Office of Operations Freight Management and Operations
photos of truck, cargo ship, airplane and freight train
Office of Operations  -  21st century operations using 21st century technologies

Southern California Regional Freight Study

Executive Summary

As part of a process to enrich the national dialogue about freight transportation issues, needs, and potential program options, the Federal Highway Administration’s (FHWA) Office of Freight Management and Operations has undertaken a series of case studies.  This report presents the results of a case study undertaken in Southern California (the Los Angeles metropolitan area).  Southern California is home to the nation’s largest container port complex, a major air cargo center, a West Coast rail hub, and numerous regional distribution centers.  As the second largest metropolitan area in the U.S., Southern California also represents one of the largest local markets for freight services in the country.  The volume and complexity of freight movements in the region are enormous.  The institutional environment for freight planning in Southern California is also extremely complex.  Within this complex region much is being done to address freight issues.  Yet many of the participants in this case study agree that the challenges the region faces in the future will require substantial resources and innovative approaches that are still being developed.

Freight movement in Southern California consists of three major markets:  1) regional and local distribution, 2) domestic trade and national distribution, and 3) international trade.  Southern California provides a huge internal market for goods and services.  Based on the Freight Analysis Framework, FHWA estimated that over 223 million tons of freight were shipped internally within the Southern California region – approximately 30 percent of the total freight shipped in the region.  Southern California is also one of the leading manufacturing centers in the nation, generating shipments for domestic trade with the rest of the U.S.  The six-county region ranks fourth in the nation, behind only California, Ohio, and Texas, in total manufacturing jobs.  Shipments between Southern California and the rest of the country account for 447 million tons, or over 60 percent of freight shipped in the region.  Southern California is also a large gateway for international trade.  Over 11 percent of the nation’s trade (by value) passes through the region and it collects over 37 percent of the nation’s import duties.

In order to meet its freight transportation needs, the Southern California transportation network has developed and invested in international gateway facilities (such as the Ports of Los Angeles and Long Beach and the international airports of Los Angeles and Ontario), interstate multi-modal corridors (including several major interstate highways and the transcontinental rail lines operated by the Union Pacific and Burlington Northern Santa Fe railroads), and a vast metropolitan roadway system.

As Southern California grapples with its freight transportation needs, it plans within the context of a number of major regional issues.  These include:

  • Growth – Southern California continues to be a major population and employment growth region, fueling demand for freight transportation services.  According to the Southern California Association of Governments, freight transportation demand is expected to grow by 80 percent between 1995 and 2020.
  • Congestion – Southern California has some of the most congested highway, rail, and airport facilities in the country.  This creates substantial delays for all users of the transportation system and imposes costs on goods shipped through the regional freight transportation system.
  • Air Quality – Much of Southern California is within severe non-attainment areas for national air quality standards.  Any new system capacity must justify that it will not negatively change air quality, which may serve as major constraint to growth in the freight transportation system.
  • Security – In the aftermath of the events of September 11th, increasing attention is being paid to freight transportation security, especially at international ports of entry.
  • Safety – Provision of a safe transportation system is a major goal of regional planning.  However, the interaction of passenger and freight transportation creates significant safety concerns, especially on high truck volume freeways and at rail-highway crossings.
  • Land Use – High land costs in the developed areas surrounding ports, airports, intermodal terminals, and truck terminals have forced the freight transportation industry to look to outlying areas for facility growth.  This coupled with the region’s sprawling development patterns has caused regional freight distribution patterns that emphasize peak period congestion and high levels of freight vehicle-miles traveled.
  • Regional Governance and Institutional Complexity – Southern California includes four district offices of the state department of transportation, 14 subregional councils of government, six county transportation commissions that program transportation funds, and 184 cities.  Needless to say, this is an extremely difficult environment within which to plan for freight transportation systems that transcend multiple jurisdictional boundaries within the region.

Despite these challenges, the region has enjoyed numerous successes in addressing freight transportation needs.  Successes have included both major capital projects as well as planning process/institutional relationships.  Perhaps the best known of these successes is the Alameda Corridor, which brought together cities, ports, and railroads in a unique public-private partnership of epic proportions.  Lesser known, but equally important, successes are present throughout the region.

The experiences of Southern California illustrate a number of themes that should be the focus of freight policy discussions throughout the nation.  These fall into two broad categories:  funding/financing and institutional/planning process.


  • Adequacy of Resources – Southern California has enormous transportation funding needs, but freight transportation projects will need to compete with all other projects for local funding resources.  Freight projects, particularly international gateway projects, tend to be expensive and their local benefits are considered to be relatively low when compared to development costs.  With a transportation programming process that largely focuses locally, broad freight projects will continue to face an uphill battle for funding.  This suggests that major gateway and mutli-modal interstate corridor projects will need to include partnerships with state and federal agencies, find new revenue sources that are increasingly user-fee oriented, and look for greater flexibility in use of federal surface transportation funds in the next reauthorization.
  • Burden Sharing and Fairness:  The Distribution of Costs and Benefits – Southern California maintains freight transportation facilities that have regional, statewide, and national significance.  The benefits of these facilities are felt throughout the U.S., but the transportation effects of these facilities are greatest at the local level.  The question of who pays and who benefits from improvements in these facilities requires national attention and may imply a need for new federal and state funding programs, i.e., local users bear the cost for dispersed national benefits.
  • Innovative Financing and User Fees – Given the enormous transportation funding needs in Southern California and the benefits of freight transportation projects to the private sector, it is not surprising that planners will look to user fees as a source of financing for freight transportation improvements.  The Alameda Corridor is one of the most often cited examples of how user fees can play a critical role in financing major freight projects.  But not all freight projects in Southern California will be able to rely on user fee financing.  Initial evaluations of tolling options for truck lanes in Southern California show that they may not produce sufficient revenues to support project financing.  Beneficiaries of freight improvements, particularly on highways, include non-freight interests and they need to pay their share of costs. In addition, user fees may reduce the competitive position of regional freight facilities as compared to ports and intermodal facilities elsewhere in the U.S. 
  • Public Investment in Private Freight System – While a substantial volume of freight is moved on public highway systems, there is increasing interest in expanding the role of private systems, such as using railroads or barge activities to alleviate highway congestion.  The Metrolink project in Southern California is a good example of how public passenger rail projects can be used to benefit rail freight capacity needs.  But the limited flexibility of existing funding sources and the difficulties associated with justifying public investment in private systems are obstacles that will need to be addressed in the future.

Institutional/Planning Process

  • Regional Coordination and Decision-Making – Freight projects do not respect jurisdictional boundaries.  Thus, freight projects tend to require the coordination of numerous local and regional agencies.  In an area as complex as Southern California this creates an extremely complex planning process for freight projects.  In addition, achieving multi-jurisdictional consensus on regional freight priorities is very difficult.  New institutions are needed to address these multi-jurisdictional issues.  The joint powers agency created for the Alameda Corridor is an example of one type of institution used to create cooperative working arrangements.  Other forums like the regional Goods Movement Advisory Committee, that brings different governmental agencies together to develop a consensus regarding planning objectives, are also important.
  • Public-Private Collaboration – Freight planning requires the coordination of public and private sector interests.  Yet public agencies plan on a long-term (20-25 years) basis, while private agencies plan on a much more immediate basis.  For private businesses that must devote as much of their resources as possible to revenue generating activities, the public sector planning process is complex and cumbersome.  There is also a longstanding mistrust between public and private sectors in the freight industry due to concerns regarding regulatory relationships.  The region needs standing institutions to bring public and private sector freight organizations together to tackle the short term and long term needs of the freight transportation system.
  • Private-Private Collaboration – In Southern California, there is tremendous potential for resolving freight transportation issues through operational strategies.  These include making better use of existing capacity through more coordinated time of day operations.  But to affect this change, private companies who are fiercely competitive must work together, and recognize that the public sector clearly has a role to play in facilitating this cooperation.  Removing regulatory obstacles (such as night-time operating restrictions) and providing economic inducements (such as congestion fees charged at terminal gates for peak period operations) are potential alternatives that could be explored.
  • Public Awareness – Citizen groups often line up against freight interests in the local planning process.  This has been an issue for air cargo and port access projects in Southern California.  Yet freight transportation demands are derivative of the public’s demand for goods and service.  Much needs to be done to educate the public as to the benefits of efficient goods movement.
  • Data Modeling and Tools – Critical decisions about freight transportation face local agencies in Southern California and these agencies have taken major steps to develop the tools necessary to evaluate alternative transportation investments and policies.  Yet many of these tools rest on flimsy methodologies and insufficient data.  Information about freight movement in a metropolitan area is difficult to obtain due to the proprietary nature of much of these data.  The Federal government can play a role in developing techniques and data for local freight planning that would assist in local decision-making.
  • Coordination of ITS – ITS presents tremendous potential for improving the efficiency of goods movement.  However, for this potential to be realized it will require a greater level of cooperation and interface between public and private information systems.  ITS intermodal demonstrations at the Port of Long Beach are beginning to tackle the problem of how to bring these public and private information systems together to produce good traveler and traffic management information.  Building on this program and other ITS projects in other parts of the region would be beneficial.

1.   Case Study Introduction

The Federal Highway Administration’s (FHWA) Office of Freight Management and Operations invited stakeholders from five areas across the country to examine how different regions are addressing freight transportation needs.  These case studies were selected to illustrate different types of freight activity, institutional complexity, and approaches to problem solving.  Together, these case studies help tell the national “freight story.”

Southern California (the Greater Los Angeles Metropolitan region) presents a particularly informative example.  The region is home to the nation’s largest container port complex, a major air cargo center, a West Coast rail hub, and numerous regional distribution centers.  As the second largest metropolitan area in the U.S., Southern California also represents one of the largest local markets for freight services in the country.  The volume and complexity of freight movements in the region are enormous.  The institutional environment for freight planning in Southern California is also extremely complex.  Within the region much is being done to address freight issues.  Yet most agree that the challenges the region faces in the future will require substantial resources and innovative approaches that are still being developed.

This report summarizes the results of a case study conducted by major freight transportation stakeholders in Southern California.[1]  The report begins with a brief description of the characteristics of freight movement and the freight transportation network in Southern California.  Freight transportation in the region serves three distinct markets:  international trade, domestic trade, and regional/local distribution.  To serve these markets, the regional freight transportation network consists of three types of facilities playing the roles of international gateways, elements of a statewide/multi-state transport network, and a system of local roads and connector facilities that aid in local and regional distribution systems.

After describing Southern California freight transportation, the report describes some of the critical factors and issues that influence freight transportation planning and management in the region.  These issues include regional economic/population growth, congestion on transportation facilities, air quality concerns, land use issues/conflicts, and regional governance and institutional complexity.

Southern California has often succeeded in addressing freight transportation needs within this context of regional issues and concerns.  The report provides some examples of how the region has dealt with its diverse freight transportation needs.  Examples of capital project successes, institutional/planning successes, and funding/resource successes are also examined.

The remainder of the report describes lessons learned from the region’s experience and describes challenges for the future.  These can be broadly categorized as institutional/planning process-related or funding/resource-related.  The analysis suggests areas where various freight transportation partners in private sector, regional and local government agencies, state government agencies, and the federal government will need to work together to shape the region’s future freight transportation system.  An analysis of the challenges related to many topics, including funding/financing, regional coordination and decision-making, institutional partnerships, public awareness of freight issues, development of data and analytical tools, and implementation and coordination of information technology and intelligent transportation systems (ITS), is also discussed.

While the region has undertaken a number of freight movement studies (including an interregional goods movement study, a number of subregional goods movement reports, and numerous analyses of corridors and specific freight-related projects), this case study provided a unique opportunity to take a big picture look at regional freight issues.  By examining not only how regional freight issues manifest themselves within the broader regional transportation picture, but also where past efforts have resulted in successful programs and projects, and finally where challenges remain, local stakeholders have been able to discuss the region’s freight future from a new perspective.

2.   An Overview of Existing Freight Movement Patterns in Southern California

Southern California – the counties of Los Angeles, Orange, Riverside, San Bernardino, Imperial, and Ventura that comprise the metropolitan planning organization (MPO) region of the Southern California Association of Governments (SCAG) – is the second largest metropolitan region in the United States.  The population in the region is over 16.5 million people, up two million from 1990, according to census reports.  In addition, the Southern California economy generates over seven million jobs, mostly in the trade and transportation, manufacturing, and tourism industries.

Freight Movement in Southern California

Freight movement in Southern California consists of three major and distinct freight markets: 

  1.  regional and local distribution,
  2. domestic trade and national distribution, and
  3.  international trade. 

Figure 2.1 provides some perspective on the magnitude of each of these components of the regional freight movement picture and how this is projected to change in the future.  This figure shows the amount of tonnage carried by each freight mode in each of the three market segments in 1998 and forecasted for 2020.  The data for international trade shows the mode used to move these cargoes to/from their domestic markets through Southern California gateways, not necessarily the mode used to carry the product into or out of the United States.  In 1998, over 735 million tons of freight moved into, out of, and within Southern California (FHWA Freight Analysis Framework Database, 2002).  Key features of Southern California freight markets are summarized below.

Regional and Local Distribution

  • The enormous population and economic base creates a massive internal market for local/regional distribution and creates a critical mass of freight transportation facilities.
  • Over 30 percent of the freight tonnage moved in Southern California remained within the six county region (see Figure 2.1)
  • The region is home to 32,538 wholesale trade establishments and 7,345 trucking firms.
  • The region ranks second among U.S. metropolitan areas for wholesale trade employment and sixth in wholesale trade share of total employment.

Figure 2.1  Freight in the SCAG Region (Millions of Tons)

Freight in the SCAG Region (Millions of Tons) shows that over 30 percent of the freight tonnage moved in Southern California remained within the six county region.

Source: Federal Highway Administration, Office of Freight Management and Operations, Freight Analysis Framework.

Domestic Trade and National Distribution

  • The Los Angeles MSA is one of the leading manufacturing centers in the country, shipping $20 billion in manufactured goods and providing roughly one million manufacturing jobs in 1997 (more than the entire state of Michigan).
  • The six county region ranks fourth in total manufacturing jobs behind the entire state of California, Ohio, and Texas.
  • Figure 2.2 illustrates commodity flows between Southern California and its local, regional and national markets.  The map was developed in the Freight Analysis Framework, and shows the movement of freight that has either an origin or destination within the Southern California area.  (Freight shipments that travel the area but do not actually have an origin or destination within the region are not represented.)  This illustrates the importance of both domestic and international trade shipments between Southern California and the rest of the U.S. and the need for effective transportation networks to link the region's economy to the rest of the United States.

Figure 2.2  Los Angeles Total Truck Flows (1998)

Figure 2.2 illustrates commodity flows between Southern California and its local, regional and national markets.  The map was developed in the Freight Analysis Framework, and shows the movement of freight that has either an origin or destination within the Southern California area.  (Freight shipments that travel the area but do not actually have an origin or destination within the region are not represented.)  This illustrates the importance of both domestic and international trade shipments between Southern California and the rest of the U.S. and the need for effective transportation networks to link the region's economy to the rest of the United States.

International Trade

  • According to the Los Angeles County Economic Development Corporation, $230 billion of international trade cargoes moved through the region’s ports of entry in 2000.  This accounted for over 11 percent of the nation’s international trade and generated 37 percent of all import duties.
  • International trade accounted for approximately 9 percent of the total tonnage moved into and out of Southern California in 1998 (see Figure 2.1).
  • International trade is the fastest growing segment of the Southern California freight picture, with expected growth to 14 percent of total tonnage moved in the region by 2020 (see Figure 2.1).

The Freight Transportation Network in Southern California

In order to support its freight transportation markets, Southern California has developed an extensive infrastructure of international gateway facilities, interstate multimodal corridors, and a metropolitan roadway and distribution network.

International Gateways

Southern California has made substantial investments in infrastructure to service international trade through its airports and maritime ports.  The region is a major air cargo center, home to two international and six commercial airports.  Most of the region’s air cargo moves through Los Angeles International Airport (LAX), making it the third busiest air cargo facility in the world.  Air cargo is critical for many manufacturing operations both in the U.S. and abroad, and the high-value cargo typically shipped by air explains why LAX handles more exports by dollar value ($36.5 billion in 1997) than the nearby Ports of Long Beach and Los Angeles ($35.2 billion).

Southern California is home to three international deepwater port facilities that comprise the Los Angeles Customs Region.  The Ports of Los Angeles and Long Beach, respectively the first and second largest container port facilities in the United States, together form the third largest container port complex in the world.  Their share of West Coast container cargo is an astounding 50 percent and growing, and they handle 35 percent of all waterborne cargo in the U.S.  The Port of Hueneme, the only deepwater harbor between Los Angeles and the San Francisco Bay Area, has developed to serve a core niche.  It is the top seaport in the United States for citrus exports and ranks among the top 10 ports in the country for imports of automobiles and bananas.

Interstate Multimodal Corridors

An extensive network of multimodal facilities has developed in order to link the large cargo volumes of both domestic and international trade moving between Southern California and the rest of the country.  The regional air cargo system also serves the domestic trade system.  Southern California is a major rail hub with both Western Class I railroads operating on mainlines that connect the region to the national rail network.  The region includes six rail-truck intermodal facilities, including Burlington Northern Santa Fe’s (BNSF) Hobart Intermodal Facility, the busiest in the U.S. (handling over 90,000 lifts per month).  There are three major interstate highway corridors in the region:  I-5 (providing linkages to the rest of the West Coast of the U.S., Canada, and Mexico); I-15/I-40 (providing links to the interior U.S.); and I-10 (the “Southwest Passage” to the rest of the Sun Belt).  Each of these interstates ranks among the highest truck volume corridors in the Western U.S.

Metropolitan Roadway System

Southern California is famous for its freeway system, which functions as the backbone for the extensive local distribution network that serves the regional economy.  As of 1997, Southern California was home to 8,906 miles of freeways; 14,998 miles of principal arterials; 17,605 miles of minor arterials; and 8,262 miles of major collectors.  This system includes critical access routes to the ports, airports, and rail intermodal facilities.

3.  Regional Concerns that Influence Freight Planning and Management in Southern California

Freight transportation has helped facilitate the enormous economic success Southern California has enjoyed throughout its history. Looking to the future, this metropolitan area must determine how it will balance the needs of a growing economy and population with an increasingly constrained transportation system.  Decision-makers at the state and local level are beginning to craft innovative strategies for addressing freight transportation needs, with an initial focus on trade gateways and corridors of statewide and regional significance.  An example of these innovative approaches is the Global Gateways Development Program (SCR 96, Karnette), a state program that calls on the state’s Department of Transportation (Caltrans) to develop strategies and funding programs to improve those key transportation facilities that provide access to trade gateways.  In its report to the legislature as mandated by SCR 96, Caltrans identified a number of issues that will influence freight transportation priorities in California in the future.  Most of these issues will also drive freight transportation planning in Southern California.

Growth heads the list of regional issues that will face freight transportation planners in the future.  The question for Southern California is how to accommodate economic and transportation growth in the context of heavily congested transportation facilities, regulatory constraints posed by the region’s air quality non-attainment status, increasing concerns about transportation safety and security, growing land use conflicts and constraints, and the complexity of regional governance and institutional relationships.


Fueled by the continuing economic growth of the region and the increasing importance of international trade in the national economy, goods movement traffic in Southern California by all modes is projected to increase by over 80 percent between 1995 and 2020, according to studies conducted for SCAG.  More recent freight forecasts by the FHWA project that domestic freight flows in Southern California will grow at a higher rate than the national growth rate  (83 percent growth in Southern California between 1998 and 2020 as compared to 71 percent growth nationally).  International freight traffic in Southern California is projected to grow at a substantially higher rate than international freight will grow for the nation as a whole (170 percent growth in Southern California between 1998 and 2020 as compared to 98.7 percent growth in the rest of the nation).

Figure 3.1 illustrates the growth in freight tonnage by mode projected by SCAG.  The Regional Transportation Plan (RTP) forecasts over 65 percent increase in regional heavy-duty truck traffic by 2020.  SCAG studies project rail tonnage in Southern California to increase by more than 240 percent between 1995 and 2020, due in large part to international trade growth and connections to the Ports of Los Angeles and Long Beach.  Air cargo is expected to be the fastest growing component of the regional goods movement picture, with growth of over 300 percent in tonnage projected by SCAG between 1995 and 2020.  Other studies forecast the strong growth in marine cargoes will continue into the future.  Port projections show increases to between 25 million and 36.1 million 20-foot equivalent units (TEUs) by 2025 from current levels of 9.5 million TEUs. 

Figure 3.1  Freight Forecasts by Mode:  1995-2020

Figure 3.1 illustrates the growth in freight tonnage by mode projected by SCAG.  The Regional Transportation Plan (RTP) forecasts over 65 percent increase in regional heavy-duty truck traffic by 2020.  SCAG studies project rail tonnage in Southern California to increase by more than 240 percent between 1995 and 2020, due in large part to international trade growth and connections to the Ports of Los Angeles and Long Beach.  Air cargo is expected to be the fastest growing component of the regional goods movement picture, with growth of over 300 percent in tonnage projected by SCAG between 1995 and 2020.  Other studies forecast the strong growth in marine cargoes will continue into the future.  Port projections show increases to between 25 million and 36.1 million 20-foot equivalent units (TEUs) by 2025 from current levels of 9.5 million TEUs.

Population growth will exacerbate trends in congestion and land use competition, while creating an even larger internal market.  The six-county Southern California region will add more than five million people – twice the population of Chicago – over the next 20 years.  Ultimately, additional freight growth will also be driven by demand from this growing population.

Congestion - Highway and Facility Based

Congestion is a critical problem in Southern California.  According to the American Society of Civil Engineers’ 2001 Report Card for America’s Infrastructure, Los Angeles highways create 82 person-hours of delay per capita annually, the highest in the country.  This report also shows that Los Angeles has four of the 10 most congested highway locations in the U.S.  The I-405 at the I-10 interchange, U.S. 101 at the I-405 interchange, State Route 55 at the State Route 22 Interchange, and the I-10 at the I-5 interchange each average 10 minutes of delay per vehicle per trip during peak hours.  The contribution of trucks to regional congestion is forecast to increase as truck vehicle miles of travel (VMT) increase from 38 million miles in 2000 to 50 million miles in 2010, according to estimates by the California Air Resources Board (ARB), a higher rate of growth than is being experienced by automobile traffic.

There remains a perception that trucks are significant contributors to congestion due to their disproportionate use of roadway capacity, but trucks are also influenced by congestion, and the resultant costs eventually affect all consumers.  Congestion leads to longer travel times per trip, which in turn means that truck drivers will make fewer pickups and deliveries during a day.  Therefore, either the cost of goods will increase or drivers’ income will decrease.  Spreading of the peak period exacerbates the congestion problem by making it more difficult for truckers to squeeze their activities into narrowing windows of low traffic volumes during off-peak hours.

Incident-based congestion creates unreliability in the transportation system.  Unreliable transportation systems cause travel times to become unstable, preventing shippers, carriers, and logistics providers from being able to precisely schedule shipments.  This can cause a ripple effect throughout the supply chain as inefficient inventory levels and labor utilization increase the cost to deliver goods to the final customer.

Highway congestion also affects the operations of other transportation facilities.  Air cargo facilities rely on trucks to feed shipments to the airport and to deliver goods to their final destination.  Intermodal rail facilities primarily utilize trucks to connect the rail system to its customers and with other modes such as the ports.  The largest intermodal facility, the BNSF Hobart Yard in downtown Los Angeles, is within 20 miles of four of the worst interchanges in the country (I-405 at I-10 interchange, U.S. 101 at I-405 interchange, State Route 55 at State Route 22 interchange, and I-10 at I-5 interchange) [2].  I-710, the major access route to the Ports of Los Angeles/Long Beach, experiences an average of five accidents, and the resultant delays, everyday.

In addition to congestion on the highways, air, rail, and port facilities in Southern California also face significant internal capacity constraints.  For example, airport and air traffic congestion is influencing the reliability of airfreight operations.  In 1999, the Federal Aviation Administration reported that about 28 percent of departures (including freight and passenger flights) at LAX were delayed because of air traffic volumes.  To accommodate future demand, the region must balance between expanding the 6.1 million square feet of dedicated cargo space in the LAX local area (over two million of which are on LAX property) and expanding air cargo facilities at other local airports.  The traffic volumes at intermodal facilities serving both the ports and railyards in Southern California are also projected to exceed capacity over the next 20 years.  Increased delays at terminals gates and within the terminals themselves, coupled with increased passenger traffic demands to move freight into and from these facilities, has led to additional concerns over the region's ability to handle future freight movements.

Air Quality

Air quality management is another significant issue facing transportation planners in Southern California.  The region includes all or part of seven different air quality non-attainment or maintenance areas in five air basins.  The South Coast Air Basin is a severe non-attainment area and the need to demonstrate transportation plan conformity can constrain capacity expansion.

Marine, rail, and truck modes predominantly use diesel fuels, which are major sources of oxides of nitrogen (NOx – an ozone precursor) and the primary mobile source of particulate matter.  With the successes of the past 30 years in the control of emissions from light-duty on-road vehicles, emissions from freight modes are coming under increasing scrutiny.  However, the share of total mobile source NOx emissions in the South Coast Air Basin attributable to trucks is expected to increase from 44 percent to 53 percent between 2000 and 2010, even with the adoption of new truck emission standards.

In California, trucks will face increasingly stringent emission standards and requirements for cleaner burning diesel fuels.  These requirements will add costs to freight transportation.  Historically, California established its own emission and fuel standards, a difficult posture given that many trucks operate in interstate commerce.  Competitive effects on the California trucking industry have long been an issue of contention between the California Trucking Association and the California Air Resources Board, which, with the U.S. Environmental Protection Agency (EPA), regulates truck emissions and diesel fuel specifications.  Regulation of off-road mobile sources of pollution, including locomotive and steamship emissions, have also periodically involved contentious relationships among the carrier community, the California Air Resources Board, and regional air quality management agencies.


In the aftermath of the terrorist attacks on September 11, 2001, transportation security has become a priority.  The Coast Guard has dramatically stepped up its harbor patrols and monitoring efforts.  The California Highway Patrol completed a re-certification of the 1,000 companies licensed to carry hazardous materials in the Southern California region, although current inspection processes are costly and time consuming.  Containers must be selected (often at random), stopped, opened, sifted, and approved to continue moving towards their final destination.  Increasing the amount of inspection introduces significant additional costs to goods movement.

Air cargo facilities have a unique security issue, because passengers and freight are often mixed aboard the same aircraft with cargo being carried in the belly of commercial airlines.  Screening of cargo is likely to undergo increased scrutiny in line with the procedures that have been enacted for air passengers and their baggage.  Potential future actions range from increasing the percentage of cargo security checks, to improving the cargo screening equipment, to mandating that cargo use dedicated air freighters only.  The latter solution would dramatically increase the cost for both air cargo and air passengers.  In Southern California, implementation of increased inspection processes will be particularly difficult due to the high percentage of international freight moving through airport facilities.


Provision of a safe transportation system is one of the key goals of regional transportation planning in Southern California.  However, the interaction of passenger transportation and freight transportation on the regional roadway system and at road-railroad crossings creates significant safety concerns.  Many accidents result from outdated highway designs that do not reflect current vehicle size, vehicle performance, or driving habits.  The lack of proper median or narrow shoulders of highways has also increased accident risk.  Overloading or improper loading of vehicles also creates safety concerns.  Truck-involved accidents have a higher incidence of fatality, property damage, and economic loss compared to other types of accidents.  Truck-involved accidents also generate traffic congestion, because truck related incidents generally involve a larger number of lanes blocked or closed.  Records show that, in Southern California during the five-year period from 1992 to 1997, there were over 27,000 truck-related accidents with 10,200 accidents involving injuries, 232 accidents involving fatalities, and over 20,000 accidents involving property damage.  Safety issues are more critical on the corridors with heavy volumes of truck traffic.  For example, in 2000, on a 27-mile stretch of the I-710 Freeway, trucks were involved in over 31 percent of its 2,250 reported accidents.  The trucks were found to be at fault in roughly half of the accidents.

Rail accidents are also a major concern in the region, especially at rail-roadway crossings.  Fatalities related to railroad traffic have declined by two-thirds since 1960 as the result of improvements in rail crossing technology, better education, and improvements to rail infrastructure.  Nevertheless, between 1997 and 2000, the California Highway Patrol counted over 40 deaths and 345 injuries due to rail crossing accidents.  Hundreds of millions of dollars are spent in the region to separate the rail and road infrastructure in an effort to reduce the safety risk of accidents at highway-rail crossings.

Land Use

While the older metropolitan areas of the East and industrial Midwest are grappling with freight access problems in mature, built-out, high-density urban cores, Southern California faces its own unique land use-related problems.  The metropolitan area is famous for its sprawling development and high-priced real estate.  This development pattern has had significant consequences for freight facilities in the region.  Ports, airports, intermodal terminals, and truck terminals frequently abut built-out industrial, residential, and commercial areas, creating land-use conflicts and limiting the ability to expand existing facilities.  Attempts to expand the LAX airport are fiercely opposed by residents in neighboring communities, while residents of communities along the I-710 access routes to the San Pedro Bay ports complain of environmental justice violations associated with heavy truck traffic.  Truck operators face increasing parking and traffic route restrictions in cities throughout Southern California.

Distribution centers utilize cheap suburban land to relocate and expand their facilities.  Housing developers are building in the same areas to provide homes to the region’s growing population.  Over time, the pattern experienced in today’s developed sections of the metropolitan area will be repeated.  Community pressure will mount for the distribution centers to relocate and expand further out of the region.  One long-term outcome may be more dispersed distribution centers and longer truck trips, leading to an increase in local and regional congestion and emissions.

Regional Governance and Institutional Complexity

Transportation planning and programming in Southern California are conducted in one of the most institutionally complex settings of any region in the country.  Figure 3.2 lists some of the many organizations that are involved in regional transportation planning.  Four different district offices of the California Department of Transportation (Caltrans) are responsible for planning, design, construction, maintenance, and operation of the region’s state highways.  SCAG, the regional MPO, develops the Regional Transportation Plan (RTP) and provides funding for numerous regional transportation studies.  There are six county transportation commissions/authorities (CTCs) that are responsible for programming and funding the transportation projects in Southern California.  There are 14 subregions, represented by councils of government and subregional planning agencies that work with SCAG and the CTCs to conduct transportation planning throughout the region.  At the base of this pyramid of regional transportation agencies are 184 cities that have critical roles in permitting roadway construction projects and operating and maintaining much of the regional roadway network.

Figure 3.2  Organizations Involved in the Regional Transportation Planning

Organizations Involved in the Regional Transportation Planning: Four different district offices of the California Department of Transportation (Caltrans) are responsible for planning, design, construction, maintenance, and operation of the region's state highways.  SCAG, the regional MPO, develops the Regional Transportation Plan (RTP) and provides funding for numerous regional transportation studies.  There are six county transportation commissions/authorities (CTCs) that are responsible for programming and funding the transportation projects in Southern California.  There are 14 subregions, represented by councils of government and subregional planning agencies that work with SCAG and the CTCs to conduct transportation planning throughout the region.  At the base of this pyramid of regional transportation agencies are 184 cities that have critical roles in permitting roadway construction projects and operating and maintaining much of the regional roadway network.

There are a host of other governmental agencies involved in regional transportation issues.  These include the seaport and airport operators (city agencies or joint powers authorities), the California ARB, and the regional air quality management and water quality agencies.  The competing priorities, fragmented funding resources and authority, and overlapping geographic jurisdiction of these different agencies make cooperative planning a necessity and a frequent challenge.  In general, the various transportation agencies in Southern California have developed processes for planning and implementing transportation programs and projects that provide clear authority and jurisdiction to each participating agency.  However, most of these planning and implementation models encounter problems when applied to freight projects.  The reach of freight markets and freight projects extends across traditional jurisdictional boundaries and the cooperative relationships that are needed to deal with freight projects (often involving both public and private agencies) have often not been developed.

In an attempt to coordinate freight activities at the regional level, SCAG has established a Goods Movement Advisory Committee (GMAC).  While the GMAC provides a useful forum for discussing freight issues that have regional implications, it has yet to tackle some of the thornier problems associated with institutional relationships.  Some stakeholders feel new institutional structures/models are needed to bring together various agencies that have responsibilities for planning freight projects that overlap existing jurisdictional boundaries.  In the most widely heralded freight success story in the region, the Alameda Corridor, a new joint powers agency was created to handle implementation of the project.  Creating new joint powers agencies for every multi-jurisdictional freight project in the region may prove cumbersome in the future.  Which agencies will be included in these agreements and which will not, could be a source of much controversy.  Clearly, Southern California is still searching for the appropriate institutional mechanisms with which to plan and coordinate major freight projects of regional significance.

4.  Regional Successes in Freight

Despite the many challenges facing freight planners and managers in Southern California, the region has achieved some notable successes.  Several projects have addressed freight transportation for both international and domestic shipping needs through improvements at the international gateways, the statewide and multi-state corridors, and within the metropolitan roadway network and by dealing with many of the freight planning and management issues mentioned in the previous section.  Successes have included capital projects, several of which are under construction and many of which have been programmed.  In addition, the region has developed successful planning processes and institutional strategies, along with innovative funding/resource management strategies.  The lessons learned from these successes and the remaining planning process, institutional, and funding challenges should help inform discussion about future regional, statewide, and national freight policy.

Successes at the International Gateways

Capital Project Successes

  • The Alameda Corridor – Perhaps the nation’s largest freight-oriented public works project, the Alameda Corridor, consolidates harbor-related rail traffic from four separate branch lines into a 20-mile, fully grade-separated route.  The corridor connects the Ports of Los Angeles and Long Beach to the transcontinental rail line near downtown Los Angeles, eliminating 200 at-grade crossings and doubling rail speeds.  The Alameda Corridor has helped the port area cope with growth in international trade and roadway/railroad congestion by facilitating more efficient on-dock rail movements to and from the ports and reducing delays at rail grade crossings. Increased on-dock rail will also have positive air quality implications as rail movements emit fewer pollutants per ton-mile than do truck.  The elimination of 200 at-grade rail-roadway crossings will reduce accidents and improve the safety of the freight transportation system.
  • Port Infrastructure Improvements – All three of the region’s deepwater ports are constructing major infrastructure improvements on port property and at adjacent access roadways.  These include dredging and landfill projects, terminal expansion, and the development of on-dock rail facilities, grade separations, interchange construction, and bridge replacements.  A major impetus for these infrastructure improvements is to accommodate the projected tripling of container traffic at the ports.  Improvements to on-dock rail facilities and roadway access improvements should also partially relieve congestion near the ports.  The on-dock rail improvements, coupled with the opening of the Alameda Corridor, are projected to increase the on-dock rail share of port inland container traffic from 15 to 35 percent.
  • LAX/Ontario Air Cargo Improvements – These projects include cargo terminal expansion and reconstruction, the development of ITS for trucks at LAX, and roadway improvements related to the opening of Ontario International Airport’s two new passenger terminals in 1998.  Like the terminal expansion and roadway access projects at the ports, these improvements will help reduce congestion in the vicinity of the airports and accommodate future growth in air traffic.

Organizational and Planning Successes

  • Port Truck Travel Demand Model – The Ports of Long Beach and Los Angeles have developed a state-of-the-art truck travel demand model that was used for the Port of Long Beach/Port of Los Angeles Transportation Master Plan, and will be used as a major component of the analysis tools for the I-710 Major Corridor Study.  This unique modeling tool is helping port and regional planners evaluate alternatives that will address congestion and growth issues on access routes to the port.
  • West Coast Waterfront Coalition – The West Coast Waterfront Coalition was formed to bring together shippers and other interested parties on the waterfront to discuss ways of working together to solve problems related to trade logistics operations in the ocean shipping industries.  By working together to change logistics practices (such as changes in hours of operation), the group hopes to induce more substantial changes in the operations of the port than if each acted individually.  Ultimately, increased efficiency in the supply chain should translate into operational capacity improvements to deal with growth and congestion problems.
  • National Center for Metropolitan Research (METRANS)/Center for International Trade and Transportation (CITT) – A major program that has brought public and private interests together in the region is METRANS, a University Transportation Center funded by the U.S. DOT and operated by the University of Southern California and the California State University at Long Beach.  CITT, also at the California State University at Long Beach, is another organization that has focused on research and education efforts related to the unique needs at the gateway facilities.  CITT has been instrumental in bringing together public and private stakeholders on issues related to trade and transportation, including hosting the Southern California Goods Movement Summit, and offers degree and certificate programs in global logistics.  METRANS/CITT have also facilitated dialogue among industry and labor stakeholders in international trade through their “town hall” meetings.  These stakeholder meetings cover a wide range of topics that are helping address operational improvements that involve all of the stakeholder groups.

Funding/Resources Successes

  • Financing for the Alameda Corridor – The approach used to generate the required funding to construct the Alameda Corridor is an outstanding example of how a combination of local grant money, federal loan money, and user fee backed revenue bond financing can be used to raise the significant capital required to make gateway improvement projects work.  The largest portion of funding ($1.16 billion) was obtained from revenue bonds.  Another $400 million was provided through federal loans under the TIFIA program.  This debt financing will be repaid with revenues obtained from user fees.  The Alameda Corridor Transportation Authority (ACTA) came up with a plan to charge a $30 fee on all containers using the corridor.  The remainder of the project’s funding came from port contributions ($394 million), local contributions (conventional funding sources from the Los Angeles County Metropolitan Transportation Authority (LACMTA)), and other local sources ($130 million).
  • ITS Intermodal Demonstration Funds – The ports have also been successful in obtaining a grant from the Federal ITS Intermodal Program, which was created to demonstrate how ITS solutions could be applied to major intermodal hubs.  The ports are using this funding to implement a comprehensive ITS program that will link real-time traffic information at the terminal gates with public ITS in the vicinity of the port and private information management systems in order to allow for more efficient scheduling, dispatching, and traffic management.

Successes on State and Multi-State corridors

Capital Project Successes

  • The Alameda Corridor East (ACE) – The goal of the ACE project seeks to mitigate the effects of increased rail traffic along a freight mainline corridor from Los Angeles through San Bernardino County.  The project will include safety upgrades, traffic signal control measures, constructing grade separations at rail crossings, and the elimination of at-grade rail crossings.  In addition to the safety improvements, these projects will allow for more efficient rail operations to deal with growth in domestic and international trade by rail.
  • The Orange County Gateway (Orangethorpe Corridor) – This project will provide grade-separation for the BNSF mainline through northern Orange County.  The Orange County Gateway is part of the larger ACE program and addresses rail-highway safety issues and the need for more efficient, higher speed rail operations through this congested rail corridor.
  • San Bernardino County Infrastructure Projects – Using traditional state and federal transportation funds in combination with $600 million from a half-cent, voter-approved sales tax, this subregion made numerous improvements integral to movement of freight in and through San Bernardino County.  Some of the key projects to improve interregional goods movement facilities have included additional capacity on SR-60 (a critical truck route through the county), upgrades to I-215 that improve access to San Bernardino International Airport and the BNSF Intermodal Facility, and ground access improvements at Ontario International Airport.
  • Railroad Investment Programs – After the mid-1990s mergers left the Western U.S. with two Class I railroads, both rail companies made major investments in Southern California.  For example, the BNSF has invested in new track and parking at its East Los Angeles intermodal facility and upgrades and major expansion of the San Bernardino intermodal facility.  These improvements will expand capacity and reduce rail congestion throughout the region.

Organizational and Planning Successes

  • Development of Regional Freight Planning Capacity – The Caltrans Office of Goods Movement has funded full and partial positions in many of the Caltrans district offices for goods movement planners.  Through this process, local Caltrans officials are being trained to understand the unique requirements of freight projects; and this increases the likelihood that freight concerns will be addressed in projects that involve the state highway system.  This should also help address some of the institutional obstacles to getting freight projects programmed.
  • Development of Statewide and Interregional Commodity Flow Data – Recognizing the need for improved data and analytical tools, public agencies in Southern California have worked together to develop several innovative programs.  California was one of the pilot states to develop an intermodal management system (ITMS) as required by the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA).  The state continues to support the ITMS even though the requirement for this system has been eliminated from the federal regulations.  The freight component of ITMS includes county-level commodity flow data for the entire state.  Building from this early program, SCAG conducted an interregional goods movement study in the mid-1990s that further developed regional commodity flow data.  These data are used in a variety of planning studies to help understand the transportation requirements to facilitate freight growth in the region.
  • I-10 Pooled Funds Study – Caltrans has been a leader in bringing together a group of state Department of Transportations (DOTs) along the I-10 corridor from California to Florida to look at how coordinated multi-state and multimodal freight planning can be conducted for a nationally significant freight corridor.  A pooled funds study is being conducted to characterize current and projected freight flows and to develop alternatives for improved freight efficiency and safety in the corridor.

Successes on the Metropolitan Transportation Network

Capital Project Successes

  • Los Angeles City Goods Movement Improvement Program – This program was one of the first local goods movement investment programs developed with funding assistance from SCAG.  In Phase I of the program, the City obtained $1.8 million in discretionary funding from the LACMTA Transportation Improvement Program (TIP) to address problems with truck movement and access to intermodal facilities, distribution centers, industrial uses, and freeways in the City, as well as truck conflicts with sensitive land uses.
  • Riverside County Infrastructure Projects – Riverside County also has a half-cent sales tax that has been used to fund major transportation projects that have benefited goods movement.  Currently, the Riverside CTC has several major goods movement-related projects underway, including construction of truck climbing lanes and truck bypasses and interchanges on key freight routes.  One interesting example of public-private partnership in the county was the establishment of the Metrolink commuter rail service, which invested millions of dollars in track improvements on main lines of the Class I freight railroads.

Organizational and Planning Successes

  • Freight Element in SCAG Long-Range Transportation Plan – When the ISTEA mandated that states and Metropolitan Planning Organizations (MPOs) plan for efficient intermodal systems for passenger and freight transportation, very few regions had instituted the necessary processes to examine goods movement needs.  However, in the Southern California region, a number of steps have been taken to develop the necessary planning processes.  Almost immediately after the passage of ISTEA, SCAG began implementing a goods movement planning program, including the designation of goods movement planners on the staff and development of a freight element in the RTP.

    A major freight focus in the most recent RTP has been the identification of a system of corridors that could benefit from dedicated truck lanes.  SCAG, in partnership with Caltrans District Offices and the relevant CTCs, is undertaking a process to examine the feasibility of the truck lane concept in these corridors.  To assist in this process, SCAG has developed a Truck Lane Task Force.  SCAG is also conducting studies of rail capacity constraints in order to develop regional public-private investment strategies.  All of these planning efforts have addressed regional governance and multi-jurisdictional cooperation in the region.
  • Subregional Freight Studies – Another successful program initiated by SCAG is the funding of subregional freight studies.  These studies, which often focus on arterial needs and involve city public works directors in the process, have helped participating cities identify projects for programming in the TIP. These projects have been very successful in developing multi-jurisdictional collaboration within the region and, in a number of cases, have helped facilitate public-private cooperation by focusing on specific projects of concern to the goods movement industry.
  • Regional GMAC – Several efforts have been undertaken in Southern California to facilitate public-private collaboration on freight projects.  SCAG convened a regional GMAC that brings elected officials and public agency staff together with representatives of private sector freight interests to address problems of regional significance.
  • Regional Heavy-Duty Truck Model –In the late-1990s, SCAG undertook development of a regional heavy-duty truck model.  Funding for this project was obtained from discretionary funds of the South Coast Air Quality Management District, which was interested in obtaining more reliable forecasts of truck activity for emissions modeling.
  • Subregional Truck Models – A number of subregions have also developed truck models or truck elements of subregional travel demand models, including the San Bernardino Associated Governments (SANBAG) and Imperial County.  The LACMTA has recently begun a major effort to build a county truck model and freight database that will be used in the evaluation and planning of future freight projects.
  • Truck Data Collection Programs – There have been a number of efforts undertaken in the region to collect data on truck activity.  These include the regular Caltrans truck count program on state highways, the recent Caltrans Statewide Truck Travel Survey, numerous truck counts and shipper surveys conducted during the subregional goods movement studies, a major truck count and truck origin-destination study currently underway at SCAG, and planned truck travel diary surveys to be conducted by the LACMTA.
  • Freight Partnership Working Group – Recently, the LACMTA kicked off a major effort to enhance its freight planning capabilities and convened a Freight Partnership Working Group to assist in this effort.  The Working Group, which includes public and private sector freight interests, is assisting the LACMTA in establishing policy and programming priorities and will help with data collection needed to further develop models and analytical tools.

Funding/Resources Successes

  • Programming Funds in Traditional TIP Process – All of the CTCs in the region have begun to program local roadway and arterial projects through their traditional TIP process.  By focusing planning resources on identification of fixable problems and educating decision-makers about congestion relief, safety, and air quality benefits of projects, the programming of freight projects is beginning to occur.  As a number of the region’s planners have noted, it helps when freight projects also benefit non-freight modes.
  • Local Sales Tax Measures – Several CTCs have been able to program projects with funds from local sales tax measures.  In these cases, projects with clear local benefits have been the leading candidates.  For example, projects in San Bernardino County and Riverside County that used local sales tax revenues to fund improvements on freeways and freeway interchanges that are also major commute routes or to provide better access to Ontario Airport, which serves a growing volume of passenger travel, were sold to the public without any significant discussion of freight benefits.

5.  Lessons Learned and Continuing Challenges

Much can be learned from the Southern California experience that is relevant to the national freight policy discussion.  The region’s project successes provide examples of the full range of types of freight projects that states and MPOs may need to undertake at international gateways, state and multi-state corridors, and in the metropolitan road network.  There are many more project ideas that have been identified and will be pursued in the future.

What is most relevant to national freight policy are the lessons learned and challenges in the areas of funding/financing and planning processes/institutional relations.  Within each of these broad areas, there are a number of specific issues that have emerged in Southern California that are discussed in the remainder of this section


Adequacy of Funding Resources

With the enormous growth in goods movement traffic predicted for Southern California across all modes, it is not difficult to see why there is a need for substantial investment in infrastructure and operational improvements.  However, the cost of maintaining and improving the existing transportation network within the region for all users exceeds the available resources.  The 2001 SCAG RTP estimates costs of all regional transportation projects over the next 20 years at $44 billion, compared with available resources estimated at only $24 billion.  In addition to the enormous construction costs associated with these projects, transportation projects in Southern California, as elsewhere in the country, face growing costs of right-of-way acquisition, environmental compliance, complex public involvement processes, and other planning costs that will strain local transportation budgets.  Competition for transportation funds will continue to be hard fought and will challenge the political ability of the region’s decision-makers.

Several freight projects have been identified that have the potential to improve the flow of goods in the metropolitan area.  However, freight projects tend to be expensive, due to their scale and institutional complexity, and funding of the projects remains a challenge in a fiscally constrained environment. 

A major program that may suffer from funding limitations is the development of dedicated truck lanes. [3]   The SCAG RTP has identified five freeway segments that would benefit from the use of truck lanes.  However, a recent feasibility study of truck lanes on the SR-60 freeway indicated that, even if tolls were optimally applied to the truck lanes, less than 30 percent of the project costs could be recovered from project revenues.  Therefore, billions of dollars of the truck lane projects would have to be funded from other (likely public) sources.

Table 5.1 SCAG RTP Freight Projects

Truck Lane Projects

Truck Climbing Lane Projects

Truck Lane Study Projects

SR-60 (I-710 to San Bernardino County)

SR-57 (Lambert to Tonner)

I-5 (I-605 to SR-14)

SR-60 (San Bernardino County to I-15)

I0-15 (Devore to Summit)

I-5 (SR-14 to SR-126)

SR-60 (Los Angeles County to Riverside County)


I-710 (SR-60 to Port of Long Beach)

I-15 (SR-60 to San Bernardino County)

- -

I-15 (Riverside County to U.S. 395)

- -

Other projects, such as the Orangethorpe Corridor project and the San Bernardino and Riverside County portions of the ACE project, have substantial funding needs that have not been fully met.

As long as freight projects must compete in such a highly constrained fiscal environment, they will advance slowly.  This may be especially true for projects at international gateways and on multi-state networks.  These freight projects tend to be especially costly and are often perceived locally as having state or national benefits that should be paid for by the state and federal governments.  In addition, lack of flexibility in many of the available funding sources that are targeted for highway and transit improvements further limits the funding available for these types of projects.

Burden Sharing and Fairness:  The Distribution of Costs and Benefits of Freight Projects

Projects conveying national benefits but having local repercussions create unique challenges for local funding.  For example, over $3 billion worth of road improvements have been proposed for I-710, the major access route to the San Pedro Bay ports.  These improvements would have national transportation implications, since a great deal of the truck traffic is to support international trade that does not directly benefit Southern California.  Generating local sources of funding for these projects is often difficult due to the perception that the projects benefit national interests and have a mixed effect on local traffic.  Other projects, such as the Alameda Corridor, are completed only at substantial additional cost in terms of the mitigation needed to overcome local opposition.

The issue of equitable distribution of costs and benefits for goods movement projects is a question that is hotly debated in Southern California.  Many of the most expensive freight projects in the region involve access improvements to international trade hubs and dealing with increasing volumes of through traffic on facilities that serve these hubs.  Projects such as ACE, the Orangethorpe Corridor, and the San Bernardino and Riverside County grade separation projects are all dealing with increased delay and safety problems at railroad grade crossings due in part to increased international trade traffic.  The amount of local funding that has been obtained for these projects to-date falls far short of need and many local decision-makers contend that with national benefits should come national funding.

In the past, there has been limited political support at the federal level for separate categories of funds for nationally significant freight projects, so funding from Washington has often come through earmarking (as it did in the case of the Alameda Corridor).  This often pits the freight interests of this region against each other across jurisdictional lines.    At the state level, the source of funding for improvements suggested for the Global Gateways Development Program has yet to be identified and could involve contentious debate over user fees and state/local allocation of transportation discretionary funds.

The Importance of Local Benefits in Justifying Local Funding

The evidence in Southern California suggests that, while economic development benefits are often associated with successful freight projects, this seems to be more important to attract federal funding than local funding.  Former Alameda Corridor Transportation Authority (ACTA) staff indicate that it was the congestion relief and air quality benefits of the Corridor that attracted local funding.  This local funding, even in the case of a nationally significant project like the Alameda Corridor, was extremely important.  The LACMTA provided $347 million in direct grants, or 14 percent of the total project funding, based on the local congestion and air quality benefits that could be demonstrated.  In Los Angeles City, while economic development benefits were an initial rationale for the Goods Movement Improvement Program (when the project was started, California was at the height of the recession of the early 1990s), ultimately the project was sold on the merits of its safety benefits.

Innovative Financing and User Fees

Many goods movement planners in the region acknowledge that it will be necessary in the future to come up with alternative revenue sources.  Thus, there is increasing interest in user fees.  One of the successful features of the Alameda Corridor was the provision for a $30 container fee on all cargo moving in the Corridor.  This provided a revenue stream, which when combined with attractive loan terms from the federal government, allowed for almost two-thirds of the financing of the project to come from debt instruments.  But not all freight projects can be structured with user fees.  Projects on Southern California’s freeways will clearly address congestion, air quality, and safety issues that affect all motorists and many non-motoring residents.  Again, the issue of equitable distribution of costs and benefits and linking revenue sources with use of the facility is important in evaluating user fee alternatives.

There is also local concern about the negative effects that user fees could have on the competitive position of the region in both international and domestic trade.  Local state legislators have recently proposed to collect some form of fees on all cargoes moving through the ports and to use this to finance landside access improvements.  There are strong and mixed feelings about this proposal among the private and public sector freight interests.

Some local decision-makers think that the answer to the funding problem may lie, at least in part, with an alternative mechanism for distributing revenues from fees already collected by the federal government in connection with trade activities.  These officials argue that more funds ought to be available locally from customs fees and the Harbor Maintenance Tax to pay for improvements necessary to support efficient trade transportation.

Public Investment in the Private Freight System

A particular funding issue for freight projects in Southern California is the need for funding to assist the private sector for projects with broad public sector benefits.  The private sector often perceives these projects as having an insufficient return on capital due to long payback times, lack of equity, and high risk.  This is becoming an increasingly important issue in the region as public agencies become more interested in rail capacity problems.  Improvements to the regional rail system could create opportunities to divert more truck traffic off of congested freeways, as well as reducing delay at grade crossings.  Making these investments with public funds is difficult.  In Southern California, successful financial participation by public agencies in railroad projects has generally come in connection with commuter rail projects (such as the Metrolink project in Riverside County), safety upgrades, or land swaps.

Institutional/Planning Process

Regional Coordination and Decision-Making

A major problem faced by freight projects in Southern California is the large number of agencies with overlapping geographic jurisdiction that become involved in significant goods movement projects.  Freight markets do not respect political boundaries, and this requires agencies to cooperate not only in the implementation of projects, but also in the identification of needs and solutions.

The Problem of Coordinating Freight Projects that Cross Political Boundaries

An example of how this problem has been played out in Southern California comes from the history of the Alameda Corridor.  The ACTA was formed as a joint powers agreement between the cities of Los Angeles and Long Beach (both San Pedro Bay ports are managed by the departments of their respective cities).  Since the Alameda Corridor runs through a number of smaller cities on its way from the ports to downtown Los Angeles, these smaller cities were originally invited to participate as members of the board of the ACTA.  Distrust between the cities and the ports concerning how project funds would be spent and the ports’ concern about their fiduciary responsibility for the bonds that were to be issued eventually led to a reconstitution of the ACTA board that eliminated the smaller cities.

After lawsuits between the cities and the ports were resolved, the ACTA and the cities ultimately came to agreements codified in two separate memoranda of understanding that provided $12 million in mitigation funds to the cities and a guarantee of expedited permitting for construction to the ACTA.  The road to this collaboration was expensive and time consuming.

Boundaries Don't Match Freight Movement Patterns

Many other freight projects in the region involve the movement of goods over transportation networks that cross jurisdictional lines and similar issues of collaborative planning are faced consistently.  Defining the appropriate boundaries of goods movement projects can create problems from the outset.  While it may be convenient to define a goods movement project consistent with the boundaries of existing subregional or political boundaries, this may run counter to the need to produce the most cost-effective system-level solutions to problems.  For example, the definition of the ACE project now carries a particular political significance, because it is a designated corridor eligible for funding under the National Corridor Development Program.  But the definition of the corridor in the Transportation Equity Act for the 21st Century (TEA-21) legislation does not include certain portions in San Bernardino, Riverside, and Orange Counties.  Some planners in the region believe that this broader definition is more reflective of how railroad operations associated with international trade affect the regional railroad network.  Today, the projects in each of the segments of this rail corridor that are not part of the ACE are being planned as separate projects, sometimes competing against each other for regional funding priority.

Achieving Group Consensus

Regional consensus on freight project priorities is also difficult to achieve in such an institutionally complex environment.  While SCAG is responsible for establishing the RTP and as part of this responsibility undertakes to reflect regional goods movement priorities in that plan, each county has its own transportation programming authority.  Many decisions about funding priorities are, thus, made at the county level rather than at the regional level.  In this type of decision-making environment, it is especially difficult to tradeoff projects that address national and state needs with those that have primarily local benefits.

The Financial Risk Implications of Multi-Jurisdictional/Public-Private Projects

Projects that involve a single jurisdiction are clearly easier to implement than are those that involve multiple jurisdictions.  The size and scope of the Los Angeles Goods Movement Improvement program and the fact that it was proposed and implemented by a single city were keys to its success.  The Alameda Corridor, on the other hand, was one of the more institutionally complex projects ever undertaken in the region.  Dealing with three Class I railroads (before the UP-SP merger) and numerous smaller cities along the corridor created many complications and presented risk that might have been unacceptable to private financiers of the project.  In order to negotiate out of this risk, the ports ultimately purchased the rail right-of-way from the Southern Pacific Railroad (in order to assure all three railroads equal access) and memoranda of understanding were signed with all of the cities, as described previously.  While these agreements were costly to the project, they reduced the financial risk and allowed funding to proceed.

The financial community indicates that port ownership of the rail right-of-way was a critical element of the financial arrangements in another way.  Because the bonds were backed by the revenues from the container fees, the financial risk was that of achieving trade volumes rather than the financial and management health of the railroad companies.  While long-term trade projections do carry uncertainty, the risk is associated more with when the trade volumes will be achieved rather than if they will be achieved.  With conservative revenue projections, the cost of financing could be held to a more reasonable level with the revenue bond options that the ports were able to pursue.  In addition, tax exempt public sector bonding authority is a benefit rail projects rarely use.

Public-Private Collaboration and Challenges

As noted throughout this case study, the involvement of the private sector in freight transportation planning and management is crucial.  A major obstacle to this collaboration – cited by public and private sector officials alike – is the divergent planning timeframes of the public and the private sectors.  The public sector plans for 20- to 25-year implementation, whereas the private sector needs quick turnaround and rapid response in order to maintain competitiveness.  Private businesses do not see results in the public sector policy process.  Some in the region believe that shifting the focus of the GMAC, primarily an advisory group on policy issues, towards project orientation will improve the results of the GMAC.  An alternative or parallel forum that is focused on solving problems in the short term or tackling major long-term projects might prove more engaging to the private sector.

A related issue is the complexity of the planning process from the perspective of the private sector.  There are an enormous number of public agencies that are involved in identifying freight transportation needs, funding projects, and implementing projects.  Private businesses, particularly the numerous small trucking and warehousing operations, do not have the staff time to stay involved on a regular basis with all of these agencies.  Many of the issues of concern to shippers and carriers in Southern California have to do with local regulations (parking and route restrictions), design of loading areas and on-street parking, and geometric configuration of local streets.  These issues are generally not effectively addressed within the many public-private forums on goods movement that currently exist within the region.  The subregional planning studies that have been conducted have often been successful in identifying these issues and bringing together local shippers, carriers, city public works directors, and law enforcement officials.  But the extent to which any of these groups have continued to meet once the studies were completed is difficult to determine.

Another problem that has been a significant factor in public-private collaboration in the region is the distrust that has developed between the parties as a result of contentious regulatory relationships.  A central issue has been air quality regulation and its influence on the freight industry.  At various times, state and regional air quality regulations have had the potential to affect all goods movement modes.  But the trucking industry has clearly had the most frequent disagreements with the California ARB and the regional air quality management agencies over emissions and fuels regulations.  In cooperation with the ARB, the South Coast Air Quality Management District has pursued numerous programs to provide incentives for truck owners to switch to cleaner burning fuels or to adopt various emission control devices.  But these programs have not been widely subscribed.

Some of the most successful public-private collaborations involve facility improvements that benefit both freight and passenger vehicle movement.  This is even true for non-highway modes, as was the case of the Metrolink improvements in Riverside County that created justification for investment in the Class I railroad system.

Private-Private Collaboration

Many of the solutions to freight and goods movement problems in Southern California could be addressed through changes in operating practices within the industry.  But these types of changes would require a degree of cooperation among private businesses that is difficult to achieve given the competitive nature of the freight industry.  For example, many studies have concluded that if freight activity could be spread over a longer period throughout the day to avoid truck operation during peak traffic hours, increased efficiency could be wrung from the existing system.  This would require major changes in the operating practices of shippers and consignees.  Arranging these types of changes across industries has been difficult. 

Port Operating Hours - One Example of Private-Private Collaboration Challenges

For example, in order to stretch existing capacity and accommodate growth at space-constrained facilities, the option of lengthening the hours of operations at terminal gates at the San Pedro Bay ports has been explored.  Terminal operators avoid this option, because longer hours mean paying overtime wages or changing labor rules.  Overtime wages increase the cost of doing business at the port, and changing work rules involves difficult labor-management negotiations.  Some terminal operators report that when they have experimented with longer operating hours, there is little demand from consignees to have their cargoes picked up in off-peak hours.  Most of the shippers/consignees continue to run their pickup and delivery operations during normal business hours and are unwilling to experiment with extended operations.  These shippers/consignees cite the increased costs of overtime wages to warehouse employees under current contracts (or unwillingness of non-unionized workers to work at regular wages in off-peak hours) and local ordinances that limit night loading/unloading operations.  Drayage firms, who would like to take advantage of off-peak traffic conditions, are unable to store cargoes overnight due to lack of space and increased liability/security costs.

In the above example, the circular logic of "port terminal hours will change if truckers change their hours if warehouses change their hours if the port terminals change, etc.," presents a problem regarding who will make the first step at identifying problems and implementing solutions in a manner that generates economic benefits for the private sector partners.  Thus far, there has not been sufficient economic incentive for significant private-private collaboration in the area of expanded operating hours.  Private companies are accustomed to allocating resources to activities that create an advantage over their competitors but to also maintain profits and control costs.  There are costs associated with change, since new services require a level of commitment and usage to cover fixed costs (hiring workers in anticipation of projected activities) and generate additional profits.  Many firms may feel that they are providing adequate service for their customers, and the additional costs associated with expanding their hours may not be economically feasible, nor will their clients find any additional benefit.  The costs associated with inefficiency are simply spread amongst the various users.  Most private-private collaborative initiatives would reduce costs evenly for all companies in the industry, and, therefore, innovations may be eventually transformed into lower prices for all end customers rather than increased profits for the firms initially engaged in the freight partnership. 

Yet some terminal operators and shippers/consignees are moving in the direction of longer operating hours.  For the terminal operators, it is simply an issue of how to increase throughput for a given acreage of terminal space.  Longer operating hours can mean more throughput per acre.  These operators work hard to identify shippers most able to adapt to these changes and offer service incentives.  The terminal operators also need to be willing to wait for logistics systems to adjust, something that can be costly without an aggressive marketing campaign.  While improved reliability of delivery schedules is an advantage to shippers/consignees, it is often an insufficient incentive, particularly if drayage operators bear most of the risk of missed delivery windows. 

Private-Private Collaborations Do Exist But Difficult To Engage With Public Sector

Many private-private examples exist where firms engage in one-to-one relationships, where freight operations can be tailored to meet the needs of individual clients.  Anecdotal evidence suggests improvements can be made, but private-private partnerships are further complicated by the inability to define the issues with specificity to others outside the private sector.  Public efforts may be needed to provide the incentive necessary for private-private collaboration, but it is difficult for a public sector participant to support improving private sector operations unless the weak links in system operations can be clearly identified by the private sector firms involved. 

Public Awareness

There is often the perception in the local communities that the effects of freight activities on the surrounding neighborhoods are limited to increases in congestion, pollution, and traffic accidents.  The positive effects of freight activities, such as employment and efficient goods movement, are not recognized.  Expansion of freight facilities has the potential to be viewed by some in Southern California as an exclusively harmful event.  This was evident during United Airlines’ expansion of its air cargo facilities at LAX.  United’s air cargo operation had expanded beyond the capacity of its 20-year old facility to the extent that freight was often stored outdoors.  According to United, millions of dollars of cargo was at risk of being lost to spoilage annually due to the improper handling of freight from its old facility.  New facilities were also needed for the airline to handle the increase in demand that has been predicted for the region.  However, concerns by the local community about the effect of the new facilities on truck traffic in the surrounding neighborhoods delayed construction of the new facility and ended up costing United Airlines a significant amount of time and money.  The city of Los Angeles, on behalf of LAX, assisted in local mitigation and public awareness of the full effects of the facility expansion that ultimately allowed for completion of the project.  Clearly, a campaign to educate affected communities about the role that goods movement plays in their economy could be effective.  Thus far, the region has not developed an effective way of conducting this campaign.

Data and Modeling Tools

The evaluation of alternative proposals for freight improvements, particularly when this evaluation must be made in comparison with other non-freight alternatives, requires effective freight demand forecasting tools and performance measures.  While the Southern California region has made major steps towards the development and application of such tools, much work remains to be done.  To a large extent, this work will be focused on data deficiencies that will be expensive to address and will face practical limitations with regard to the data collection techniques.

Current Obstacles

For example, the development of the regional truck model for SCAG faced numerous data collection problems, and much of the data the model uses are based upon limited samples or data borrowed from other communities.  Carriers in the region have historically been unwilling to participate in major origin-destination studies.  Reasons cited include lack of time to participate in the program, the frustration over lack of coordination among the various agencies in the region all trying to collect the same data, and the concern over the proprietary nature of origin-destination information.  Surveys to collect statistically valid origin-destination data for a region this large will be very expensive.

The SCAG truck model also utilizes aggregate commodity flow information.  These data could be very valuable for other types of freight analyses in the region.  But the data were purchased a number of years ago and there is no process in place for updating the data.  In addition, there are needs for more disaggregate transactional data that are not available from any published source.

Decisions Made Based Upon Inadequate Freight Data Sources

Despite these problems with data, regional and subregional planners continue to try to make use of the data and tools they have as best as they can to make major investment decisions.  For example, the SCAG truck model and limited additional count data have been used to develop critical information for the SR-60 truck lane feasibility assessment and the I-710 Major Corridor Study and will be used again to study truck issues in the I-15 corridor.  Data on national and global commodity movements are being used to justify federal participation in regionally significant projects.  That these decisions are being made with data and tools that suffer from the types of deficiencies described previously is clearly a concern to regional and national decision-makers.  Regional, county, and subregional agencies are all working together with FHWA to try to build better databases and tools, but the available resources and techniques do not appear adequate to the task.

Coordination of ITS

The full integration of Intelligent Transportation Systems (ITS) into transportation operations has the potential to improve both the availability of goods movement data and the implementation of public policy initiatives.  While information systems technologies have been widely used in the freight industry for a number of years, the application of public ITS technology to freight transportation is relatively new.  There are a growing number of ITS deployments throughout Southern California, and these clearly benefit freight movements to the extent that they improve overall traffic flows and operational capacity on major freeways and arterials.  However, little has been done to target ITS squarely at significant freight corridors and facilities.

Application in Southern California

The Port of Long Beach recently received a demonstration grant from the U.S. DOT to assist with the application of ITS to improve access and security at the ports and to mitigate congestion on the area roadways.  The ports’ ITS project will provide truck drivers, truck dispatchers, terminal operators, traffic engineers, system operators, and all motorists with real-time traffic conditions information to better assist travel and manage incidents.  The Port’s Automatic Traffic Management and Information System will include terminal-gate queue-detection cameras at all container terminals; closed circuit television surveillance at container terminal gates and key roadway locations; and changeable message signs at gate exits.  The system will also provide links to other ITS, including the Caltrans Traveler Information System; eModal (a private Internet-based shipment information management system); and the Long Beach, Los Angeles, and Caltrans Traffic Management Centers.  This type of interactive ITS, coordinated across multiple government agencies and with links to private systems, could be a critical element of future freight transportation operational strategies.

Some Challenges Identified

However, much of the ITS information is owned by separate private entities rather than transportation-related public agencies.  Therefore, proprietary issues impede the availability of ITS freight data, and the data that are available are often contained in inconsistent and incompatible formats.  In addition, private systems operators have not effectively linked to public data sources, nor do they share data among each other for operational improvements.  The security of data from private systems is a critical concern as efforts to share these data are pursued.

6.  Conclusion

Safe, efficient, and reliable freight transportation is critical to the continued growth of the economy of Southern California.  The region has taken major steps to identify freight transportation needs and potential solutions to goods movement problems.  Many strategies for addressing freight transportation needs can be developed and implemented locally, but the region will continue to look to the state of California, the federal government, and private industry for partnership in ensuring efficient goods movement continues.

While the region has benefited from some major successes in building freight planning processes and analysis tools, considerable work remains to be done. 

  • Freight systems possess their own geographic dimension, forcing the region to continue developing alternative institutional arrangements to plan and manage the public sector side of its freight system.  Joint powers authorities, subregional planning groups, and multi-state compacts are all tools that have succeeded in Southern California.  The challenge is how to institutionalize these approaches in the future. 
  • Public-private coordination will also continue to be needed; and methods to engage the private sector in processes that have a short-term focus, as well as the current processes that emphasize longer-term planning, need to be pursued. 
  • Regional, state, and federal programs to help educate the public about the benefits of freight transportation are also needed. 
  • Southern California has invested substantially in data development and analytical tools, but the needs continue to outstrip the region’s ability to pay for these data/tools.  To the extent that many other regions need the same types of data/tools, a national program to address these needs could be appropriate. 
  • Continued development of national models for how to integrate public and private ITS and information management systems could lead to greater operational efficiency in regions like Southern California.  These improvements in the region’s freight planning process/tools will lead to greater success in freight planning and management in the future.
  • Financing Challenges: While domestic traffic grows, so too will traffic through international gateways, resulting in fierce competition for transportation funds.  It is logical to expect projects that show clear local benefits will be favored over those where the benefits are more dispersed.  This suggests that there will continue to be a need for state and federal funding programs to address the needs of gateway and state/multi-state corridor facilities.  Programs like the state of California's new Global Gateways Development Program, if fully funded, could help address these needs.  The region would also benefit from greater flexibility in the use of available funds so that multimodal freight solutions can be more easily pursued.  Creative financing methods, especially those that take advantage of user fees, when appropriate, will be needed to expand the resource pool.

[1] In a companion document, these stakeholders have provided a more thorough presentation of the freight story for their region.  This document is available from the Los Angeles County Metropolitan Transportation Authority.

[2] 2001 Report Card for America's Infrastructure, American Society of Civil Engineers.

[3] This is also becoming an important issue across the nation.

Office of Operations