2016 Freight Quick Facts Report

3. Trends, Policy and Funding

Key Trends

The draft National Freight Strategic Plan (NFSP) (https://www.transportation.gov/freight/NFSP) identified the following key freight trends.

Growth in freight tonnages will be caused by:
- The U.S. economy doubling in size over the next 30 years.
- The Nation's population increasing to 389 million (by 2045), compared to 321 million in 2015.
- Americans increasingly living in congested urban areas.
Under investment in the freight system has been caused by:
- Few public-sector funds being dedicated to freight infrastructure.
- Freight projects being costly to undertake.
- Freight projects not competing well with non-freight projects because of the manner in which public investments are evaluated.
- Freight projects involving multiple transportation modes, jurisdictions, and stakeholders, each having different objectives or operating under different investment timeframes.
Difficulties in planning and implementing freight projects have resulted from the decentralized approach of State and local agencies working with each other and a broad array of Federal and private sector partners, leading to challenges such as fragmented decision-making.
An ongoing need to address safety, security, and resilience in order to continue reducing accidents and fatalities, and to address special risks to our physical and cyber infrastructure.
Increased global economic competition will:
- Lead to a "significant amount of goods moved by air, truck, and train through land border crossings with Mexico and Canada."
- Force ports to "address congestion and equipment-shortage challenges generated by bigger, new generation container ships as well as the larger bulk ships that are now able to transit the expanded Panama Canal." This will involve "investing to modernize their facilities by dredging harbors, raising bridges, automating and expanding container yards, purchasing larger ship-to-shore cranes, and improving roads and rail connections to surface infrastructure."
- Result in "a surge in domestic energy production and increased domestic manufacturing and assembly work."
Application and development of new technologies will:
- Enable faster and more accurate analysis of freight routes, travel times, and infrastructure capacity.
- Increase productivity in the freight industry and change the skill sets needed to work in freight.
- Automate and expedite inspection processes, improving safety and lowering costs.
- Transform freight transportation through autonomous vehicle technologies.
- Provide many benefits through positive train control and next generation air traffic control.

Policy Context

On December 4, 2015, the President signed the first long-term transportation reauthorization act in a decade, the Fixing America's Surface Transportation Act (FAST Act). This Act provides 5 years of funding certainty for infrastructure planning and investment, including $305 billion over FY 2016-2020 for all modes. The FAST Act establishes a national policy of maintaining and improving the condition and performance of the National Multimodal Freight Network ("the Network"), described below, to ensure that the Network provides a foundation for the U.S. to compete in the global economy. The FAST Act specifies goals associated with this national policy related to the condition, safety, security, efficiency, productivity, resiliency, and reliability of the Network, and also includes goals to reduce the adverse environmental impacts of freight movement on the Network. These goals are to be pursued in a manner that is not burdensome to State and local governments. (49 U.S.C. 70101). With regard to freight, the FAST Act includes the following two programs:

National Highway Freight Program: Provides $1.2 billion per year on average for States according to a formula, for construction, operational improvements, freight planning, and performance measures. Up to 10 percent of this budget can be spent on rail, port or intermodal projects. The National Highway Freight Program requires State freight plans.
FASTLANE Grant Program: Provides $900 million per year on average for competitive grants or Transportation Infrastructure Finance and Innovation Act (TIFIA) loans. These funds can be used for projects on the National Highway Freight Network, National Highway System, rail and intermodal infrastructure, and rail-highway grade crossings. States, large metropolitan planning organizations, Tribes, localities, and Federal Land Management Agencies may apply. The first round of awards can be found on the FASTLANE website (https://www.transportation.gov/fastlanegrants).

To implement the two programs above, the FAST Act:

Requires a national freight strategic plan that presents multi-modal freight policy goals.
Requires the designation of a National Multimodal Freight Network.
Requires the designation of a National Highway Freight Network.
Requires State freight plans.
Encourages State freight advisory committees.

In addition to this new program introduced by the FAST Act, there are many existing programs that will continue to be used in the freight sector to fund capital expenses. Some of the larger ones include:

Federal Highway Administration (FHWA) programs such as the National Highway Performance Program (NHPP), the Surface Transportation Program (STP), and the Highway Safety Improvement Program (HSIP).
Transportation Investment Generating Economic Recovery (TIGER) Grants.
The Congestion Mitigation and Air Quality Improvement Program (CMAQ).
The TIFIA credit assistance program.

Funding Overview

Isolating the funding of freight transportation infrastructure is difficult because many freight-related projects benefit passenger transportation as well. Therefore, this section describes funding of the whole transportation sector. Financing freight projects is often complex because they tend to be costly to undertake and regularly involve a variety of modes, jurisdictions, and stakeholders, each operating with separate objectives and timeframes.

As can be seen from Table 38, the government (Federal, State, and local) spent $350 billion on the transportation system in 2012, with the majority going toward highways. Revenues came from each of the modes in roughly the same proportion as expenditures. Over time, expenditures grew at 1.6 percent per year from 2000 to 2010, and accelerated to 3.1 percent per year as a result of the programs introduced to stimulate the economy following the economic recession of 2008. Government spending on railroads increased quickly from 2000 to 2010, at almost double digit pace, although, since 2010, it appears to be decreasing. However, most spending on rail came from private Class 1 railroads. It is estimated that from 1980 to 2013, over half a trillion dollars was spent by Class 1 railroads on rail infrastructure, representing 40 percent of all revenues during this time.

Table 38. Public sector expenditures by different transportation modes, 2000 to 2012.
Expenditures on Modes	Billions of USD 2012	Percent of USD	Percentage Average Annual Growth Rate (chained 2009 USD)
Expenditures on Modes	Billions of USD 2012	Percent of USD	2000 to 2010	2010 to 2012
Highway	225.9	64.5	0.7	5.3
Transit	54.9	15.7	2.3	0.2
Railroads	2.3	0.7	9.7	-9.3
Air	50.9	14.5	3.5	-1.3
Water	14.9	4.2	3.8	-1.4
Pipeline	0.2	0.1	2.5	-3.2
General	1.3	0.4	4.4	34.5
Total	350.4	100.0	1.6	3.1

USD=U.S. dollars
Source: BTS Government Transportation Financial Statistics 2014, Table 2-A and Table 2-B (http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/government_transportation_financial_statistics/2014/table_2a.html).

Table 39. Public sector revenues by different transportation modes, 2000 to 2012.
Revenues from Modes	Billions of USD 2012	Percent of USD	Percentage Average Annual Growth Rate (chained 2009 USD)
Revenues from Modes	Billions of USD 2012	Percent of USD	2000 to 2010	2010 to 2012
Highway	206.3	64.5	2.0	-1.5
Transit	55.2	17.2	0.9	-1.3
Railroads	1.8	0.5	9.3	-20.1
Air	41.8	13.1	3.2	-3.3
Water	13.3	4.1	2.6	-1.8
Pipeline	0.1	0.0	0.6	-6.9
General	1.5	0.5	-0.7	26.2
Total	319.8	100.0	2.0	-1.8

Table 40 shows that, on the whole, 43.4 percent of expenditures in 2012 went toward capital projects while 56.6 percent went toward maintenance and operations. This table also shows that State and local governments made the majority of expenditures, which in this table includes grants from the Federal government.

Table 40. Public expenditures by type and level of government, 2012.
Mode	Billions of USD 2012	Type of Expense (percent)		Level of Government (percent)
Mode	Billions of USD 2012	Capital	Maintenance & Operations	Federal	State & Local
Highway	192.2	53.4	46.6	4.2	95.8
Transit	51.4	21.4	78.6	0.2	99.8
Railroads	1.6	54.6	45.4	100.0	0.0
Air	39.0	32.6	67.4	43.6	56.4
Water	12.4	16.5	83.5	61.0	39.0
Pipeline	0.08	0.0	100.0	70.9	29.1
General	1.42	0.0	100.0	98.6	1.4
Total	298.1	43.4	56.6	12.0	88.8

Conclusion

The Freight Quick Facts Report 2016 aims to supply practitioners and the public at large with a user-friendly source of information about the Nation's vital freight system. It mines and supplies a host of data resources to provide a bird's eye view of the extent and usage of freight infrastructure in the United States; the impacts of the freight transportation system on the economy, environment, and society; and the key freight trends driving policy and funding issues. The Report is organized in tabular fashion so that its data can be integrated with other information sources for use by a variety of stakeholders.

The economic prosperity and competitiveness of America depends upon the efficiency and performance of the Nation's complex freight transportation system. The Freight Quick Facts Report 2016 provides data and context to help stakeholders steward the system and adapt to evolving needs.