Summary Report (Page 3 of 4)

Public Sector Actions

Governments can have a significant influence on market conditions, either through direct intervention in market pricing or through the provision of infrastructure and services. Just as in North America, the economic and transport challenges facing Europe require the coordinated effort of many different levels of government. In addition, this effort can consist of many innovative and creative solutions to the problems encountered in improving mobility and accessibility. The following sections describe what the scan team found at three levels of government planning and management as they relate to the freight transport challenges described earlier.

Creation of an Institutional Structure—the European Union—and Resulting Policies that Influence the Transport Market

The European Union has had an important impact on market conditions and on the regulatory environment for the movement of freight in the European market. The intent of the original founding member countries (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands) was to create closer economic, social, and political relationships among the nations who shared common interests. The original motivation for establishing a common European market was to emphasize the competitive advantages of working as one economic unit rather than as separate competing entities, while at the same time providing a means of dealing with a long history of conflict on the continent. Transportation policy was seen by the founding members, and reinforced repeatedly by the expanded membership, as one of the key policy areas where substantial benefits could occur through EU-level action. In particular, the major thrusts of initial EU efforts were on developing free competition within the Common Market and on promoting the interoperability of transport services and operations among member states. The specific characteristics of the EU role in transportation, and in particular as they relate to freight transport, are as follows:

Establishing a common policy framework: The Treaty of Rome, the agreement establishing the structure of what is today the European Union, recognized the important role that transport policy could play in developing a European common market. The Treaty called for the development of a common transport policy that would provide a framework within which member countries could develop their own transport networks, while at the same time improving the performance characteristics of the European transport system as a whole. By providing compatible system improvements whose benefits transcended any individual country, the EU was targeting strategic investments whose net impact would be of benefit to the common market. Given that national transport networks serve as the foundation for the prospective European network, it is not surprising that one of the initial challenges facing the EU in the transport sector was establishing the interoperability of services and infrastructure for trans-European travel.

Neil Kinnock, European Commissioner for Transport from 1995 to 1999, summarized the key characteristics of the Common Transport Policy in a 1999 progress report on its achievements.[European Commission, 1999] The following statements from this report provide a good sense of the key characteristics of this policy (emphases added).

"Sustainable mobility is the core purpose of the Common Transport Policy.

The Commission has been developing policy approaches that will encourage the establishment of public/private investment and development partnerships.

The Community has an obligation to pursue measures to improve transport safety.

(The) rail, road, maritime and aviation systems…must also be made interoperable.

(It) is essential to make much better use of what exists.

Intermodality…could transform the ease and efficiency of movement.

Any pricing and charging system must clearly and fairly relate to the infrastructure and external costs caused by use…

To protect the legitimate interest of consumers and competitors in transport as elsewhere, the competition rules that help to sustain the vitality of the market system have to be applied."

The principles articulated in the Common Transport Policy have guided EU policy making and rule promulgation over the past decade. As such, it has provided a common point-of-departure for member nations in developing their own national transport policies, and for establishing the transport-related criteria that must be satisfied for new members to join the Union. One of the key principles that is now being considered seriously is the implementation of road pricing. However, the exact nature of how this concept is to be applied is not yet determined and is subject to a great deal of debate.

It is of interest to note that during the scan visit, the direction of future transport policy was of great interest to many key stakeholders and to the media. In particular, one of the key points of disagreement was the level to which transport policy was to be tied to sustainability/energy conservation goals (and thus having a high target value for reducing road use) versus recognizing the important role that the transport system has for economic development and trade in the context of sustainability/energy conservation goals (and thus having a smaller target value).

Advocates common principles and interests that can be reflected in national policies: Within the context of adopted policies and frameworks, the EU is a strong advocate for the coordinated development of national transport policies that are consistent with each other and with EU positions. In some cases, the EU acts as a catalyst in coordinating multi-country planning, policy development and research activities. It was noteworthy that some of the principles put forth by the EU were repeated in presentations by national ministry of transport officials, private service providers, and facility operators. There thus seems to be some success in providing a channel for the consistent articulation of common goals and strategies at the different levels of governance that affect the transport market.

The greatest evidence of this consistency was the policy approach adopted by the EU in its transport policy and reflected in the Dutch national policy as well. The approach simply is to establish target market shares for the different modal systems. Thus, for example, the following growth rates for mode share in the Netherlands have been established for the year 2010, compared to the likely scenario if the transport policy is not followed. As shown, road transport will grow by 50 percent without the actions proposed in the transport policy, 38 percent with such actions. Rail, inland water and short sea transport will grow at faster rates under the new policy scenario. These target values are very ambitious and in many ways represent dramatic changes in the way freight moves in Europe. Based on those interviewed as part of the scan, there is some question as to whether the rail industry can come anywhere close to the targeted market share desired in the policy due to historical and industry-specific barriers.

Volumes for	will grow by
	2010 (without policy)	2010 (with policy)
Road transport	50%	38%
Railroads	13%	40%
Inland water	25%	40%
Pipelines	13%	13%
Maritime	34%	40%

Targeting strategic investments to significantly improve transport system performance: The Maastricht Treaty in 1992 extended the Treaty of Rome's benchmark position on the EU common transport policy by fostering the development of trans-European networks in several infrastructure areas, including transport. Trans-European transport (TEN-T) networks were defined for high-speed trains, highways, combined truck/rail transport, and inland waterways. The scope of the TEN-T program encompasses hundreds of projects throughout the EU, ranging from large-scale infrastructure development to the application of intelligent transportation systems (ITS) technologies to existing infrastructure.

The Commission recommends corridor projects, and the Parliament and Council choose which projects should be included based on staff input and political considerations. In order to provide some political support to the program, the EU identified 14 concepts/projects that were to receive highest priority. Figure 4 shows these 14 priority investments; the criteria for selecting these priority projects are shown in the sidebar.

The EU provides funds that are designed to leverage project funding from other sources. For example, the EU will provide up to 50 percent for feasibility studies and up to 10 percent for construction (85 percent for accession countries, which at this time include Ireland, Greece, Portugal, and Spain). EUR 18 billion is available between 2001 and 2006 to trigger an expected EUR 60 to 100 billion in investment from other sources.[1] Historically, however, from 1996 to 1997 a total of EUR 38 billion was spent on TEN-T projects, with the EU representing a 30 percent share. The buy-in from member governments and the private sector on the priority projects has been more modest than expected, partly because of a slowdown in the economy, an overestimation of private sector financial interest in the projects, and in some cases, encountering environmental problems with a project. A proposal is expected to be made to increase EU participation to 20 percent for projects relating to the implementation of intelligent transportation systems (ITS) technologies. This reflects the importance that EU officials are placing on the role of technology-based system management. As stated by one official, "to compete, we must be high tech." The EU has also encouraged a regional systems management approach that will provide integrated traffic control over large portions of Europe's transport network.

The EU has recently adopted a multi-year programming approach to project prioritization. A maximum of 75 percent of the budget will be allocated in the following way: 45 percent (of the 75 percent) will go to projects with public/private sector participation, 20 percent to the implementation of a continent-wide GPS system, and 35 percent to other transport projects, such as air traffic control, ITS, rail bottlenecks, etc. A small amount will be set aside to provide risk capital for projects that are outside this program, but which have high potential for substantial benefits.

It is of interest to note that all of the TEN-T priority projects completed so far are contained within one nation's borders. The multinational projects, which presumably require more coordination and negotiation, have not been implemented as quickly. There was no indication from those interviewed whether this was a conscious decision on the part of the EU, i.e., pushing those projects first that were "easiest" to show progress toward program goals, or whether this was the natural result of the complexity of multijurisdictional implementation.

In addition to investment in infrastructure, the EU targets human resource development and training as part of its overall strategy of economic and social cohesion. In 2000, for example, over EUR 480 million was allocated for education and vocational training. The scan team found examples of EUR training investment at some of the sites visited.

Establishes legally binding rules and regulations: In the majority of policy areas, the responsibility for implementing EU policies and guidelines rests with the member states. Thus, in some ways, the level of effectiveness of EU policy guidance depends on the willingness of member states to adopt the recommendations. In other cases, binding rules and regulations are used to guarantee universal implementation of a policy, which is monitored by the EU. If warranted, the Commission can take a member state to the European Court for legal resolution. An example of the role of the European Court was a case initiative by the Dutch that challenged favorable pricing of German rail services to the ports of Hamburg and Bremen. The resulting agreement establishes maximum flow rates that can cross three border locations. Examples of legally binding rules include allowable vehicle weights, vehicle emission standards, aircraft noise standards, and allowable trucker driving hours. A more recent policy that has an important effect on the European freight network is a policy of disassociating the management/ownership of rail infrastructure with those responsible for operating freight services. The European Commission also monitors member nation aid to its own transport industry to maintain market competition.

Perhaps the greatest success in establishing consistent application of EU rules was the reduction in customs clearances at national borders. Prior to 1993, all truckers were stopped at each national border for customs checks, tax clearance and in some cases vehicle inspection. On January 1, 1993, all such national border checks were abolished; spot checks still occur for drugs and immigration enforcement. The creation of free cross border transport was identified by almost all those interviewed as one of the most important EU actions for creating a better market environment for freight transport.

Special Attention Given to Enlargement of the EU: The EU has expanded membership four times in its short history. It is facing another such expansion in the near future. Thirteen countries have sought membership in the EU, which makes it potentially the largest of such expansions.[2] With all 13 countries added as members, the EU's total population would exceed 500 million. The process of being admitted as a member of the EU reflects some of the actions that have been taken within the original membership to promote a more cohesive and coordinated Europe. Each candidate must adopt and enforce the entire body of EU rules and regulations, known as the 'acquis communautaire' (representing over 100,000 pages). Part of this acquis is a policy chapter on transport, known as the transport acquis, which must be adopted en toto (see appendix B for a more detailed description of this process). The process of successful adoption includes three major stages:

• The transport acquis must be incorporated into the national legal system of the candidate country.
• The implementation of the transport acquis must occur by providing administrative capacity, institutions, and budgets necessary to carry out this legal basis.
• The enforcement of the transport acquis should provide the necessary controls and penalties to ensure that the law is being complied with.

The EU also provides financial assistance to candidate accession countries, of which a large percentage is assigned to helping candidate countries bring their infrastructure up to EU standards. In 2000, EUR 3.2 billion was earmarked for helping the candidate countries. Over EUR 1 billion was provided to upgrade transportation and environmental systems to EU standards. A program called Phare provided EUR 1.5 billion to modernize and adapt the economies of the accession countries. From 2000 to 2006, EUR 22 billion for pre accession support, and from 2002 on, EUR 57 billion for new member states has been provided for in the EU budget. Examples of the types of studies undertaken by the Phare program include the investigation of the competitiveness of the rail system in eastern and central Europe, the application of road transport charges, costs of upgrading each accession country's transport infrastructure, forecasting traffic demand for 10 Pan-European transport corridors, road and maritime safety, and the extent to which environmental concerns were being addressed within the accession countries. Importantly, 30 percent of the Phare budget was allocated to human resource development. Between 1996 and 1999, over 1,600 individuals in the accession countries received training.

Observations on the EU

Much of the effort at the EU for the past several decades has been on institution-building, that is, providing the institutional structure that can act as the foundation for the EU concept of "one Europe". The EU has clearly been advantageous for the European transport sector. Not only has it fostered the removal of barriers to cross border travel (e.g., customs at national borders), but it has also raised transport policy issues to the international and national levels of debate. Transport policy in the EU is in the middle of key debates on the economic and environmental future for the Union.

However, it is very much the case that the future role of EU governance is at the core of policy debates, and will likely remain so in the foreseeable future. The respective roles of a central authority in the form of the EU versus that of member states is the crux of the issue. In the transport sector, for example, member states still wield an important influence on the overall effectiveness of EU policy outcomes through their policy implementation responsibility. Consistent application of transport policies at the EU level requires the agreement of member states. The adoption of policies that are controversial, or that impact one group more than others (e.g., road pricing), can become delayed while the politics of acceptance are worked out. One of the ways of providing political acceptance of such policies is to structure their implementation so as to achieve the ultimate objective (e.g., shift in mode share), but still "hold harmless" the industry or sectors that have to respond. For example, current road pricing proposals suggest that increased road prices that will influence market transport decisions will be offset by reductions in tax burdens to the road transport industry so that the net financial effect on this industry is close to zero.

The Common Transport Policy provides an important point of departure for the development of transport policies in member nations. Road pricing, for example, which is very much supported by the EU, is finding its way into other transport policies (e.g. that of the Netherlands). However, the approach of targeting market shares by mode raises significant questions concerning the ability of these modes to achieve the desired levels. In the European case, this seems especially true for the rail industry. The quality of service provided and continuing interoperability issues need to be addressed before such targets can be reached.

The EU provision of funding for strategic transportation investments is an important component of the strategy of providing consistent and coordinated transport infrastructure within the EU. However, several of those interviewed noted that the assumption of private sector interest in paying for a share of this investment cost was too optimistic. Government investment in the projects was needed to reduce the risk to private investors. Those interviewed stated that it was also important to have a specific project authority that is enabled with the responsibility for project implementation and is held accountable in order for the program to be successful.

Member State Response to the Challenges

The scan team visited a limited number of countries, thus generalizations that apply to all member countries of the EU are not appropriate. However, in the countries visited, some important observations can be made on how they have responded to the European Union's transport policies, as well as on their own policies/programs for improving freight transport. In addition, the countries visited have a long history of participation in trade and in the movement of goods and services, thus this experience is potentially valuable to the North American context.

Linkage to broader societal goals: The transport policy challenge to the EU countries, and to the EU itself, is balancing the many different goals that have been identified by policy makers and by the public as being important for the future of the community. In particular, sustainability has been identified by the EU and by many member countries as one of the overarching goals that should guide investment policies. In some sense, one of the differences between the national transport policy emphasis on intermodal transport in Europe and of that in North America is the linkage to these broader goals. Sustainability, energy conservation, and quality of life are driving forces for public policy interest in intermodal transport in Europe. Economic efficiency and productivity tend to be the major motivation in North America.

Consistency with EU policies: Even with a limited number of countries visited, there seems to be a strong consistency between national government transport policy and EU policy. The latest transport plan for the Netherlands, for example, highlights those areas where the Dutch policies are consistent with EU policies, in particular, in the areas of road pricing; deregulation of the road transport market; liberalization of the railways; safety, accessibility, and emission requirements for vehicles and vessels; and electronic vehicle tagging.[3] In Italy, Germany, and Switzerland (even though it is not a member of the EU), the scan team identified policy approaches that were supportive of the overarching EU common transport policy framework.

Focus on transport system infrastructure and technology: The member states recognize the importance of efficient transportation systems for their economies and for the success of the EU. There was a general understanding from all government officials interviewed of the "bigger picture" of continent-wide transportation services, and where their country's transport network or facility's operations fit into this bigger picture. In fact, the Dutch invested in the transport system beyond their own borders. The Netherlands has invested in a high speed rail project in Belgium, and there was some speculation that investment might occur in Germany to improve rail service, both of which would benefit the Dutch economy and the efficiency of their transport system. The Port of Rotterdam has invested in Hungary and the Czech Republic in facilities that make the port more competitive to freight in this market. Large investment has occurred and is continuing to occur in EU countries aimed at improving the physical transport infrastructure. In addition, the application of advanced ITS technologies for system management, in conjunction with corresponding investments by the transport industry for their own operations, is considered to be one of the more important future directions in system investment.

Investment in freight infrastructure: The countries visited seem to provide greater levels of public investment in freight infrastructure than found in North America. In many cases, the government's focus was on providing the infrastructure (in some cases leasing it to a concessionaire) and where appropriate providing loans to those operating services and terminals. The conditions for the latter support was most often that full access to these services had to be allowed, and that the public subsidy did not diminish the competitiveness of the freight industry in the local market. The most impressive example of such an investment is the Betuwe rail corridor in the Netherlands, which represents a USD $4 billion commitment by the national government to rail freight. This level of investment was not the norm in the countries visited. Clearly, the Dutch government has a greater sensitivity of, and willingness to invest heavily in, freight infrastructure given its country's location at the heart of Europe's economy (see Figure 5).

Emphasis on using existing infrastructure as much as possible, and thus a governmental interest in intermodal transportation: One of the key targets for providing enhanced freight transport mobility is to use the existing multimodal transport infrastructure more effectively. In the Netherlands, for example, Ministry officials stated that most improvements to transport system performance will come first from operational enhancements, second from pricing and finally from capacity expansion. Freight transport policy has emphasized shifting market shares to modes of transport that are currently underutilized, primarily inland water, short sea and rail transport, in sum, maximizing the number of alternatives available to system users. In this context, intermodal freight transport—rail/truck, rail/barge, and truck/barge—is viewed by many government officials as an important means for achieving modal shifts. This is the case even though current market share for intermodal freight transportation and rail freight transportation is very small. Some governments are providing monetary incentives to encourage this shift. Germany, for example, provides the following inducements for those using intermodal transport: reduced road vehicle taxes (currently EUR 2,500 – 3,500 per truck; zero for intermodal carriage), allowance of greater vehicle weight (44 tonnes instead of 40 tonnes), exemption from road driving bans on holidays and weekends; and exemption from sabotage rules.

The emphasis on intermodal transport has also led to interest in promoting better transshipment capabilities at terminals and ports. For example, an EU Green Paper on Sea Ports and Maritime Infrastructure argued that ports needed to be included in the TEN-T program because of the importance of interconnection and interoperability of national networks (EU ports handle approximately 30 percent of intra-EU freight movement).[4] The "rationalization" of Europe's ports from the perspective of which ports should serve as the primary gateways to the EU could potentially be a significant challenge (and controversy) given the large number of ports that exist in EU countries. The competitive nature among European ports leads one to suspect that efforts to "rationalize" port gateways from an EU perspective is going to be very difficult.

Development of a market-driven transport policy within context of public interest: Both EU officials and national officials stated that the focus of freight transport policy is on influencing the transport market through pricing and financial incentives that influence the decisions of freight forwarders as well as operators. To some of those interviewed, this is a different approach than what has been tried previously, which was described as a "Thou shalt…" approach. That is, government policies mandated that certain market responses would occur, but would not put in place incentives or disincentives to obtain this result. Perhaps the best example of this market-driven transport policy is found in the German and Dutch governmental subsidy programs for intermodal terminal developments and the logistics support program in the Netherlands where the basis for the program is letting private firms decide what is feasible, and then providing leverage capital to make the investment decision economically viable. This was described by Dutch officials as using public policy to augment logistical efficiencies.

Road pricing is one of the cornerstones of the market-driven transport policy. The EU has adopted road pricing as an important lever for influencing mode choice. Member countries have mirrored this focus. In the Benelux countries, for example, current passenger pricing schemes rely on toll roads or lanes. The governments have proposed to implement a peak hour fee scheme in 2003, and a per kilometer charge by 2010. Public opposition to the peak hour fee has resulted in a change in strategy to implement a per kilometer usage fee by 2006. Similar pricing schemes will be applied to use of freight road, rail, and inland water infrastructure. In order to retain competitiveness of their transport industry, the governments have proposed to offset these increased costs by reducing tax burdens in other parts of the transport business. The road pricing schemes remain controversial, so they still might not be implemented by the proposed schedule.

Public/private partnerships as an important component of government's strategy for implementing transport policy: Almost all of the major projects visited by the scan team involved some form of partnership between the public and private sectors. Examples include:

• The Betuwe rail freight corridor in the Netherlands connecting the port at Rotterdam with Germany is an example of how difficult it can be to create public/private partnerships (see inset, page xx). Initially, the Dutch government planned to have substantial private investment in the provision of the rail infrastructure, but later determined that such a commitment was not likely to occur. There is some thought at this time of selling the rail infrastructure to a private concern after 10 years. Part of the operations of the rail line included the construction of rail service centers that were built with government funds, but are being managed by a private firm. Another example of public/private cooperation was the port's investment in a railroad bridge as part of a strategy increase rail access to the port.
• Both the Netherlands and Germany have provided subsidies to inland freight terminals where access is provided to all customers. In the Netherlands, 50 percent of the investment must be from private sources, 25 percent from the national government and 25 percent from the provincial/local governments. See inset on the following page for a description of the German intermodal terminal subsidy program.
• In Italy, the new transshipment port of Gioia Tauro received national government investment both in the port facilities themselves, as well as in road and rail access improvements. Private companies have provided much of the investment for the port operations facilities.
• In Germany, the national government has participated in the privatization of the Frankfurt airport and provided the impetus (and subsidies) for freight forwarders to create a third party intermodal logistics company.

In 1991, the European Commission issued a non-discrimination directive that stated the owner of infrastructure could not be the operator of services using that infrastructure. Government construction of rail lines or terminals will thus require partnerships with private firms to operate or manage these facilities.

National planning and analysis for freight investment reflective of importance attached to the role of trade and the transport industry to the nation's economy: The scan team only visited one national ministry of transport, this for the Netherlands. However, it is clear from this visit that at least in the Netherlands, freight transport is a concern at the national level and is approached in a very systematic and analytical fashion. Performance measures and economic indicators that are collected as part of a European transport information system are used to monitor system performance over time. The analysis of freight transport futures was based on scenarios that made different assumptions concerning the stability of European progress toward closer cohesion. For example, the scenarios included a status quo (termed divided Europe), a coordinated Europe, and a Europe integrated for global competition. The results of this analysis as presented in the national transport plan are shown in Figure 6. It was also interesting to note that the ministry itself is organized into four Directorates General, of which one is dedicated to freight transport. According to those familiar with the national transport planning activities of other EU countries, this attention to freight issues is similarly found in other ministries (although the Netherlands is considered to be a leader in such planning).

Figure 6: Scenario Analysis in National Transportation Planning in The Netherlands

Local Government Response

Similar to experience in North America, local governments at the sites visited have played an important role in fostering those activities that result in economic development for their city or state. These roles range from expediting permits and planning procedures to providing financial support for infrastructure development. For the facilities visited, local governments had reconciled the linkage between investment in economic development as manifested in freight distribution terminals/centers and community goals.

It is also important to note (in order to establish the correct context for our findings) that, in some cases, local and private investment took advantage of opportunities not available to other locations. In some sense, these opportunities were "accidents of history." For example, the freight distribution center at Frankfort Airport, which is strategically located within Europe and has tremendous opportunities for expansion, is located on land used by the U.S. Air Force during the Berlin Air Lift. Much of the infrastructure investment at the new transshipment port at Gioia Tauro was originally built as a bulk commodity port that was never finished. Rotterdam's pre-eminent position as a port gateway to Europe is due to a strategic geographical location. However, whether taking advantage of such opportunities or starting anew, the local government support for freight infrastructure was primarily aimed at enhancing the relative competitiveness of their community compared to other locations in the country and/or in Europe. Some examples of the local government role in freight facilities include:

Port of Rotterdam: The port is municipally owned and operated. As noted by a port official, the port is run like a business, but with a public purpose. From the business plan for the port, this public purpose is clearly defined as remaining the strong foundation for the city's economy (and indeed the country's—20 percent of the Netherlands' GDP is attributed to the Port of Rotterdam and Schipol Airport). Port officials are strongly supportive of investments that will maintain Rotterdam as the leading port of Europe. For example, the port built a railroad bridge because it realized the bottleneck that port access represents to future port activities. Other port investments are similarly aimed at enhancing the competitive advantage of Rotterdam over other ports.

Port of Gioia Tauro: The Port is a major employer in southwestern Italy. Because of its strong economic impact, the state and local governments have been very supportive in helping the port develop its plans for expansion and in providing support for access improvements. Some of the funds provided to the state of Reggio Calabria for economic development purposes have been used to improve the position of the port.

Verona Freight Village: The Board of Directors for the Freight Village consists of three representatives from the Chamber of Commerce, three from the City of Verona, and three from the Province. The Village is viewed by local officials as one of the main foundations for the economic success of the Verona region, and have devoted considerable energy to supporting its viability. This includes providing financial support for needed infrastructure as well as expediting planned expansions through the planning approval process.

Frankfurt Airport: The City of Frankfurt is part owner of the management company that is operating the airport. As such, it provides policy guidance on what is desired from the community's point of view. City officials have also participated closely with the airport in developing plans for expansion of Cargo City and other economic development opportunities at this site.

Lessons for North America and Role of Domestic Freight Transportation Investment in International Freight Movement

The following lessons for the North American and U.S. context result from this scan.

1. Global market and logistics relies heavily on the performance of infrastructure owned and operated by the public sector. Understanding the motivation of logistics decisions and their local implications is a critical point of departure for a national or multinational effort on fostering trade. Identifying freight bottlenecks, "solving them", and establishing market conditions that provide "free access" should be an important focus of regional, state, national, and international planning/policy efforts.
2. One of the most important concerns of freight transport users, and thus of transport officials identifying improvements to this system, is the reliability of service or trip-making. Speed of travel is important, but the results of service strategies examined as part of this scan suggest that system reliability is even more important. This has significant implications on the types of performance measures used in system monitoring and in the criteria used for project prioritization.
3. The EU illustrates the importance of having an international and national policy on investment in freight transportation. Public and private investment in freight facilities has occurred, and continues to occur, in Europe. Public investment is designed to act as a catalyst for private investment in services and facilities could provide important public benefits. In some cases, such investment is being considered from a true "systems" perspective (i.e., improvements are being made in infrastructure that is outside of a nation's boundaries, but that will clearly benefit that nation's industry).
4. Public investment targeted at freight movement should adopt a framework in which private sector is provided incentives to choose what is best for their business within context of achieving public goals (e.g., economic development, sustainability, etc.). This was portrayed by the Europeans as making market-driven policy decisions within a "public good" context. In addition, the focus of the overall policy was to make best use of existing transportation options (e.g., rail and inland water transportation) before developing new transport networks. Interestingly, a "long-term" public policy focus in this context was at most 10 years, whereas private sector focus was at most five years.
5. Public budget and financing mechanisms for funding freight projects exist in the EU, although as a percentage of total transport system investment, they are quite limited. No debt financing was found in any of the examples discussed, and for the very largest projects (e.g., the Betuwe corridor) little private investment occurred upfront. However, even with this, the level of public investment in freight facilities and services seems far greater in Europe than in North America.
6. A critical role for multinational efforts is to foster open competition and open borders. Free access allows the market to take advantage of productivity economies and results in market-reflective decisions. However, the European experience suggests that there might have to be different market incentives and rules for different segments of the transportation system (e.g., intermodal terminals, national rail service, inland water, etc.).
7. The EU has served as an important forum for establishing consensus on strategies for establishing an openly competitive market in Europe. Such a forum provides the institutional framework for developing a common message among government agencies and among important stakeholders as it relates to economic competitiveness. In addition, such a forum has raised transportation issues to the level of national political debate.
8. Interoperability and consistency in national laws and regulations are important areas for multinational concern. This leads to a concern for consistent application of information technology strategies across borders. Although important, however, these issues should not overshadow much broader concerns for market-driven policy and decision making. In addition, the EU experience suggested that issues such as language compatibility, signage consistency, and handling of paperwork precede information technology concerns. In the case of European freight movement, the trucking industry seems to have dealt with these problems more successfully than the rail industry.
9. The EU has incorporated human resource development/training as an important component of any public/private initiative aimed at improving freight movements. This has been done primarily to raise the quality of life of the communities that are affected by freight facilities and operations.

Recommendation for Further Studies

The panel identified many prospective studies that should be undertaken to further understand the characteristics of international freight movement, and the market response to changes in the institutional and regulatory environment. In particular, the panel feels that many of the examples and initiatives found in Europe warrant follow-up examination, perhaps every two to three years, so that the longer term market response to open markets can be followed. Some specific studies of interest include:

1. Collaboration with research centers in Europe, e.g., the Intermodal Transport Research Center in Hamburg, to monitor the response of intermodal freight to national and EU policies.
2. Examination of the results of EU "rationalization" of transportation infrastructure. For example, what happens to ports or terminals when the EU's transport plan suggests that a smaller number of such facilities will better serve EU purposes?
3. Comparison of North American and EU productivity in freight transportation, and the differing criteria for investment.
4. Review of existing forums/mechanisms for NAFTA discussions to see if there are more effective means of tri-lateral cooperation in regard to transportation decisions. For example, how should improved water transportation opportunities be incorporated into on-going discussions? Are there different models for institutional decisions in North America? How do we get trade/commerce groups involved in these discussions?
5. Continued monitoring of EU experience with road pricing and success in mode shifts.
6. Investigation of the role of the MPO in freight transportation, especially those issues that have national implications. What are the expectations of the MPOs with regard to such issues?
7. Investigation of public/private partnerships for freight improvement projects. How can public investment be related to public benefits?
8. Examination of adopting a systems perspective on freight transportation. This includes not only a conceptual model, but also reflects performance measurement.
9. Consideration of the role that technology innovation can play in international and national trade markets. This includes not only physical modifications to vehicles or networks, but also the increasingly important role for information technologies.
10. Examination of global freight flows, and the relative importance of different transport flows to global trade movement.

previous | next