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2003 Forum
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2003 Oberstar Forum — Rep. Oberstar's Speech
Intermodal Transportation: The Potential and the Challenge
Remarks by Congressman James Oberstar, March 16, 2003
Introduction
I am pleased that this year’s forum focuses on a subject that I feel is at the core of our effort to reinvest in our nation’s transportation infrastructure: intermodalism. Intermodalism is more than just a "buzzword" or the flavor of the day among transport policymakers. We need to think in intermodal terms as we engage in long-range planning for our transportation infrastructures; and we will need to think in those terms for a long time to come.
In this Congress, the Committee on Transportation and Infrastructure will reauthorize the highway and transit programs, the aviation programs, and hopefully, the hazardous materials transportation program and Amtrak. I am also hopeful that we will enact rail infrastructure legislation that will finally commit meaningful resources to develop high-speed rail systems similar to those in the rest of the industrialized world and reinvest in our nation’s freight rail system. All together, these infrastructure efforts could total one-half trillion dollars!
This investment will also provide a badly needed jumpstart to the American economy. In the last two years, we have lost 2.5 million jobs. Two years ago, contractors could not find enough qualified workers. Today, more than one million construction workers are out of work and the construction sector unemployment rate is now 14 percent. Investing in our nation’s transportation infrastructure will create and retain millions of family-wage jobs. According to the Federal Highway Administration, each $1 billion of federal funds invested in infrastructure creates approximately 47,500 jobs and a total of $6.2 billion in economic activity.
In addition, this investment in our transportation infrastructure will play a vital role in enhancing our national productivity. Through a combination of public and private investment and by relaxing the regulatory framework, our transportation system has become dramatically more efficient. Between 1980 and 2000, spending for transportation and logistics fell from 16 percent of gross domestic product to only 10 percent. We are moving more goods and more people far more efficiently than ever before. By reducing the portion of GDP that is dedicated to logistics, this six percent efficiency gain in our $10 trillion economy results in a savings of $600 billion per year. Moreover, the transportation costs of moving goods, now totaling 5.9 percent of GDP, are a record low.
But these gains can easily be lost if we do not continue to invest and to invest wisely. We will need to take a more holistic approach to our transportation investment strategy than we have in the past. We must think beyond highways, airways, railways, and ports independently and, instead, focus on the interdependencies between the various modes—think intermodally.
Defining Intermodalism
As we discuss "intermodalism," I think it is important to understand what we mean by intermodal transportation. Different people use the term to refer to different things, and definitions abound. The European Conference of Ministers of Transportation defines the term as "the movement of goods in one and the same loading unit or vehicle, which uses successively several modes of transport without handling of the goods themselves in changing modes." This is, however, a somewhat narrow definition pertaining almost entirely to freight transportation. Car ferries or Amtrak’s Autotrain might be the only forms of passenger travel that would qualify, in that definition, as intermodal transportation. Webster’s dictionary gives a broader definition: "being or involving transportation by more than one form of carrier during a single journey." This encompasses both the container traffic covered by the European ministers’ definition as well as movements that involve connections and transfers, so-called multi-modal movements.
Still, much passenger travel and most freight movements involve more than a single mode of transportation. Virtually every rail and water shipment at some point will be carried by truck to its final destination. Every air traveler will use some other mode to get to and from the airport. Are all of these movements to be considered intermodal? If so, the definition would be so broad as to be meaningless. I have used "intermodal" to describe coordinated interchanges between two or more modes to complete a movement, particularly when the trip could have been made by a single mode. In this light, intermodal movements involve either the physical transfer of people or individual items from one mode to another, or the transfer of one loaded transport vehicle or container from one mode to another to continue the journey.
Intermodalism in America
Intermodalism has a long history in America. The early canals included intermodal operations to move both freight and passengers.
The Pennsylvania Canal opened in 1839 to connect Philadelphia with Pittsburgh and Lake Erie to compete with the highly successful Erie Canal in New York. Because of the terrain in Pennsylvania, an all water connection was not feasible, so the Pennsylvania "canal" included rail and wagon road segments as well.
Between 1847 and 1896, the New York, New Haven, and Hartford Railroad and the Fall River Steamship Line jointly experimented with an early type of intermodal container to handle freight movements between rail and water modes in New England.
During the 1890s, the Long Island Railroad operated the famous "farmers’ trains" bringing wagons loaded with potatoes and other produce on railroad flatcars to New York City.
Intermodalism, in forms more comparable to those of today, dates back to 1926 when the Chicago, North Shore and Milwaukee Railroad inaugurated truck-trailer-on-flatcar or piggyback service. In 1929, Sealand Lines introduced a radically new intermodal system that loaded and unloaded full railcars onto specially built seagoing vessels. This new intermodal service was inaugurated between New York City and Havana, Cuba. These vessels were among the world’s fastest and carried up to 100 railcars. Using specially designed heavy lift cranes, these ships could be loaded and unloaded in 10 hours. It would have required six days to handle the same amount of cargo using traditional cargo handling systems.
The rail piggyback service that the Chicago, North Shore and Milwaukee Railroad began in 1926 grew slowly until the-mid 1950s. A combination of excessive regulation and distrust between the railroads and the trucking companies limited its development. Eventually, the Interstate Commerce Commission revised its regulations and railroads overcame their aversion to working with the truckers and began to take advantage of the commercial opportunities offered by intermodal piggyback operations.
In 1956, Malcolm McLean revolutionized ocean shipping with his invention of the container—the TEU—efficiency convenience, safety, and big savings.
In the mid 1960s, as rail intermodal freight transportation spread across the nation, the idea of using the continental United States as a landbridge for moving containers between the Pacific and Atlantic Oceans developed. Post-Panamax container ships from the Far East could offload onto rail flatcars and move the containers to East and Gulf Port destinations. Some containers were then reloaded onto ships to continue to Europe. Others containers would move by rail or truck to other U.S. destinations. Either way, the movement was faster than going through the Panama Canal, thanks to technological innovations in handling intermodal transfers.
Rail intermodal traffic continues to expand. While truck-trailer-on-flatcar traffic has declined in recent years, ocean container-on-flatcar traffic more than doubled between 1991 and 2001 to 6.3 million containers annually. This growth is due in large part to the development of doublestack operations in the late 1970s and 1980s. Doublestacking greatly improved the productivity of rail intermodal operations. Nearly nine million trailers and containers were moved by rail in 2001.
Virtually all airfreight is intermodal in the sense that pickup and delivery services are provided by trucks. Airfreight also moves in special containers, as well as standard 8x8x20 containers that are transferred to truck, rail, and even ocean going ships. While airfreight is still a relatively small share of intermodal operations, it has been growing at an annual rate of more than 10 percent since 1985.
Intermodalism and the Federal Government
The federal government has slowly come around to recognize the importance of intermodal solutions to our nation’s transportation needs. The 1979 report of the National Transportation Policy Study Commission, on which I served, specifically recommended multimodal systems planning, rather than continuing to plan for each mode separately. The Congressional commitment to intermodalism began with a bill I introduced in the late 1980s.
Four years later, when Congress passed the 1991 Intermodal Surface Transportation Efficiency Act (ISTEA), intermodalism had moved to the forefront—the "I" of ISTEA. In that act, we directed the Secretary of Transportation to create an Office of Intermodalism within the Department of Transportation. The purpose of the office was to promote and coordinate efficient intermodal transportation policies between the modes.
ISTEA was landmark legislation. It provided state and local governments with incentives to promote intermodal solutions to passenger and freight transportation problems. State and local governments were given more flexibility especially in how they could use federal funds to find passenger transportation solutions—highways or transit. As TEA-21 began taking shape, congressional highway advocates wanted to cut the transit program or, at a minimum, ensure that state and local authorities would have the option to "flex" transit funds to the highway programs. I insisted that "flexing" had to go both ways. States and local authorities should also have the option to flex highway funds for transit projects. The other side readily agreed—believing that the flexing would be in one direction. They were right, but not in the direction they thought! Under TEA- 21, states and local authorities have flexed $8.5 billion from highways to transit; conversely, they have flexed only $40 million from transit to highways—99.5 percent of the time, states and local authorities choose to flex funds from highways to transit. ISTEA also provided funding for new technologies such as intelligent vehicle transportation systems and for experimental prototype magnetic levitation transportation systems. The bill was truly visionary.
Six years later, Congress passed the Transportation Equity Act for the 21st Century (TEA-21)—the successor legislation to ISTEA. Although TEA-21 did not have as many new initiatives as ISTEA, it continued the movement toward intermodalism and built upon the ISTEA framework. TEA-21 ensured that freight mobility would be considered during the planning process and gave greater flexibility to finance intermodal connectors that involve major and local highways, rail yards, marine terminals, and airports. Until the passage of ISTEA and TEA-21, the issue of the connectivity of intermodal terminals with the nation’s highway system and the development of intermodal services to reduce highway congestion had not been given a high priority.
TEA-21 also reconstituted a rail infrastructure program designed to help the nation’s freight railroads, especially smaller, non-Class I carriers (Short Lines), invest in their infrastructure. The Railroad Rehabilitation and Improvement Financing (RRIF) program provides up to $3.5 billion in loans and loan guarantees for railroad infrastructure investment. However, the Office of Management and Budget established criteria for the program that have largely made it unworkable. Regrettably, the Federal Railroad Administration has been a passive bystander and, in the six years of this program, only a few, relatively small, loans have been made.
Barriers to Intermodalism
If intermodalism is so beneficial, why don’t we have more of it? What obstacles are in the path of improving intermodal connectivity in this country? There is certainly a growing need for intermodal solutions as key elements of our transportation system—especially our air and highway infrastructure—become increasingly congested.
There are several persistent obstacles to expanding intermodalism. First, there is considerable intermodal competition; competitors often find it difficult to cooperate. Truck and rail operators are vigorous competitors; each would prefer to handle a shipper’s long-distance move alone. Even where intermodalism has expanded, it is not always for altruistic reasons. For instance, part of the growth in piggyback service is the result of the shortage of truck drivers rather than the desire to use the most appropriate form of transport.
A related obstacle is the tendency of the individual modes to focus on their own operations often to the disadvantage of potential intermodal partners. The extension of the BART transit system to San Francisco International Airport is a good example. Because of disputes about cost responsibilities, the airlines insisted that the airport line be a dedicated service, and that the new airport transit station remain outside the domestic and international passenger terminals. Result: the station is next to the international terminal instead of in the terminal, where it would be more useful. International travelers may be less willing to ride a local transit system. Typically, they have more baggage and foreign travelers might feel uncomfortable using a local system with which they are unfamiliar. Domestic passengers will have to take an airport people mover to get to the BART station. This will deter some potential riders as it adds one more connection to their trip.
A third barrier is the stovepipe organizational structure of public transportation agencies, including the U.S. Department of Transportation. It is true that we created an Office of Intermodalism within DOT, but that office remains a small and underfunded operation. DOT launches periodic efforts to improve communications between the various modal administrations, such as the ONEDOT initiative by former Secretary Slater, but the efforts have been short-lived and have not produced any meaningful integration of the agencies. Lack of effective integration among agencies with different modal responsibilities is even more true at state DOTs.
A fourth barrier is the way we fund the infrastructure of several of the principal transport modes—trust-fund financing through user fees. Those who pay into the Trust Funds either through fuel user fees, ticket taxes, or some other user charge expect that their taxes will be used to benefit that mode. Trust Fund financing has proven to be a highly effective way of ensuring that there is a dedicated source of revenues to invest in the infrastructure, but it also makes it difficult to use the monies to fund intermodal projects.
Cost—the Fifth Obstacle
Intermodal projects are often large ones—I call them "mega-projects." The beneficiaries often include groups other than the user, such as the public at large. Cost responsibility should be fairly allocated among all beneficiaries. This is not always easy, as the various groups will generally try to minimize the benefits they will receive in the hope of shifting the costs onto others.
Intermodalism and TEA-21 Reauthorization
In this Congress, we will enact the successor to TEA-21 (Transportation Equity Act for the 21st Century) and it is my hope that this new bill will restore the intermodal theme that was so prominent in ISTEA. This bill must pay greater attention to funding projects that encourage travelers and shippers to rely on modes that are less congested, more environmentally friendly, and more efficient. We need to focus more attention on major projects that can produce benefits across the modes of transport. A few examples:
- Congressman Jerry Nadler of New York is interested in boring a rail (freight) tunnel under New York Harbor that would allow rail freight traffic to go directly to Brooklyn and Long Island. Today, 93 percent of all New York City’s merchandise arrives by truck and nearly all that traffic goes over the George Washington Bridge. Rail traffic, from anywhere but New England, either must make a 200-plus mile trip to cross the Hudson river to reach New York City or be transferred onto barges to cross the New York Harbor. The tunnel project would have intermodal impacts, as it would help develop the Port of New York and would reduce traffic congestion from the truck traffic entering New York. This tunnel project will cost about $2 billion, far more than can be made available through existing programs.
- Another potential intermodal mega-project would be developing rail as an alternative to truck transport along the I-35 corridor in Texas. As international traffic expands under the North American Free Trade Agreement (NAFTA), the volume of truck traffic moving up from Mexico through central Texas will have serious adverse consequences on traffic congestion and the environment. It is in the national interest to develop intermodal transfer facilities near the border and expand rail capacity to accommodate this traffic and traffic along the other main corridors from the Mexican and Canadian borders that will be affected by NAFTA.
There are many other projects that would qualify as being in the national interest, but whose costs lie beyond the range of traditional funding mechanisms. These projects cannot be funded by state and local governments alone, and the private sector will not invest sufficiently to produce the desired public benefits. I believe that we need to create an intermodal mega-projects program to address these needs and I hope to include this program in TEA-21 reauthorization.
Intermodalism and Intercity Passenger Travel
At the outset, I said intermodalism goes beyond freight issues. We need to think intermodally about intercity passenger travel as well. In the summer of 2000, before the economic downturn and before the tragedy of September 11, America’s airports and airways were experiencing unacceptable levels of congestion. Nearly one-fourth of commercial air flights were either delayed, diverted, or cancelled, while on the ground, people were spending countless hours behind the wheel stuck in traffic. Air traffic congestion currently has abated, but the Federal Aviation Administration forecasts that by 2015 air travel will grow to 1 billion passengers, up from 690 million today.
Long delays and frustration will come with the return of air travel demand. As part of our reauthorization of the Aviation Investment and Reform Act for the 21st Century (AIR-21), we are committed to making the investments in our nation’s airports and air traffic control systems to mitigate congestion problems. But to be perfectly honest, there is only so much that can be done to expand airport capacity. It is difficult to build new airports. We have built just three new airports in the past 35 years. Runway expansion is also a critical component of our aviation investment strategy, but again there are limits. In many places community opposition will frustrate needed expansion, while in others, physical or environmental conditions will limit expansion and Air Traffic Control technology can greatly help. We need alternative approaches that will allow us to squeeze out more capacity from our existing aviation infrastructure. I believe that this can be done by thinking intermodally.
In Europe and Japan, high-speed rail carries the majority of travelers making intercity trips of less than 400 miles. These nations have made a conscious decision to reserve scarce airport capacity for international and intercontinental trips. In 1964, the Japanese introduced the high-speed Shinkansen trains between Tokyo and Osaka. These trains virtually eliminated air travel between these two major Japanese cities and freed up scarce airport capacity for long distance flights. High-speed Shinkansen service has now been extended throughout Japan; in virtually every market where it has been introduced, the Shinkansen has replaced air travel and freed up capacity at airports.
The French followed suit in 1971 with the introduction of the Train a Grande Vitesse (TGV) between Paris and Lyon. I recall riding that route when I was a student at the College of Europe before the TGV went into service. The trip took four and one-half hours. When I returned as a Member of Congress 32 years later, the trip took just two hours and one minute. The effects on the transportation system were the same as in Japan. Air travel in this corridor virtually disappeared and the airports at Paris and Lyon could now handle more long-distance traffic. Moreover, the French have integrated the TGV with air travel. A traveler arriving at Charles de Gaulle Airport in Paris can step directly onto a TGV train at the airport rail station. Baggage is checked through and travelers earn frequent flyer miles for the rail portion of their trip.
In America, we have not yet come to grips with our aviation system capacity dilemma. Even with all its faults and limitations, we have the world’s premier aviation system. But it has been, and soon will be again, strained to the breaking point. We need to think beyond aviation investment solutions—we need to think intermodally. Like the Europeans and the Japanese, we need to make a serious commitment to the high-speed rail alternative to replace short- and medium-distance air travel.
In the last Congress, the Transportation Committee considered legislation that would provide nearly $60 billion in tax-credit bonds, tax-exempt bonds, and loan guarantees to develop high-speed rail systems and improve freight rail systems around the nation. Regrettably, the bill stalled and it did not become law. In this Congress, I will renew my efforts to enact high-speed rail legislation. Under the high-speed rail bill, for the first time, funds will be available for more than just more feasibility studies. The potential beneficial impacts on the airline industry are enormous. For example, according to data provided by the Department of Transportation, roughly 17 percent of all travelers to Chicago’s O’Hare Airport originate from cities within 300 miles of ORD that would be served by the Midwest High-Speed Rail Initiative. Building high-speed rail would have tremendous consequences for capacity at O’Hare and other congested airports in the region. The freed-up capacity could handle additional long distance domestic and international traffic. This traffic is far more profitable for the airlines and generates far more income for the airport host city than short-haul flights.
Conclusion
Our nation faces critical transportation investment needs that will be all the more difficult to solve because of the current state of the economy. The economic recession has slowed tax receipts and the Bush tax cuts have further exacerbated the budget problem. Surpluses have been replaced by mounting deficits for as far as the eye can see. Securing sufficient monies to meet our transportation investment needs will be a struggle—a struggle I intend to wage with all my being. Scarcity of available resources also means that it is more important than ever that shippers and travelers be able to select the best combination of modes to meet their needs—that is, they need to have intermodal options.
It can be done. Public-private partnerships can be formed that can launch intermodal projects that will generate profits for private firms and social benefits for the society at large. The Alameda Corridor is a good example of this approach. This 20-mile rail trench from the Port of Long Beach to the rail yards further inland eliminated dozens of grade crossings and greatly facilitated rail traffic through the streets of Los Angeles and Long Beach. This $2.5 billion project was built using a combination of public and private sources.
Will we move ahead on intermodalism? Will we build the mega-projects needed to facilitate intermodal transfers? I remain optimistic, but I believe several things must happen—not all of them good—for progress to be made over the next two decades. First, the cost of congestion must continue to rise. Virtually all forecasters anticipate that congestion and delay will increase. As frustration and costs mount, the pressure to address the congestion problem by finding more efficient solutions will drive us to action.
Second, we must make institutional changes at both the federal and state DOTs. Serious commitments to intermodalism within these departments must be made if the governmental commitment is to go beyond lip service.
Finally, we need to develop a separate funding source for intermodal mega-projects. I am working with many other members of Congress and interested groups to develop funding mechanisms to address intermodal needs, especially ways to enhance rail intermodal projects. Railroad investment is key to many intermodal solutions, and today the nation’s freight railroads barely earn enough revenue to maintain the existing infrastructure much less expand it to meet new demands.
The question is not so much if we will move toward a greater reliance on intermodalism, but when we will. We can either wait until crippling congestion drives us to this point or we can begin to address the problems now. I intend to lead the fight for solutions today.
Rep. Oberstar delivered these remarks March 16, 2003, at the second James L. Oberstar Forum, hosted by the Center for Transportation Studies at the University of Minnesota.