Office of Operations Freight Management and Operations

Appendix A. Executive Dialogue Discussion Summary

On December 10, 1998, a set of individuals representing shippers and freight carriers gathered in Washington, DC to discuss changing needs and priorities for the US freight transportation system as the country moves into the 21st century. The executive dialogue was designed to be a tightly focused working session that would provide guidance to USDOT as part of a congressionally mandated assessment of NHS connectors. The key points that emerged from the discussion included:

  • The efficiency of all modes is dependent on efficient roadway access. Roadways handle the end moves of an intermodal movement. They also link freight facilities. For example, roadways link maritime terminals to rail yards that are not on-dock. In terms of providing the high degree of reliability needed today, the highways provide the best dollar value.
  • Transit time, reliability, cost and damage minimization are the key considerations in modal selection. It was noted that shippers are looking for a "perfect world" in terms of the speed and reliability they expect from their transportation providers. From a carrier perspective, the customers' expectations are: "We are going to be there; we're going to make the commitment; we'll get it there on time. They don't care how we do it." In addition, speed can matter. For example, in deciding between routing cargo by truck-rail-truck or by truck only, transit time may be the decision point. The mode can also matter to shippers in terms of limiting the potential damage to cargo shipped and delays. In today's just-in-time work environment, delays can significantly hurt firms.
  • Shippers want flexibility, that is the use more than one mode or route to move their cargo. Shippers worry about breakdowns in service (for example, from carriers or from unexpected weather). They do not want "all their service eggs in one basket." Accordingly, access to a variety of options for moving goods is highly desired.
  • The railroads have a tremendous opportunity to grow their cargo market. This growth depends on the railroads improving their reliability and may be hampered by cost savings efforts. Participants noted that consistency in railroad service was essential to bring customers back. The market for intermodal rail service is there because of the railroads' ability to move freight long distances economically and because of the truck driver shortage. However, it was also noted that the railroads continue to focus on using their existing yards, which were originally developed for box car traffic that did not require highway connections. Highway access is crucial to intermodal rail service.
  • Congestion directly impacts productivity. Participants noted that truck drivers need to arrive an hour early to ensure they make their appointment with a receiver because of the uncertainty in travel time caused by congestion. This seriously impacts the use of driver hours and productivity levels. It was also pointed out that trucks do not necessarily have the luxury of waiting for off-peak periods to deliver their shipments. Accordingly, participants noted that "peak period pricing" would not necessarily work to redistribute truck movements.
  • Safety is a major concern. Safety issues arise in a number of circumstances, including the difference in operating characteristics of freight and passenger vehicles that must use the same roadway; the movement of hazardous materials (which also raises liability and preparedness issues); and having to travel through construction zones while en route.
  • Industrial sprawl, similar to suburban sprawl, has complicated modal decisions and operations. Industrial production and distribution centers have moved away from urban cores to more suburban and exurban locations. This outward movement places the facilities further away from existing intermodal rail yards. It was noted that railroads will continue to focus on maximizing the use of existing yards because of cost considerations. For example, modern intermodal yards require much more capital expenditures that previous types of yards – there are more equipment and information system requirements.
  • The military has freight movement requirements that are similar to the private sector. For the military, time is of the essence. Their concerns include supporting emergency deployments using the commercial freight system, as well as the impacts of congestion and construction zones on crucial cargo movements.
  • Solutions to intermodal connector problems should be considered on a case-by-case basis. Some problems may require a relatively minimal expenditure to resolve. Solutions can consist of a new turnpike exit, the designation of a local road as a federal route, or development of a dedicated truck lane. Participants noted that "value toll pricing" is the fad of the moment but is not the answer to nationwide problems. Similarly, building new capacity simply cannot be done in some urban settings. Participants suggested that the federal government become more focused on finding specific solutions to specific problems.
  • Separating trucks from passenger vehicles, along with separating long distance movements from local traffic could substantially help. The participants noted that one of the biggest headaches is freight and passenger vehicles having to use the same roadways. Similarly, long distance truck moves must pass through local "peak period" congestion zones, hampering their speed and reliability. Dedicated truck routes or lanes can expedite traffic and cargo flows. A similar situation exists with the railroads who must share rights-of-way and track with passenger operations.
  • Technology can help. However, standards are still needed, and technologies must provide an easily identifiable benefit (particularly financial) to the users. Information is crucial, particularly to manage and react quickly to unexpected problems and needs. Participants noted that a convergence of standards is needed in technology applications that cut across modes. It was noted that there were too many individual "stove pipes" for the flow of information currently in existence. Further, the financial savings of new technology applications must be readily apparent. One carrier related that it notified the owner operators that the company works with about the EZPass electronic toll system as a time saver. However, the owner operators apparently focused primarily on the need to place $500 up front into an EZPass account rather than pay as they used toll facilities. None signed up for the program.
  • With the increased passenger load factors on aircraft, shippers are moving towards more use of all-cargo aircraft and investigating options such as using trucks on some routes. The Postal Service noted that it is leasing a number of aircraft on a long term basis in response to passengers and their baggage reducing the amount of "belly cargo" space available to move the mail, as well as to ensure adequate air capacity on needed routes.
  • Freight carriers are willing to pay to reduce the congestion they encounter. However, the improvements must work and save them money. Further, because of the low margin nature of the business, increased costs will be passed on to customers. Participants noted that "most of the fat" has been removed from the freight system. Accordingly, increased costs of operations have to passed on to customers. One way that congestion relief can generate cost savings is if a driver can handle an additional cargo movement each day as a result of the improvement.
  • The MPOs need to have a better understanding of freight movement and the concerns of freight industry. Similarly, the freight industry needs a better understanding of the MPOs and the role they play. The involvement of the federal government could help. Participants noted that the MPOs have done a good job of involving citizens in their planning; however, the MPOs also need the active participation of the freight community. It was conversely noted that it is often hard to get private sector freight firms involved with MPOs; that companies only go when there is an item that specifically affects them. One participant noted that MPOs were the "ultimate in uncharted waters." Further, for larger corporations, interaction with MPOs is particularly difficult – they must interact with several MPOs, each with its own personality. It was suggested that FHWA working with the MPOs:
    • develop project measurements that make sense to the general public (such as jobs, economic impact, competition) rather than focusing on the goods movement nature of some initiatives.
    • document best practices with regard to freight movement and intermodal connectors.
    Participants also suggested that the federal government ask more questions of the MPOs regarding freight movement and intermodal connectors. The participants felt that the federal government could take a greater role in advancing freight movement objectives and considerations with the MPOs, along with increasing the meaningful involvement of freight users and providers in the MPO processes.

The dialogue agenda and participants are attached.

The Role of the National Highway System Connectors in the Development of a North American Intermodal Transport Network: Practices, Priorities, and Policies

Executive Dialogue Agenda

December 10, 1998

Washington, DC
KPMG Building
2001 M Street, NW on the 9th floor

Time Session
9:00 – 9:30 AM Continental Breakfast
9:30 – 10:45 AM Welcome and Introductions – Madeleine Bloom, Harry Caldwell and George Schoener, Federal Highway Administration

  • What are the key characteristics sought in freight movement today?
  • How are the various modes – rail, truck, maritime and air – being used?
  • What is the role of the intermodal connectors?
10:45 – 11:00 AM Coffee Break
11:00 – 12:30 PM Discussion:
  • How can the federal government facilitate development of an efficient freight transportation system?
  • What are the appropriate roles and priorities for the federal government in improving intermodal connectors?
  • How can USDOT better organize its programs and functions to better serve businesses?
12:30 – 1:30 PM Informal Lunch

Executive Dialogue Participants

Mr. Walter Curran
Holt Cargo Systems, Inc.

William Goetz
CSX Intermodal

Mr. Edward Bridges
H&M Trucking

Mr. James Hertwig
Landstar Logistics

Mr. Richard Fallica
US Postal Service Headquarters

Mr. Arthur C. Kelly, Jr.
The Terminal Corporation

Mr. Robert Utz, Jr.
McCormick & Company

Mr. Bob Franz

Public Sector Participants

Madeleine Bloom
FHWA Policy

Harry Caldwell
FHWA Policy

George Schoener
FHWA Program Development

Lee Chimini
FHWA Program Development

Steve Natzke
FHWA Program Development

Mike Onder

Richard Walker
Marad Intermodal

Evie Chitwood
Marad Intermodal

Rob Martin
FRA Policy

Chip Wood
USDOT Intermodal

Consultant Team

Anne Strauss-Wieder
A. Strauss-Wieder, Inc.
(dialogue facilitator)

Christina Casgar
A. Strauss-Wieder, Inc.

Ray Ellis
KPMG Peat Marwick

Amy Orringer
KPMG Peat Marwick

Jennifer Clinger
Louis Berger & Associates

Joan Yim
Parsons Brinkerhoff

Office of Operations