity for the future will require an effort by Congress and federal agencies to coordinate the activities of dozens of separately administered programs that affect the freight transportation system. When the federal-aid highway program comes up for reauthorization, Congress also should provide the states with sufficient funding to maintain the overall performance of the highway system. Highway services are essential for the movement of freight by rail, air, port, and waterway systems.

The committee recommended four principles to guide decisions about using, enlarging, funding, or regulating the freight transportation system and offered examples of how to apply them.

> Economic efficiency. Government transportation policy should have economic efficiency as its primary goal. Decisions about capital improvements, such as adding roads, and operating practices for public facilities should aim for the greatest usefulness considering all the costs. For example, the administration and Congress should revise the federal planning process for harbor and channel projects to ensure that federal funds in support of local port development projects are concentrated on those projects with the greatest net benefits.

> Limited government involvement. The government -- whether local, state, or federal -- should be involved in transportation only when it can do the job better than any other entity. Those occasions include circumstances in which market-dictated outcomes would not be economically efficient; the complexity of the situation requires government leadership; conflicts exist between local and national interests; and transportation facilities must be ensured for national defense. Examples are projects that typically require coordination of numerous government jurisdictions and private firms, and major construction through urban areas, such as providing highway and rail access to seaports.

> Limited government subsidies. The government's responsibility to provide facilities or take the lead in developing projects does not necessarily demand that it cover the costs from general revenues. Whenever the prime benefits of a project are lower transportation and logistical costs for the facility's users, user fees -- not government subsidies -- should pay for the capital and operating costs, the committee said. As the federal-aid highway program comes up for reauthorization, Congress should reinforce the principle of user-fee financing by tying fees more closely to the costs of highway wear and tear caused by various types of vehicles. Congress should also consider increasing reliance on user fees for funding inland waterways and harbors.

> Appropriate financing. The type of financing affects the soundness of investment decisions for a project and, ultimately, how well it operates. Making appropriate choices about financing arrangements at the outset of a project will greatly enhance its efficiency. For example, federal grant programs that require local matching funds help ensure that only the most useful improvements will be carried out. Congestion pricing -- in which user fees, such as turnpike tolls, are cut during periods of lower demand -- will increase the overall capacity of the system by encouraging some shippers to shift to less-popular travel times. Making the most-popular times more expensive can also provide revenue to expand the most heavily burdened parts of the system. To overcome congestion on inland waterways, both demand management and user fees should be considered by the U.S. Army Corps of Engineers.

When building more transportation infrastructure is appropriate, cost control is essential. Shortening the time from the project's conception to its completion will trim the total cost. To help accomplish this, the U.S. Department of Transportation should investigate innovations in project development, design, and management that would reduce the total delivery time and streamline procedures for conducting legally required environmental reviews, the report says.

The study was funded by the Federal Highway Administration, U.S. Army Corps of Engineers, National Cooperative Highway Research Program, and the Transportation Research Board of the National Research Council. The National Research Council is the principal operating arm of the National Academy of Sciences and the National Academy of Engineering. It is a private, nonprofit institution that provides independent advice on science and technology issues under congressional charter. A committee roster follows.

Copies of Freight Capacity for the 21st Century are available for free on the Internet at Printed copies will be available in the winter for purchase from the Transportation Research Board; tel. (202) 334-3213, fax (202) 334-2519, or e-mail <>. Reporters may obtain a pre-publication copy from the Office of News and Public Information (contacts listed above).

Transportation Research Board

Committee for the Study of Freight Capacity for the Next Century

Benjamin J. Allen (chair)
Provost in the Interim
Iowa State University

Paul H. Bingham
Global Insight Inc.
Washington, D.C.

Lillian C. Borrone*
Avon-by-the-Sea, N.J.

Kenneth J. Button
Professor of Public Policy
Institute of Public Policy
George Mason University
Fairfax, Va.

Joseph J. Catto
Professional Representation Inc.
Morris Plains, N.J.

G. Edward Dickey

Stephen W. Fuller
Department of Agricultural Economics
Texas A&M University
College Station

Cameron Gordon
Executive Director
American Council on Intergovernmental Relations
New York City

Randall K. Halvorson
Assistant Commissioner for Transportation Research and Investment Management
Minnesota Department of Transportation
St. Paul

James R. Hertwig
Landstar Logistics
Jacksonville, Fla.

James W. McClellan
Senior Vice President
Norfolk Southern Corp.
Norfolk, Va.

Edward K. Morlok
UPS Foundation Professor of Transportation
University of Pennsylvania

Carmine Palombo
Transportation Programs
Southeast Michigan Council of Governments

Evelyn A. Thomchick
Associate Professor of Business Logistics
Pennsylvania State University
University Park


Joseph R. Morris
Study Director

* Member, National Academy of Engineering