The Freight Challenge

How can the nation move more goods cheaply and reliably on an increasingly constrained infrastructure without affecting safety and degrading the environment? No doubt, the challenge is enormous. To a great extent, efficiency gains from economic deregulation have been achieved and absorbed by the system. Opportunities for operational improvements are still available and need to be utilized. New physical capacity is limited by available financing, competition with other needs and uses, and environmental concerns. In addition, traditional strategies aimed at passenger travel may not apply.

The freight transportation challenge differs from that of urban commuting and other passenger travel in several ways:

• Freight moves long distances through localities and responds to distant economic demands while the majority of passenger travel occurs between local origins and destinations. Freight movement often creates local problems without local benefits.
• Freight movements fluctuate more quickly and in greater relative amounts than passenger travel. While both passenger travel and freight respond to long-term demographic change, freight responds more quickly than passenger travel to short-term economic fluctuations. Fluctuations can be national or local. The addition or loss of just one major business can dramatically change the level of freight activity in a locality.
• Freight movement is heterogeneous compared to passenger travel. Patterns of passenger travel tend to be very similar across metropolitan areas and among large economic and social strata. The freight transportation demands of farms, steel mills, and clothing boutiques differ radically from one another. Solutions aimed at average conditions are less likely to work because the freight demands of economic sectors vary widely.
• Improvements targeted at freight demand are needed as freight accounts for a larger share of the transportation system, and as improvements targeted at general traffic or passenger travel are less likely to aid the flow of freight as an incidental by-product.

Local public action is difficult to marshal because freight traffic and the benefits of serving that traffic rarely stay within a single political jurisdiction. Onehalf of the weight and two-thirds of the value of all freight movements cross a state or international boundary. Federal legislation established metropolitan planning organizations (MPOs) four decades ago to coordinate transportation planning and investment across state and local lines within urban areas, but freight corridors extend well beyond even the largest metropolitan regions and usually involve several states. Creative and ad hoc arrangements are often required through pooled fund studies and multistate coalitions to plan and invest in freight corridors that span regions and even the continent, but there are few institutional arrangements that coordinate this activity.

The growing needs of freight transportation can bring into focus conflicts between interstate and local interests. Many communities do not want the noise and other aspects of trucks and trains that pass through with little benefit to the locality, but those transits can have a huge impact on national freight movement and regional economies.

Beyond the challenges of intergovernmental coordination, freight transportation raises additional issues involving the relationships between public and private sectors. Virtually all carriers and many freight facilities are privately owned. The private sector owns $985 billion in transportation equipment plus $558 billion in transportation structures. In comparison, public agencies own $486 billion in transportation equipment plus $2.4 trillion in highways.² Freight railroad facilities and services are owned almost entirely by the private sector, while trucks owed by the private sector operate over public highways. Likewise, air cargo services owned by the private sector operate in public airways and mostly at public airports. Privately owned ships operate over public waterways and at both public and private port facilities. Most pipelines are privately owned but significantly controlled by public regulation.

In the public sector, virtually all truck routes are owned by state or local governments, and airports and harbors are typically owned by public authorities. Air and water navigation is typically handled at the federal level, and safety is regulated by all levels of government. As a consequence of this mixed ownership and management, most solutions to freight problems require joint action by both public and private sectors. Financial, planning, and other institutional mechanisms for developing and implementing joint efforts have been limited, inhibiting effective measures to improve the performance and minimize the public costs of the freight transportation system.³