Measuring the Impacts of Freight Transportation Improvements on the Economy and Competitiveness

Appendix D. Research Agenda

Introduction

This appendix describes a research agenda to build on the analytical frameworks and strengths and weaknesses of the techniques described above. This research agenda targets gaps in knowledge that have been identified, weaknesses in existing tools, or areas where new data and methods have recently become available, but have not been put to use. The collection of research ideas in this section is different from other more comprehensive research agendas. The SHRP 2 Report S2-C20-RW-2 Freight Demand Modeling and Data Improvement Strategic Plan has developed a wide ranging freight research agenda.⁵⁷ Project NCFRP 48 is also developing ideas for a future research agenda for TRB freight research. While there is some overlap between these different projects, the research agenda in this document is focused specifically on measuring the productivity and competitiveness benefits of freight transportation investments. While we do address a broad range of data, modeling and planning issues, all of these research ideas are targeted towards the characterization and measurement of the impact of highway freight infrastructure investment on productivity.

The supply chain is an important area of research where there are significant gaps. Much of the productivity impact of improvements in freight carriage comes from adjustments in the supply chain. This is sometimes called the reorganization effect. It is important to understand that this is a broad effect. As well as changes in highway or rail routes and location of distribution centers, it also encompasses factory locations, LTL terminals, intermodal terminals, and, possibly, port facilities. Supply chain impacts are most important for the movement and temporary storage of high-value freight—parts or intermediate products moving to factories, finished goods moving to distribution centers and on to retail outlets. Supply chain impacts may be particularly important for components that are necessary to continue production in a manufacturing operation, even if these supplies do not have a high value.⁵⁸ Supply chains constantly adjust as shippers seek to optimize logistics costs. As cost of carriage falls relative to inventory cost, lengths of haul increase and more inventory is held in fewer distribution centers.

We identify a set of research projects below that refine the existing understanding of the linkage of freight transportation to the economy. These consider how economic effects vary for different types of supply chains, different types of segments, and other factors. For each project we specify the research need, how it contributes to FHWA achieving its mission, provide an estimate of the scope and scale of the project, consider the likely time required to carry out the project, and suggest what stakeholders would need to be involved in the project.

The overall goal of this research agenda is to identify projects that will improve FHWA's understanding of the linkage between freight transportation investment, performance measures and economic competitiveness. The proposed agenda incorporates the following gaps and associated projects:

Agenda Item 1 – Understanding the Supply Chain: It is through changes in the supply chain that improvements in transportation system performance are translated into economic competitiveness. Understanding the supply chain better will help planners and policymakers analyze and model how transportation system investments improve competitiveness.

Agenda Item 2 – Freight Data and Performance Measures: New data is becoming available to measure transportation system performance. This data can be used to better understand the performance of the transportation system in real time and to analyze the supply chain. Improved freight data can provide better inputs into economic models that are used to measure the benefits (including productivity improvements) of transportation system investment.

Agenda Item 3 – Modeling freight demand and the Supply Chain: Improved activity based and microsimulation modeling tools will be needed by planners to accurately estimate freight demand and to model the supply chain. These models are also needed to better assess multi-modal transportation and mode choice decisions.

Agenda Item 4 – Improved Economic Models and Tools: Connecting changes in transportation system performance with economic impacts is the final link in the analytical chain discussed here. Improvements in economic models could allow planners and policymakers to more easily use these tools and obtain accurate results.

We have identified the following projects below as promising areas for further study. These projects address each of the agenda items (AI) discussed above.

AI1 - Urban Supply Chains and Freight Modeling

Additional research is needed on supply chains. A supply chain orientation is needed throughout transportation research, modeling and planning. In order to understand urban goods movement and the productivity benefits of investing in freight transportation improvements, it is necessary to understand the typology of common supply chains that are used in urban markets. This can be helpful for modeling. Modelers need to know, for this particular supply chain, this is how you deliver goods and these are the things you need to know to model your market place. Modelers need research, approaches and short cuts to understand what is happening in their marketplace. This would be useful at the state and local levels. NCFRP 14: Guidebook for Understanding Urban Goods Movement developed information on some of these supply chains, but given the diversity of supply chains existing, more research is needed in this area. An understanding of how supply chains work can serve as the basis for understanding the productivity benefits of transportation investments and how to model these impacts.

Project Size: Medium

Time Required: 12 months

Stakeholders to Involve: Carriers and shippers, state and local freight planners

AI2 - Freight Fluidity Indexes

More research is needed on freight fluidity indexes. Freight fluidity indexes measure the end-to-end performance of the supply chain, providing measures of performance that are more in line with how private sector logistics professionals measure and experience the performance of the transportation system (freight shipment transit time). Freight fluidity indexes are feasible to do it, but many of the data sources are private. Additional research is needed to help planners develop these indexes and access the private sector data that is needed. Freight fluidity indexes could provide better performance measures to assess how transportation investments will impact the supply chain and generate wider productivity benefits.

Project Size: Medium – This would require outreach to stakeholders.

Time Required: 12 months

Stakeholders to Involve: ATRI, carriers and shippers, FHWA, state and local freight planners, port officials

AI2 - Guidance on Using Truck Probe Data

The truck probe data are an important source of information on the performance of the highway network. This type of data may become very important for assessing the value of transportation investments for truck carriers, shippers and industry supply chains. This data may also serve as a valuable resource for conducting more detailed assessments of the impacts of transportation system performance on localized industry productivity.

Some states are using truck probe data from private sources and all states have access to the National Performance Management Research Data Set (NPMRDS). In the future there will be more vehicle probe data available. There is a need for information on how to use this data for performance measures and for research. How do you transform this data into useful information? The NPRDMS data has limitations and there are some holes in the data coverage. High volume corridors are missing. Approximately 30% of the intervals are missing. The problems get worse when you get down to lower level roadway types. There is a lot of variability in the data. There is a need to clean up the data and validate it against other sources. Other vehicle probe data has similar problems. FHWA could identify standard approaches to addressing these issues. Another issue is that the vehicle probe data set doesn't have ramp locations. When freight planners want to track the origin-destination performance, if they are missing ramp locations, it is hard to estimate the transit time for corridors. They may be missing some of the most congested segments.

Improved methods and approaches for using this data would facilitate the use of this data for performance measures, assessing the value of transportation investments and for measuring the productivity benefits associated with highway investments that improve performance.

Project Size: Medium

Time Required: 12 months

Stakeholders to Involve: ATRI, policymakers interested in performance measurement, major carrier and shipper groups, MPOs, DOTs, Researchers

AI2 - Cost of Delay by Commodity, Industry Type or Geographic Region

The benefits of transportation investments differ significantly across different commodity types, industry types, or geographic regions. Shippers with high value goods incur greater inventory costs from delays. Manufacturers with just-in-time inventory management systems can incur significant costs if unexpected delays in the delivery of supplies interfere with production. FHWA could conduct research to more fully examine how the benefits of highway investment differ between regions or commodity types. Manufacturing regions, particularly those with high value products, would likely benefit more. This research could provide data inputs for the SHRP 2 C11 Reliability Tool, improving the utility of this tool. This research could also examine the relative impacts of predictable vs. unpredictable delay on the supply chain and cost.

Project Size: Medium

Time Required: 12 months

Stakeholders to Involve: Industry groups representing major carriers and shippers, state and local policy makers involved in benefit cost analysis

AI2 - Peak and Off-peak Traffic Impacts

Many methods for estimating the benefits of highway freight investments do not adequately address the different impacts on peak and off peak traffic. For freight, this can be a significant issue since trucks will often operate during off-peak hours to avoid traffic where possible. Different types of traffic may be moving during off-peak hours than are moved during the most congested hours of the day. FHWA could conduct research to identify approaches to addressing this issue specifically by understanding how travel by time of day (during congested periods) varies by region or other freight characteristics. The benefits of freight transportation system improvements for freight moving during congested periods could be more accurately characterized. It may also be important for this research to examine the transportation system as a whole, since examining individual regions may miss the important inter-relationships and linkages in freight transportation activity and operating patterns between regions.

Project Size: Medium - This might require survey data which would be costly. Another approach would be to take advantage of existing new vehicle probe data from ATRI to understand the percentage of heavy trucks operating in off-peak hours. Existing data from vehicle classifiers and traffic counting stations could also be used to get generic estimates of the volume of trucks by type and time of day.

Time Required: 18 months

Stakeholders to Involve: ATRI, state and local freight modelers, state transportation officials involved with traffic counting

AI3 - Incorporating the Supply Chain Perspective in Freight Modeling and Planning

How can modelers understand market dynamics and the supply chain? How can they take advantage of the data explosion and leverage private sector data to improve models? New activity based and microsimulation models are providing tools to model the supply chain. How can planners translate and incorporate knowledge of local supply chains and local data into their models. More broadly, how can an understanding of the supply chain infuse all aspects of freight planning? Data limitations are currently one of the biggest barriers to a better understanding of the productivity benefits of freight transportation investments. FHWA could provide research to help freight modelers to take advantage of new public and private sector data that can improve the accuracy and utility of freight demand models that are needed to provide estimates of economic benefits.

Project Size: Medium

Time Required: 12 months

Stakeholders to Involve: Private sector data holders, Carriers and Shippers, FHWA, state and local freight planners, port officials

AI3 - Promoting the Diffusion of Agent-based and Microsimulation Modeling of Freight Flows and Costs

There is great interest in using agent based and microsimulation modeling to forecast the response of the supply chain to changes in the transportation system. There are a number of different barriers to using these new modeling tools. One problem is that these tools are too complex for practitioners to use without a major investment of time. Many State DOTs, MPOs and local governments choose not to run the simulations in-house due to time constraints. Some have hired consultants to do this work, but many agencies may not have sufficient budget for this. Providing more user friendly tools or other approaches to making these tools more accessible to State DOT and MPO staff would be useful. These models may also require a more detailed understanding how supply chains work in different regions. Approaches to obtaining the data inputs required by these models are also needed. More accurately modeling the supply chain would provide the basis for a better understanding of the productivity impacts of transportation system investments.

Project Size: Large

Time Required: 24 months

Stakeholders to Involve: Freight modelers, state and local freight planners and policymakers

AI4 - Use of Vehicle Probe Data to Estimate the Freight Reorganization Effect

New data on vehicle speeds from cell probes vehicle probes, Bluetooth and other sources are becoming available. These data will enable new types of research and economic tools. FHWA could invest additional resources in developing approaches to using these data to estimate the economic and the wider productivity benefits of freight-infrastructure improvement.

The data could be used to conduct research on productivity benefits of highway investment with a much finer level of geographic detail. FHWA's Freight Benefit Cost Study estimated an elasticity of demand for transportation using V/C ratios from HPMS. It would be useful to find out how real-time data on actual speeds affect the results of this analysis. The greater level of detail on the movement of trucks by time of day and geographic area could allow for new types of research approaches to be employed to study the supply chain. This data could also make useful contributions to the economic literature on localized industry productivity effects of transportation investment.

Project Size: Medium

Time Required: 24 months

Stakeholders to Involve: ATRI, policymakers interested in performance measurement, major carrier and shipper groups, MPOs, DOTs, Researchers

AI4 - Time Lags for Transportation and Supply Chain Impacts

One relevant question for productivity impacts is the timing of the impacts. What is the time lag from an improvement in place on a segment to supply-chain adjustments and the reorganization effect which bring the full impact, not just to the shipper, but to the regional economy? Firms will be cautious about making new location decisions and decisions on scale of distribution centers and factories. It could take a few years for the full effect to be apparent. In further research on supply chains and the reorganization effect, the goal would be better estimation of both timing and magnitude. The effect of a given change in delay or speed, for example, will vary with the value, and perhaps other characteristics, of the traffic and with the nature of the regional geography and economy. This research might also examine whether small operational projects near freight centers have a measurable impact, or if productivity analysis would be more applicable for larger scale capital projects that affect speed and development in a mature built out transportation system. This project could also build on work conducted in projects SHRP C-3 and SHRP C-11. In addition, there is ongoing research in the National Cooperative Highway Research Program Project 8-99: Methodology for Estimating the Value of Travel Time Reliability for Truck Freight System Users and in National Cooperative Freight Research Program Project 46: Benefit-Cost Methodologies for Evaluating Multimodal Freight Corridor Investments. Both of these projects are ongoing so there are not final deliverables available yet.

This is a challenging, but worthwhile, line of research. In tracing impacts over several years, it is necessary to separate the effects of the freight improvement from many other factors influencing a region's growth. One possible approach would be to find similar segments or corridors in other parts of a region or in similar regions to serve as controls for purposes of comparison. Very careful thinking would be needed to design the work and the data requirements would be substantial. Nonetheless, the results would be of significant value.

Project Size: Medium

Time Required: 18 months

Stakeholders to Involve: Major shippers and shipper groups, carriers, carriers, freight planners, academic organizations involved in supply chain research, MPOs, DOTs

AI4 - Recent Changes in Supply Chains and the Freight Benefit Cost Equation

There has been much discussion in recent years over how changes in the cost of fuel may be encouraging firms to re-engineer their supply chains. The cost of transportation has also been influenced by changes in the hours of service rules and other factors. FHWA could conduct research to examine how recent changes in transportation costs may have altered the benefit cost calculation for freight infrastructure investment.

Project Size: Medium

Time Required: 12 months

Stakeholders to Involve: Major carrier and shipper industry groups, academic organizations involved in supply chain research, state and local public sector officials involved in freight planning

AI4 - Simplified Methods to Conduct Productivity Analyses

State and local policymakers are interested in conducting comprehensive analyses of freight transportation investments that include the full spectrum of benefits, including long term productivity improvements to regional or state economies. Analyzing the productivity benefits of transportation investments often involves the use of sophisticated modeling tools and may require more time and resources than policymakers have available. The SHRP C11 project developed sketch planning tools to provide simplified methods to incorporate productivity analyses related to reliability, connectivity and market access into BCAs and EIAs. There is still a need for more simplified approaches that can provide policymakers with data that can be used earlier in the planning process. This would include case studies, summaries from literature reviews, meta-analysis and rules of thumb for estimating productivity (competitiveness) benefits of transportation investments. This project could examine economic findings on scale economies, technological learning curves, agglomeration economics, price elasticities, productivity, supply chain reorganization or other relevant economic research to identify rules of thumb for estimating productivity impacts of transportation improvements. This project would build upon the research that has been conducted in the SHRP C03 and SHRP C11 projects. The SHRP C03 tool is a case study-based web tool that provides ranges of estimates for planners to estimate economic impacts such as the direct jobs attributable to a project. One shortcoming of this database is that "the case studies do not directly measure the economic value of efficiency benefits, such as travel time savings, operating cost savings, and reliability improvement, as well as productivity growth associated with increased accessibility and efficiency of business operations."⁵⁹ The SHRP C11 project produced simplified planning tools to estimate some of the wider productivity benefits associated transportation improvements, but these tools are meant to be used in conjunction with a formal BCA or EIA analysis framework. This proposed project would be different and compliment and extend the SHRP CO3 case study database to include ranges for productivity and competitiveness benefits. Some of this information could be developed by actually applying the SHRP C11 tools to the existing cases, but this would not preclude also using the results of other existing research that is already available from a number of state and local agencies who have used more sophisticated methods. The results of this project would provide data to planners for considering the impacts of competitiveness at an earlier stage of the planning process (before using formal economic analysis tools) than now exists, similar to the data that is currently provided for direct benefits.

Project Size: Small

Time Required: 12 months

Stakeholders to Involve: State and local freight planners

AI4 – Segment-level Impacts

Many methods of assessing the benefits of highway improvements do not capture how these benefits differ across different types of highway segments. For instance, improvements to intermodal connectors, border crossings, or highway segments that are air quality hot-spots could have higher levels of benefits than other highway improvements. FHWA could conduct research to identify approaches to estimating productivity benefits on key segments. The research could highlight which segments or types of segments had the best B\C ratios for investments and which were associated with more significant productivity impacts. This work could build upon and utilize the SHRP2 C11 Intermodal Connectivity Tool. The results of this work would provide a more comprehensive documentation of the wider productivity benefits associated with investment in intermodal connectors.

Project Size: Medium to large - project size would like vary based on the number of different types of segments considered and the number of benefits included.

Time Required: 12-18 months

Stakeholders to Involve: State and local policy makers associated with air quality, intermodal facilities or border crossings; community organizations interested in the environment; academic research organizations that have done related work.

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