[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
              FREIGHT MOVEMENT FROM ORIGIN TO DESTINATION

=======================================================================

                               (110-121)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HIGHWAYS AND TRANSIT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 24, 2008

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California               FRANK A. LoBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas         JERRY MORAN, Kansas
GENE TAYLOR, Mississippi             GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
TIMOTHY H. BISHOP, New York          JOHN BOOZMAN, Arkansas
MICHAEL H. MICHAUD, Maine            SHELLEY MOORE CAPITO, West 
BRIAN HIGGINS, New York              Virginia
RUSS CARNAHAN, Missouri              JIM GERLACH, Pennsylvania
JOHN T. SALAZAR, Colorado            MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            TED POE, Texas
DORIS O. MATSUI, California          DAVID G. REICHERT, Washington
NICK LAMPSON, Texas                  CONNIE MACK, Florida
ZACHARY T. SPACE, Ohio               JOHN R. `RANDY' KUHL, Jr., New 
MAZIE K. HIRONO, Hawaii              York
BRUCE L. BRALEY, Iowa                LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          CHARLES W. BOUSTANY, Jr., 
TIMOTHY J. WALZ, Minnesota           Louisiana
HEATH SHULER, North Carolina         JEAN SCHMIDT, Ohio
MICHAEL A. ARCURI, New York          CANDICE S. MILLER, Michigan
HARRY E. MITCHELL, Arizona           THELMA D. DRAKE, Virginia
CHRISTOPHER P. CARNEY, Pennsylvania  MARY FALLIN, Oklahoma
JOHN J. HALL, New York               VERN BUCHANAN, Florida
STEVE KAGEN, Wisconsin               ROBERT E. LATTA, Ohio
STEVE COHEN, Tennessee
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey

                                  (ii)

?

                  SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

                   PETER A. DeFAZIO, Oregon, Chairman

NICK J. RAHALL II, West Virginia     JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             DON YOUNG, Alaska
ELLEN O. TAUSCHER, California        THOMAS E. PETRI, Wisconsin
TIM HOLDEN, Pennsylvania             HOWARD COBLE, North Carolina
MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
TIMOTHY H. BISHOP, New York          ROBIN HAYES, North Carolina
MICHAEL H. MICHAUD, Maine            HENRY E. BROWN, Jr., South 
BRIAN HIGGINS, New York              Carolina
GRACE F. NAPOLITANO, California      TIMOTHY V. JOHNSON, Illinois
MAZIE K. HIRONO, Hawaii              TODD RUSSELL PLATTS, Pennsylvania
JASON ALTMIRE, Pennsylvania          JOHN BOOZMAN, Arkansas
TIMOTHY J. WALZ, Minnesota           SHELLEY MOORE CAPITO, West 
HEATH SHULER, North Carolina         Virginia
MICHAEL A. ARCURI, New York          JIM GERLACH, Pennsylvania
CHRISTOPHER P. CARNEY, Pennsylvania  MARIO DIAZ-BALART, Florida
JERRY McNERNEY, California           CHARLES W. DENT, Pennsylvania
BOB FILNER, California               TED POE, Texas
ELIJAH E. CUMMINGS, Maryland         DAVID G. REICHERT, Washington
BRIAN BAIRD, Washington              CHARLES W. BOUSTANY, Jr., 
DANIEL LIPINSKI, Illinois            Louisiana
DORIS O. MATSUI, California          JEAN SCHMIDT, Ohio
STEVE COHEN, Tennessee               CANDICE S. MILLER, Michigan
ZACHARY T. SPACE, Ohio               THELMA D. DRAKE, Virginia
BRUCE L. BRALEY, Iowa, Vice Chair    MARY FALLIN, Oklahoma
HARRY E. MITCHELL, Arizona           VERN BUCHANAN, Florida
LAURA A. RICHARDSON, California      ROBERT E. LATTA, Ohio
ALBIO SIRES, New Jersey              JOHN L. MICA, Florida
JAMES L. OBERSTAR, Minnesota           (Ex Officio)
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Cardwell, Gary, Divisional Vice President, Northwest Container 
  Services.......................................................     4
Haas, Scott, Vice President of Transportation, UPS...............     4
Mullett, C. Randall, Vice Chair, Technical Oversight Committee, 
  National Cooperative Freight Research Program, Transportation 
  Research Board.................................................     4
Uremovich, Michael, CEO, Pacer International.....................     4

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Altmire, Hon. Jason, of Pennsylvania.............................    31
Mitchell, Hon. Harry E., of Arizona..............................    32
Oberstar, Hon. James L., of Minnesota............................    33
Reichert, Hon. David G., of Washington...........................    38
Richardson, Hon. Laura A. of California..........................    40

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Cardwell, Gary S.................................................    44
Haas, Scott......................................................    49
Mullett, C. Randal...............................................    59
Uremovich, Michael E.............................................    68

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         HEARING ON FREIGHT MOVEMENT FROM ORIGIN TO DESTINATION

                              ----------                              


                        Thursday, April 24, 2008

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                      Subcommittee on Highways and Transit,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 11:05 a.m., in 
Room 2167, Rayburn House Office Building, the Honorable Peter 
A. DeFazio [Chairman of the Subcommittee] presiding.
    Mr. DeFazio. The Subcommittee on Highways and Transit will 
come to order.
    We have a hearing today on Freight Movement from Origin to 
Destination.
    I welcome the witnesses.
    Before we get to opening statements, it is sort of a 
bittersweet day in one way for the Committee. We are about to 
launch one of our long-term and most esteemed staff members on 
a new career or he is about to launch himself on a new career, 
and we are going to be left behind, but I am sure we will still 
benefit from his knowledge in the future.
    Art Chan began work on the full Committee as a chief 
economist. Sometimes I refer to economists as pointy heads, but 
Art is more of an applied kind of guy, one of my favorite 
economists.
    In 1995, he moved to Water Resources. Then he moved to 
Highways and Transit in 2000. He was a highway policy director 
for eight years, and he was key on our side of the aisle and I 
would say overall on both sides of the aisle in crafting key 
components of SAFETEA-LU.
    He has always been able to explain things to me like RABA, 
and some other mysteries of highway funding and budgeting, and 
I am sorry that he won't be here to try and turn those things 
into English for me anymore.
    There is no one that knows Title 23 better than Art. That 
is for certain. This Committee and the Subcommittee have 
benefitted from his experience. Over the last 15 years. It will 
be a loss, as I said earlier.
    Now that he is joining the private sector and he will have 
more substantial means, Art has changed his mind about those 
new Lexus lanes on the way into Washington, D.C. and no longer 
feels they are particularly price discriminatory.
    In all seriousness, though, I wish Art well in his new 
endeavor, and I want to thank him for his years of work.
    Thank you, Art.
    Mr. Chan. Thank you.
    Mr. DeFazio. So, with that, Mr. Duncan, would you like to 
say anything?
    Mr. Duncan. Well, I also want to congratulate Dr. Chan. Art 
and I had a nice visit together yesterday, and he told me of 
his plans. He has been a valuable asset to this Committee, and 
he has worked well with people on both sides of the aisle.
    So I want to also congratulate and wish him the best as he 
moves into this new part of his life. I am sure he is going to 
be just as successful in the years ahead as he has been in past 
years in his career thus far.
    Mr. Chan. Thank you.
    Mr. DeFazio. This, in a way, is a hearing about health, and 
we have actually a couple of health diagrams that I want to put 
up on the screens. One, this is 2002. It is the estimated 
annual daily average of truck flow.
    As you can see, it is pretty robust. In fact, I used this 
chart in particular on the cover of a presentation I had about 
our cracked bridge problem in Oregon when educating Members of 
the Committee and Congress as we went into SAFETEA-LU about how 
vital the I-5 truck route is, the third busiest in America.
    We are looking at that, but now if we go to the projects 
for 2035 and suddenly it looks like a lot of either 
overstretched or perhaps clogged arteries, not so healthy, and 
that is why we are here today.
    I believe in the next reauthorization we have to chart a 
new course for America in dealing with our problems of movement 
of people and freight. Rather than doing triage on the existing 
congestion, we have to anticipate future flows, and we have to 
build a system to mitigate or accommodate those flows and 
mitigate the problems that might arise from that growth in 
traffic.
    What I have talked about, and I still don't have the total 
vision, is the idea of a least cost transportation plan. Least 
cost, from my mind, obviously, it goes to the taxpayers. It 
goes to the public in terms of their costs. It goes to 
business.
    It would be least cost also in terms of, in my mind, impact 
on the environment and other critical factors, and it would be 
truly multimodal and would facilitate better the movement of 
freight.
    Freight has to become more easily mobile or, in dealing 
with this chart and these projections, with the current levels 
of investment, the idea that we are using trucks as sort of 
portable warehouses with just-in-time delivery, we are going to 
moving things into more or less permanent storage in gridlock 
on the system. It would be tremendously expensive to business, 
a tremendous cost to the economy, and a tremendous cost to our 
economic competitiveness in a global economy.
    I see sort of a new role here for the Federal Government in 
partnering, where the Federal Government would be implementing 
some national level planning to anticipate, get ahead of these 
issues, try and be more truly multimodal and demand 
accountability of the States and those who are responsible for 
implementing the program, so we are no longer so fragmented but 
more integrated.
    This is a tremendous challenge, and I am hoping some of the 
members of the panel today can give us ideas on how we might 
get there. This is one in a number of ongoing hearings that we 
have held on this Subcommittee to try and learn the subject 
matter better and create a vision for the next transportation 
bill.
    I just had a contest to name a bill I introduced on cell 
phones on airplanes, and I gave a bottle of wine as the prize. 
I don't know what we will do for the contest to name the next 
highway bill, but we will figure out something.
    With that, I turn to the Ranking Member, the esteemed 
Member from Tennessee, Mr. Duncan.
    Mr. Duncan. Well, thank you, Mr. Chairman, and thank you 
for calling this hearing, and I want to thank the witnesses for 
being here with us.
    All of us know that transportation experts have expressed 
deep concern regarding the freight capacity shortage in 
America's transportation system. The last several decades, as 
you have noted, have witnessed steady growth in the demand for 
freight transportation and will continue to do so, but freight 
capacity, especially highway capacity, is expanding too slowly 
to keep up with the demand.
    Our witnesses today will provide testimony regarding the 
immediacy of the freight to mobility crisis caused by expanding 
freight transportation needs and the lack of transportation 
capacity. Specifically, they will address how inefficiencies in 
the transportation system impact a company's ability to manage 
its supply chain.
    Over 19 billion--19 billion with a B--tons of freight 
valued at $13 trillion moves through our transportation each 
year. By 2035, demand for freight transportation is expected to 
increase by 92 percent. The U.S. economy depends on its 
interconnected transportation network to move raw materials and 
finished goods around the Country efficiently and reliably.
    The United States need to continue investing in our 
transportation system if we want to retain our position as a 
leader in the global economy. We also desperately need 
increased domestic energy production if we are going to not see 
diesel prices and other transportation costs just skyrocket in 
the years ahead.
    China is in the process of building a 53,000-mile national 
expressway which will rival the U.S. Interstate Highway System 
when it is completed in 2020. India is building a 10,000 
national highway system, and the countries in the European 
Union are spending hundreds of billions of Euros to upgrade 
their existing network of highways, bridges, tunnels, ports and 
rail lines.
    If the United States does not adequately invest in its 
transportation infrastructure, our market share in the world 
economy will deteriorate.
    Our witnesses will bring to the table, valuable knowledge 
of freight logistics and intermodal transportation, and I hope 
the witnesses will help shed some light on where and how future 
transportation dollars should be spent.
    I yield back the balance of my time.
    Mr. DeFazio. I thank the gentleman.
    I just see our chart went down, but that is okay.
    I was remiss in not, at the outset, welcoming a new Member 
to the Subcommittee, Mr. Sires of New Jersey, who obviously, if 
we looked at the clogged arteries, kind of lives at the 
epicenter here. I am certain he will want to contribute to the 
solutions in this process and, obviously if we look at the 
other end of the Country, Mrs. Napolitano lives right near 
another one of those choke points.
    Are there other Members who have a brief opening statement?
    Mrs. Napolitano. Okay, go ahead.
    Mrs. Napolitano. Thank you, Mr. Chair, and thank you for 
holding this very important meeting.
    As you pointed out, I am from the Southern California area, 
and we do have big-time choke points. So anything that we can 
work with the industries to be able to address not only 
infrastructure but being able to get the product to market on a 
timely basis, whether it is transportation or highway, it means 
business and also if we are able to expedite it, then we have a 
solution for environmental issues.
    Along with that, of course, goes labor issues and all of 
those other good things that we have to deal with.
    I am looking forward to the testimony and again, thank you, 
sir.
    Mr. DeFazio. Thank you, Mrs. Napolitano.
    Any other Members have brief opening statements?
    Mr. Coble. Mr. Chairman?
    Mr. DeFazio. Mr. Coble, yes, sir.
    Mr. Coble. A very brief opening statement, Mr. Chairman. I 
appreciate your and Mr. Duncan's calling this hearing.
    Mr. Chairman and ladies and gentlemen, I know of no 
domestic issue any more significant than the matter of freight 
movement from origin to destination. It is critically 
important, and I appreciate your having this hearing, Mr. 
Chairman. I am looking forward to the testimony forthcoming.
    Mr. DeFazio. Howard, for a moment there, I thought you were 
saying the movement from Oregon, and I was getting really 
excited, but then I realized it was southern for origin.
    Mr. Coble. Well, then maybe Oregon may well be palatable 
too.
    Mr. DeFazio. Thank you. I appreciate it.
    Any other Members?
    If not, we will proceed to the panel then.
    The first witness will be C. Randall Mullett, Vice Chair of 
the Technical Oversight Committee, National Cooperative Freight 
Research Program, Transportation Research Board.
    Mr. Mullett, proceed, please.

    TESTIMONY OF C. RANDALL MULLETT, VICE CHAIR, TECHNICAL 
  OVERSIGHT COMMITTEE, NATIONAL COOPERATIVE FREIGHT RESEARCH 
   PROGRAM, TRANSPORTATION RESEARCH BOARD; SCOTT HAAS, VICE 
PRESIDENT OF TRANSPORTATION, UPS; MICHAEL UREMOVICH, CEO, PACER 
 INTERNATIONAL; AND GARY CARDWELL, DIVISIONAL VICE PRESIDENT, 
                 NORTHWEST CONTAINER SERVICES.

    Mr. Mullett. Thank you, Mr. Chairman, Ranking Member Duncan 
and distinguished Members of the Subcommittee. I appreciate 
being invited here before you today.
    I am Randall Mullett. I was invited here this morning 
because I am Vice Chair of the TRB's National Cooperative 
Freight Research Program Technical Oversight Committee. This is 
a congressionally authorized applied research program that is 
managed by the TRB of the National Academies.
    As you all know, the Transportation Research Board is a 
research institution rather than an advocacy group, and my 
comment should not be considered advocacy on their behalf.
    Mr. Chairman, you are to be commended for calling this 
hearing and for focusing attention on one of our Nation's 
greatest transportation challenges, assuring a freight 
transportation infrastructure system that can meet the current 
and future demands of our Nation's economy.
    Every day, hundreds of thousands of shipments containing 
everything from grain to computer parts flow through our ports, 
across our borders and on our rail, highway, air and waterways 
systems as part of a global, multimodal logistics program.
    This system is a complex array of moving parts that 
provides millions of good jobs to Americans, broadens the 
choice of products on store shelves, and creates new and 
expanding markets for U.S. businesses.
    Unfortunately, the system is showing signs of stress. 
Freight transportation has been described as the economy in 
motion.
    This illustration strengthens the indisputable truth that 
we cannot somehow decouple economic growth from transport 
growth and that constraints that limit the capacity of the 
freight system therefore place caps on our economic growth.
    Modern supply chains are intermodal, often international 
systems that are connected in ways that stretch the ability of 
government agencies and funding models that were established 
within traditional modal silos. Also, many important public 
policy issues including the environment, energy, social equity, 
safety and security have all become part of the transportation 
equation.
    More than 10 years ago, researchers warned, this broadening 
of objectives has expanded the range of relevant actors in 
transport policy and operations.
    As a consequence, the traditional transportation 
institutional framework is being forced to accommodate a wider 
than traditional range of objectives and interests at the same 
time there is rapid change in transport technology. Danger 
occurs when focus on the freight transportation system is lost 
in an effort to accommodate other public policy objectives, no 
matter how worthy.
    The surface transportation system, particularly highways, 
is under attack from users, safety groups, shippers, thought 
leaders and policy-makers at all levels. Lack of a shared 
national vision makes it difficult to develop public policies 
that address these concerns in a manner guided by established 
objectives and related performance measurements.
    To respond to these concerns, we must consider a systemic, 
holistic approach to freight transportation policy rather than 
the current model that focuses on discrete locations and is 
modal specific. Freight transportation extends State and 
national boundaries and moves freely among and between modes, 
but the current planning process does not.
    A patchwork of locally derived solutions does not somehow 
evolve into a national freight transportation system that 
supports today's complex intermodal relationships. The Federal 
Government is the only entity able to focus on the national 
interests and develop a framework to identify appropriate 
solutions.
    In conclusion, addressing the issues facing the Nation's 
freight transportation infrastructure system will require 
revolutionary thinking, a new paradigm, if you will, that might 
include:
    Recognition that a traditional reauthorization program is 
no longer able to address the problems or take advantage of the 
opportunities associated with the freight transportation 
infrastructure system;
    A strong Federal role leading a wide variety of 
stakeholders in developing and articulating a national vision 
for the freight transportation system;
    A systemic view with clearly articulated national 
objectives;
    Strategic investments that maximize system performance with 
appropriate performance measurements and accountability;
    A focus on the full promise of true intermodal and 
multimodal freight transport to enhance the door to door 
movement of freight and seamlessly connect the U.S. economy to 
the rest of the world;
    A commitment to critically examine and remove existing 
regulatory constraints;
    And, finally, a commitment to refocus on the national 
freight transportation infrastructure system as a key to our 
economic vitality.
    The opportunity before us is not simply to keep up with 
freight transportation demands but to develop a long-term 
vision of the freight transportation infrastructure system that 
results in a supply chain that is faster, more efficient and 
more predictable than the one we have today.
    Members of the Committee, thank you very much for this 
opportunity to be here. I will be glad to answer any questions 
you may have.
    Mr. DeFazio. Thank you very much, Mr. Mullett.
    We would now move on to our next witness who would be Scott 
Haas, Vice President of Transportation for UPS.
    Thank you for being here, Mr. Haas.
    Mr. Haas. Chairman DeFazio, Ranking Member Duncan and 
Members of the Subcommittee, thank you for your focus in this 
hearing on freight and for the opportunity for UPS to present 
its views.
    UPS frequently has an opportunity to share its experience 
with our Nation's leaders as they tackle critical issues of the 
day, but today's subject surely ranks well into the top tier 
both in importance and timeliness.
    My name is Scott Haas. Throughout my 29 years with UPS, I 
have had numerous operational assignments which have taken me 
from the Canadian border to the Gulf of Mexico.
    Currently, I am responsible for the single largest 
distribution facility in the UPS network which is based in 
suburban Chicago. That facility has 7,500 employees and process 
1.5 million packages per day, 40 percent of which arrive and 
depart via rail.
    In this capacity, I live every day and all too many nights 
in close proximity to the transportation challenges and 
opportunities that face UPS, our customers and the Nation as a 
whole. At times, this is particularly frustrating work, but day 
after day I also witness how obstacles can be overcome through 
planning, ingenuity and perseverance.
    The U.S. and global economies depend on the movement of 
freight and increasingly on movement that is time definite and 
expedited. It is well documented that the U.S. transportation 
infrastructure is not maintained and improved at the level 
needed to sustain current activity at optimal levels, let alone 
the growth in freight that is inevitable in the future.
    During the past 50 years, the United States has had a 
national vision regarding surface transportation policy, that 
being the Interstate Highway System. That system has served the 
Nation extremely well.
    A broader vision, one that includes all modes of 
transportation and an investment in technology is now required. 
It should focus on the movement of freight and must take a 
coordinated approach that crosses the traditional barriers 
between modes of transportation. This vision requires the 
establishment of national priorities. It requires national and 
regional planning.
    Freight movements go well beyond State and local 
boundaries. Any particular shipment may move through hundreds, 
if not thousands, of jurisdictions. An effective national 
freight policy requires a strong Federal role, in conjunction 
with State and local planning, to ensure the development of an 
infrastructure that best serves national and global commerce.
    UPS understands this and is reminded of it every single 
day. Each day, the UPS network handles 6 percent of U.S. gross 
domestic product and 2 percent of the global gross domestic 
products.
    UPS is the Nation's third largest private employer, and its 
workforce of 425,000 delivers 16 million packages and documents 
to almost 8 million customers around the world every day with a 
vast majority of those deliveries being within, to or from the 
United States.
    To accomplish this, UPS puts 94,000 vehicles, from package 
delivery vehicles to tractor-trailers, on the U.S. highways and 
roadways every day.
    As one of the largest customers of Class I railroads for 
the past 25 years, many UPS trailers are put on rail cars, 
approximately 3,000 rail cars every day, many of them moving to 
and from U.S. ports.
    In addition, UPS airplanes fly 1,130 daily segments in the 
U.S. which connect its national transportation network.
    But to UPS, these are not separate numbers but part of one 
seamless system, and that is how public policy should view it 
as well. Let me give you a few real world examples of how this 
all fits together.
    UPS has customers in Los Angeles that export products to 
China and, yes, we handle a lot of exports to China. In some 
instances, for smaller urgent shipments of parts, for example, 
a package delivery vehicle will leave a customer's facility and 
use local roads and highways, namely the 710 Freeway, to get to 
our regional distribution center in the Los Angeles suburbs.
    From there, the packages to the Ontario, California, 
regional airport for a flight to our Anchorage air gateway in 
Alaska where they will be put on another airplane for delivery 
to Shanghai the next day. Any major congestion on those roads 
or highways en route to the airport, the packages may not 
arrive to their destination on time.
    Unfortunately, surface transportation congestion isn't 
solely the domain of the U.S. highway system. America's Class I 
railroads are a key service partner in the UPS transportation 
network. Railroad congestion, bottlenecks and lack of 
fluidity--much of which can be attributed to inadequate 
railroad investment--create a ripple effect that impacts other 
modal movements within the UPS system.
    Additional rail infrastructure investment will relieve 
congestion in the network, benefit the environment and 
alleviate commercial highway traffic.
    A Chicago-land example from just yesterday is typical of 
the daily challenges that UPS faces in running our business. A 
westbound from the New York-New Jersey metropolitan area feeds 
my facility with approximately 54 trailer loads full of small 
packages every day. That is roughly 65,000 packages.
    We take these trailers off of that train, unload them and 
sort them to other trailers for transportation to their final 
destination. We have a four-hour window in which to operate.
    Many of those outbound trailers are loaded onto a westbound 
train headed for the Pacific Northwest. If the inbound train is 
delayed to the extent that it causes us to miss the outbound 
departure time, we have to decide to delay the final arrival of 
thousands of packages by one day or put additional trucks on 
the highways to recover service.
    We are a service company, so we put up the additional 
tractor-trailer movements, adding more vehicles to the highway 
system, burning more fuel and increasing our costs.
    As you can tell, congestion is very costly to both UPS and 
our customers. While the company has not determined the exact 
cost of congestion, we do know that if each of our package 
delivery and over-the-road drivers is delayed 5 minutes each 
day, the cost to UPS is 100 million per year.
    Multiply this problem nationally, and the numbers are 
staggering, costing our economy $78 billion annually as well as 
4.2 billion hours of travel delay and 2.9 gallons of wasted 
fuel each year according to the American Road and 
Transportation Builders Association.
    UPS firmly believes that the magnitude of this challenge is 
an opportunity for our Nation to set an example for the world 
regarding the establishment and maintenance of an efficient 
transportation system with the emphasis on the system as a 
whole and not just one or the other of its parts.
    Thank you again for the opportunity today to share UPS's 
views on this important matter, and I too look forward to the 
opportunity to answer any questions you may have.
    Mr. DeFazio. Thank you, Mr. Haas.
    Next, we would turn to Michael Uremovich, Chief Executive 
Officer and Chairman of the Board, Pacer International, 
Incorporated.
    Mr. Uremovich. Thank you very much and thank you for the 
name. I am from a large family. So, hey, you works as well, but 
thank you very much for the opportunity to speak today, Mr. 
Chairman.
    You have a prepared statement, and I won't repeat my way 
through that. I would like to make a couple of points.
    Pacer International is a $2 billion a year company that 
coordinates the movement of goods for major retail stores and 
other kinds of U.S. consumer goods through the international 
and the domestic system. We fundamentally make a living because 
the transportation system is broken up into a whole bunch of 
pieces, and there isn't anybody other than a coordinating 
function that could choose the proper mode at the proper time 
for that kind of a movement.
    UPS, obviously, Fed Ex and some other huge companies do 
that in their own networks and do a very, very fine job of 
that. Pacer, however, does it for smaller companies and for 
people who need to get their goods to destination on time and 
in the right order.
    We handle about a million loads per year on the U.S. 
transportation system. We run the largest double-stack 
container network in the United States. We also have a whole 
series of owner-operator truck drivers out there making the 
final deliveries.
    I want to make two additional points to my statement today, 
and that is, first and foremost, the intermodal system provides 
an opportunity to help a lot of what you pointed out, Mr. 
Chairman, relative to the artery diagram on the system.
    If we had just moved our freight, our little company's 
freight on the trucks last year, we would have put 25,000 more 
trucks on the U.S. highways. We would have run how many more 
miles, we would have risked how many more lives, and we would 
have been terribly inefficient relative to the use of fuel, an 
increasingly scarce and expensive resource for all of us.
    So, one point I would like very much to make is that when 
you consider the national transportation policy approach, 
please consider--I urge you to consider--the use of maximizing 
each of the individual modes for those things that they do 
best. The railroads have made significant additional investment 
in their infrastructure over the last several years in order to 
help mitigate the significant transportation capacity crunch we 
had in the 2005-2006 freight year which was terrible for all of 
us.
    Secondly, however, I also urge when you make those 
considerations, please, please think through and consider some 
of the unintended consequences. It always frightens a 
businessman when Congress begins to talk about national policy 
that will somehow reach out and solve a whole series of 
problems that we have to deal with every day.
    This is a very, very complicated system, and it is 
impossible to tweak only one part of it and not expect it to 
come out some place else. I will give you a specific example of 
that that Mrs. Napolitano will probably be familiar with.
    When the Southern California ports choked up two years ago 
because of some infrastructure problems and the shipping 
companies began to reroute cargo to the East Coast, the highway 
between Charleston and Atlanta became impossible. That is not 
something that could have necessarily been foreseen by people 
further downstream.
    In the freight business, we have a phenomenon called the 
pig in the python, and that is if you get a problem in some 
part of this system, it takes forever to work through it. It is 
not something that can simply be handled by a policy 
declaration and expect the thing to work efficiently. I urge 
you, when you do that, to seriously consider these unintended 
consequences as we go through the process.
    I share with my colleagues here at the table today, concern 
about individual local actions that do the same thing. You have 
to think of our freight business as an enormous plumbing 
system, and when you tweak a knob some place, it is either 
going to back up or dry up some place else. So, please, rely on 
the staff and some of the folks who have to make that freight 
move as you consider this policy.
    Again, I thank you very much for the opportunity to be with 
you here today.
    Mr. DeFazio. Thank you.
    I will turn to Mr. Baird who would like to introduce the 
next witness.
    Mr. Baird. I thank the Chairman.
    It is indeed a pleasure to introduce Gary Cardwell to the 
Committee.
    Mr. Cardwell has served as Chair of the Oregon Governors 
Small Business Council. He is a member of the Regional Freight 
and Goods Movement Task Force that is seeking ways to improve 
the regional freight system and develop strategies that address 
the environmental impacts of freight and goods movement.
    He has also served on the Pacific Northwest International 
Trade Association, working to promote international trade 
throughout the Northwest.
    His business, Northwest Container Service, employs close to 
100 employees and provides intermodal container transportation 
services throughout the Pacific Northwest. He has some 
innovative ideas to share about how we can fund projects.
    I, as a fellow Northwesterner, welcome him to the Committee 
and thank him for his testimony.
    Mr. DeFazio. I thank the gentleman.
    Washington can claim some credit and I would like to claim 
credit too since his business operates in the State of Oregon.
    With that, we would welcome Mr. Cardwell.
    Mr. Cardwell. Thank you, Mr. Chair, and thank you, 
Congressman Baird, for the introduction.
    Northwest Container has been in business for 25 years. We 
are a short-haul rail provider.
    We subcontract with the Class I railroads to hook and haul 
from our facilities, utilizing our rail cars, to our 
facilities. It is a model that has worked for 25 years. We rail 
between the ports of Seattle, Tacoma and Portland.
    We average about 70,000 containers a year, which is 
equivalent to about 100,000 truck trips annually, and 85 
percent of those containers are loads. The model we have tried 
to design_give steamships the opportunity to reload those 
containers with loads versus trucking them back as an empty.
    We all know a trucker is going to drive down with a load. 
He needs to come back as an empty. Fifty percent of the time an 
international container is on the highway, it is empty. That is 
a lot of containers.
    Our model is designed to try to give the opportunity to 
reload those, and we have done that by developing our own 
infrastructure and our own facilities to do that.
    In providing short-haul rail service, we pick that 
international box up at the port. We truck it at our facility. 
Rail it down to Portland and then deliver it to the Nikes and 
the Columbia Sportswear and the Nordstrom clothes and the tire 
guys. That empty then comes back into our facility and then has 
the ability to reload with an Oregon export.
    Christmas trees are our claim to fame to Hawaii. We move 
about 500,000 Christmas trees on an annual basis to Hawaii 
through Matson.
    So the idea is to reload those. One of the things is the 
load-load strategy for us has been very successful.
    We believe that there needs to be a combination of smart 
land use planning as well as new, innovation transportation 
packages.
    One of the problems that we see in the Pacific Northwest is 
that our importers are in one place and our exporters are in 
another place. What we are not doing is we are not moving the 
current new wave of imports into distribution centers where the 
exporters are. If we could do that, again, that container could 
then be reloaded with an export. Instead, exporters now have to 
retrieve empty containers before they can move their product to 
market, trucking empties all over our highway system.
    Central Valley, California is another example. Again, they 
are not rail served, so they are trucking it. They are trucking 
it 200 miles inland to unload at an IKEA or a Target or a Wal-
Mart.
    That empty is then brought back to the port, and the 
exporter out of that region then drives into the port to get 
the empty to bring it back in as a load.
    It is a very inefficient model. A more appropriate land use 
model would position distribution centers in a way that 
minimized load-empty-load container movements.
    Within the rail world, a lot of questions have been brought 
up about open access, allowing shippers on. My belief is the 
railroads don't have capacity to provide open access. I think 
that is a strategy that we need to move away from.
    Instead, I urge the committee to consider supporting a 
program designed to connect existing short lines. By connecting 
the short lines with new rail investments, new freight rail 
systems can be created. Building a new rail mile is less 
expensive than a new highway mile. By investing in new rail 
miles, connecting short lines, shippers could utilize short-
haul rail for intrastate, intra-region business.
    The Class I's have designed their business model through 
acquisition and merger for long-haul freight movement from L.A. 
to Chicago, from Seattle-Portland to Memphis. They are leaving 
behind a lot of the short-haul intrastate business.
    Oregon just happens to be a tweener. We are between 
California and Seattle/Tacoma. The volume of freight traffic 
driven through downtown Portland and eventually over our new 
Columbia River bridge_20 years from now_is staggering and 
projected to get much worse.
    There is a lot that could be done intrastate, intra-region 
that I think that we could do. As private owners, as short 
lines, toll us to ride on your rail network to help connect 
those short lines. So it is a program.
    I think we need to start thinking outside the box. There 
was actually an article in the Journal of Commerce where India 
has decided to do just that. The private sector will construct 
their own intermodal facilities, the country will build its 
rail network and you sign up to have them hook and haul your 
unit trains from one part of the country to the another.
    Here in the U.S., I think we need to look at that 
intrastate, intra-region that is, at this point, noncompetitive 
with the Class I's. Let them do the long haul. Assist them in 
expanding and making that investment into their network.
    One example that I wanted to bring up also is the Connect 
Oregon bill. Connect Oregon was a $100 million bill. There was 
one two years ago. There was one this year. There were 250 
million in applicants last time. There were 250 million in 
applicants this time.
    In Connect Oregon I, $45 million of the $100 million was 
dedicated to rebuild rail infrastructure. I believe that there 
will be closer to $65 million that will be used out of that 
program, again, for rebuilding the existing rail 
infrastructure. But what is not going in is development of new 
infrastructure to connect existing short-lines.
    The short lines need investment. A Visionary Federal and 
State program to help connect short-lines, to create those unit 
trains, to get to the Class I's to haul long haul, is an 
approach we need to look at.
    Thank you.
    Mr. DeFazio. Thank you.
    We now proceed to questions from the Members.
    My first question is related to the big picture, and we may 
have some differences. Mr. Uremovich raised the issue of 
unintended consequences and concerns about national policy or 
national planning.
    On the other hand, we had a vision that the Federal 
Government finally delivered beginning in the Eisenhower years 
of an interconnected national highway system. When we finally 
accomplished that goal, we didn't put forward a new broad 
vision, but we began to give more flexibility to the States to 
accomplish what they saw as their priorities and their needs.
    What we lack, I think, is both some level of accountability 
on how those funds are being spent and how that is applicable 
to these national problems. So I guess what I would ask members 
is how do we balance this equation?
    I don't think what we are doing currently works well. You 
are worried about what we might do in the future because of 
unintended consequences, but there is something, some sort of 
balance in between. I would first direct it to you and Mr. 
Mullett or anybody else who wants to respond.
    Mr. Uremovich. Thank you.
    I am simply not competent to provide any counsel regarding 
the Federal-State relationship issue. I mean that is something 
clearly that you folks are in a much better position to judge.
    Mr. DeFazio. Well, then if I could, just to clarify, I 
believe a lot in decentralizing and working with the States as 
partners and not dictating. But there is also a national goal 
here which transcends State borders, and that is the key, at 
least for some of the funds we are investing.
    Mr. Uremovich. I certainly agree that an overall view and 
guidance plan, if you will, is necessary and certainly one that 
I would be very, very much supportive of, as our company would 
be.
    However, again, I caution that frequently it seems, and I 
am sure we have all been to an airport recently when we have 
all seen situations that don't seem to make very much sense 
just in a pure common sense way in getting on an airplane. I 
would hate to see a national transportation policy that imposed 
essentially unworkable kinds of tasks.
    Now, to some extent, I speak against the interests of my 
own company when I do that because we make a living and a 
pretty good one because this thing is all broken up and 
somebody needs help putting it together. All right?
    So, believe me, I am not opposed at all to coordination or 
rationalization or those kinds of things. I am just, like most 
business people, a little bit concerned when you folks come out 
to help us too much in what we do on a day to day basis.
    Mr. DeFazio. I share your caution.
    Mr. Mullett, do you want to share with us how you would 
address that?
    Mr. Mullett. My opinion is that while the notion of some 
kind of Federal command and control system is probably way out 
of bounds, that is not the same as what I have been talking 
about, which is leadership and a vision for the system. The 
Federal Government does have a lot of opportunities through 
agenda setting, through appropriate measurements and 
accountability systems, to help impact this.
    I would never advocate taking away the important role that 
States and localities take in the planning process, but 
somebody has to lead.
    One of the things that you have done that is, I think, 
vitally important is just having these kinds of hearings that 
focus on the freight system. Freight runs on the same exact 
system that our commuters, our vacationers, our recreational 
drivers all operate on. Freight sometimes loses its place among 
all those other things, and we don't think of it in the way of 
the vital role that it plays.
    I loved your artery analogy and the clogged artery. We all 
know what happens in our bodies when that happens.
    Mr. DeFazio. Would anybody else like to comment on this?
    Mr. Haas?
    Mr. Haas. An additional point, I think several of us are 
trying to make is called a holistic approach to our 
infrastructure, meaning that the highway bill that funds our 
surface transportation with that mode, the highway 
transportation.
    The railroads are out there making decisions, investment 
decisions on their own. I am not even sure how we fund port 
expansion, the Port Authority, and then you have the FAA and 
the airlines. I think the point we are trying to make here is 
that what is required here is an approach that integrates all 
of those modes because that is the way freight moves today.
    The model that we are using today to make those decisions, 
I think, we all agree is a bit outdated.
    Mr. DeFazio. I think that is a very good point.
    We just held a hearing last month in the Rail Subcommittee 
on the need for investment, and one of the statistics we have 
before us today would be if rail doesn't invest sufficiently to 
meet new demands, that we are going to see 31 billion more 
vehicle miles in 2035.
    But the trick there is how do we work with, partner with?
    My State has done some innovative things with the 
railroads. Anyway, we are trying to work with them and figure 
out how we get them to make the needed investments, and then we 
have the new hedge funds buying into railroads and demanding 
that the railroads not make capital investments. So I mean we 
have some interesting problems.
    Mr. Cardwell, I am just curious, and I would love to see 
the article if you would provide it to the Committee. It seems 
like India has figured out a way to perhaps deal with some of 
that issue in terms of dealing with the Class I railroads, do 
you think?
    Mr. Cardwell. Well, actually, they had a Class I railroad 
and they took it over, and they decided to make it their own. 
What they did is they had 19 to 20 people signed up to utilize 
their hook and haul, that all agreed to build connecting 
facilities to that so that you could deal with the ports and 
the inland movement and the outlet movement, especially for the 
exports of freight.
    Again, it is an approach that is more regional in the 
United States than national would be my vision.
    In Portland alone, there is only a couple of miles between 
the corp and the Portland Western. That could get you from K-
Falls all the way up to Portland. There is probably 10 more 
miles from Portland into Rivergate. In the Rivergate area north 
of Portland is 100 percent of the international boxes.
    However, none of those have the ability to get to Eugene, 
to Albany, to K-Falls because that is not a connecting service 
to the short lines. It is also not a service that the Class I 
railroads want to do. It is not unit train business. It is 
smaller business.
    So we are talking Lowe's, for instance, that moved into 
Lebanon, they were going to have three days a week at 250 
containers come in. Unfortunately, due to the economy and the 
housing market, they are down to about 50 to 100.
    We were looking at moving trains from 30 to 50 containers a 
week for them. Then those empties would be reloaded down in 
Eugene with the hay-straw agricultural product and then brought 
back up to Oregon, freeing up capacity through downtown.
    So the land is available. The exports are available. The 
Lowe's model is a regional distribution model where within 100 
miles, the distribution centers feed stores within 100 miles of 
all their distribution centers.
    Mr. DeFazio. Right, and that might add another element to 
what a national plan would consider, which would be avoided 
cost. What would it cost for another lane mile if we need to 
accommodate the trucks to carry that freight or could somehow 
we get the Federal Government to partner with or somehow work, 
through inducement or otherwise, with rail to provide that 
capacity there.
    I think it is a very interesting problem, one I would hope 
people would address, although I thought at the outset that you 
were kind of recommending nationalization of railroads. I know 
you are having some frustrations, but I have only had one other 
person recommend that to me, who was one of the most 
conservative people in my district who owned a lumber mill 
after the merger of UP and SP.
    He waxed poetic. He said, couldn't we go back to the way it 
was in World War II?
    I said, well, I wasn't around in that era.
    He said, oh, the government did a great job running the 
railroads.
    I pointed out that is socialism, but he was so frustrated 
with his inability to get the railroad to move his goods.
    So I think there is an appropriate role here for the 
government. Something that is in the interest of many of these 
individual firms may not serve the national interest, and we 
may need to somehow induce them to better serve the national 
interest.
    Mr. Uremovich. You might, Mr. Chairman, find a closer 
example of this kind of thing if you examine what some of the 
ports are doing in the U.S. Southeast in some of the regional 
planning and regional transportation activities that are going 
on down there. I don't believe they are connecting rail 
networks at that particular point, but it is a very clear 
example of folks recognizing that individual locales are no 
longer in a position to do some of the things that are required 
to be done.
    Mr. DeFazio. Okay. Thank you. I thank the panel.
    Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman.
    Good to have you all with us, gentlemen.
    Mr. Haas, it is distressing to learn or to hear that 
congestion may be costing UPS up to $100 million a year. Are 
there strategies that UPS uses to hopefully reduce the impact 
of this congestion and the cost associated with it?
    Mr. Haas. Yes, we have several.
    One is the computerized routing that we use to minimize the 
number of miles traveled. There has been an awful lot of press 
lately about the fact that UPS routes its drivers to only make 
right-hand turns. I had a discussion about it last night as a 
matter of fact.
    I know everybody smiles when we say that, but the fact of 
the matter is if you think about sitting at an intersection 
with a stoplight, in most places, you can take a right-hand 
turn immediately rather than sitting there, waiting and burning 
fuel. It saves us a lot of time and fuel as well.
    On the tractor-trailer side, we measure the number of 
minutes that our tractor-trailer drivers sit idling every day. 
I get a report every morning that tells me how many minutes we 
spend with the motor running and the wheels not turning. We, 
obviously, take a look at that and decide which corridors are 
causing us the most fuel burn unnecessarily and reroute where 
possible.
    But, by definition, keep in mind that those major arteries, 
and I will go back to Chicago because I am most familiar with 
that. If we have construction on the Dan Ryan, for example, and 
we have to reroute around that, the definition of those 
ulterior routes are not as efficient by design as the original 
one.
    So, yes, we have electronics to help us with it, but there 
is no solution, long term, for what we are here to talk about 
today.
    Mr. Coble. Thank you, Mr. Haas.
    Mr. Mullett, in your written testimony, you state that we 
can no longer afford to spend limited Federal resources on 
projects that do not meet the most important national needs. 
Are there specific Federal programs that exist today that you 
feel should be eliminated because they do not serve national 
needs?
    Mr. Mullett. No, sir, there are no programs that I think 
need to be eliminated. Rather, I would say we need to 
concentrate in the freight world on things like corridors of 
national significance and do a better job, I think, of 
analyzing from a national perspective where those dollars can 
be invested that have the most impact on making the system 
efficient and effective.
    Mr. Coble. I got you.
    Mr. Haas, let me come back to you for a second question. In 
your written testimony, you state that the Country needs a 
coordinated approach that breaks down the traditional barriers 
between different modes of transportation similar, probably, to 
Congressman Mica's concept of a National Transportation 
Strategic Plan.
    Do you feel, Mr. Haas, that some in the transportation 
community would resist removing these modal barrier because of 
fear of perhaps losing market share or dedicated Federal 
funding?
    Mr. Haas. I believe initially that may be the case in some 
places, but as an example I will go back to the Class I 
railroad situation for just a second, not to say that regional 
issues are not important, but if we can use the Class I model 
as it stands today. Their investment, although it has been 
fairly healthy in the last few years, is not keeping up. 
Someone mentioned 2005-2006 years were a nightmare from a 
railroad perspective.
    I don't know if you brought this up when you were talking 
to the railroads, Mr. Chairman, a couple days ago, but one 
example would be a trust fund established for the Class I 
railroads similar to what we have for the highways.
    To your point, I do think they resist that, at least 
initially, but I think if done correctly it would not only 
provide the necessary funding, which on occasion they will say 
they don't have, but direct it in ways which will increase the 
fluidity and the speed of those railroads.
    Mr. Coble. Mr. Chairman, this has been an informative 
hearing, I think, and again thank you all for being here.
    I have to go to another meeting imminently. Did anyone else 
want to weigh in on the question I put to Mr. Haas before I 
conclude?
    Mr. Uremovich. The only thing that I might add there is 
that the modal boundaries are probably more strongly drawn here 
in Washington these days than they are drawn in the private 
community.
    As Mr. Haas pointed out, all of us work on all the modes 
all the time, so we are very familiar with them. I am not so 
sure that that is the case when you talk about the various 
Federal railroad bureaucracies and air bureaucracies and port 
bureaucracies here in Washington.
    Mr. Coble. I want my friend from Oregon to take note that I 
am yielding back before the red light illuminates.
    Mr. DeFazio. You get credit for next time, Howard. That is 
incredible, especially since you are not known to talk real 
fast.
    Mr. Coble. Thank you, Mr. Chairman.
    Mr. DeFazio. Thank you. Good questions.
    I will recognize Members on the Democratic side in the 
order in which they appeared for questions, and Mr. Sires would 
be first.
    Mr. Sires. Thank you, Mr. Chairman.
    The district I represent includes the North Port and the 
Elizabeth Port. One of the things that over the weekend I did 
was with the Army Corps of Engineers, watched the dredging that 
is going on.
    As you talked, it just frightens me because I see the 
Panama Canal being widened. They are building these super 
tankers. They are putting these cranes on these ports that can 
lift two boxes at a time. If you can see, there is no white up 
there. Everything is red.
    We have a huge UPS hub in Secaucus, New Jersey, which 
already clogs up the highways, but skip it. We get a lot of 
jobs there.
    Mr. Haas. I am glad you see the tradeoff.
    Mr. Sires. I worked there as a college student.
    I mean where are we headed with these super tankers?
    Even the Newark Bay Bridge in New Jersey, they are talking 
about raising it because these super tankers can't make it 
through there. Are we preparing? Are you prepared to handle all 
this freight that is coming in?
    The area already is so congested. Let's face it, most of 
the rail lines over the years have been paved over. I am 
frightened to death of what you are talking about here. I mean 
how are we going to deal with some of this?
    Nobody seems to be focusing on when all this freight is 
coming in. They are talking a few years, and I know the port 
grows sometimes 10 percent a year, of the freight that comes 
in.
    Anybody?
    Mr. Uremovich. Certainly in these cases, there are not 
going to be any easy answers, and there are going to be some 
very, very difficult choices and tradeoffs to be made. As Mr. 
Mullett pointed out, you have a whole series of competing, not 
just economic but social, questions regarding these kinds of 
solutions.
    Certainly, I would not offer any silver bullet, if you 
will, because I don't know if there is one. There won't be easy 
choices or easy solutions, only intelligent choices.
    Mr. Haas. I think it starts with elevating the issue, and I 
think that is what this Committee, and I commend you for doing 
it. I think it has to be a national dialogue. Up until this 
point, at least outside of Washington, it doesn't appear that 
that is the case from, like I said earlier, a holistic point of 
view.
    Then, secondly, I will go back to this comprehensive 
strategy again. You are absolutely correct. If we don't take a 
look at the entire intermodal network, a lot of it is going to 
be forced onto those arteries.
    I keep looking at them. I like that picture too. I keep 
looking at those red arteries, particularly in the area of the 
Country that you come from. It will only get worse unless we 
take a look at it from a comprehensive strategic standpoint.
    Mr. Cardwell. I will add, the statistics say the United 
States needs to add 1.5 million TEUs of port capacity a year to 
keep up with imports.
    The drawing up there, three years ago in 2005, to 2015, 
freight, container freight will double. It doesn't say that, 
but that is what is going to go on by 2015.
    The next bill is an extremely important bill to think 
outside the box because it will be out in 2009 and go to 2015. 
So thinking multimodal, thinking ocean and thinking rail in how 
we can help ourselves is going to be a big part of that 
transportation bill.
    Mr. Sires. I only spoke about the New Jersey side. I didn't 
even mention the New York side, what is going on, all the 
growth on the New York side.
    Any silver bullets? No? All right.
    Thank you very much, Mr. Chairman.
    Mr. DeFazio. Thank you.
    I would now turn to Mrs. Drake who was first on the 
Republican side.
    Mrs. Drake. Thank you, Mr. Chairman.
    Gentlemen, thank you all for being here.
    I represent the Port of Virginia. So it is fascinating for 
me to hear your testimony today.
    I think everyone in America knows the number one issue in 
Virginia is transportation and the problems that we have had 
trying to address our transportation needs. My big concern in 
our district is how do you grow that port and meet the needs 
that you are talking about if the transportation system doesn't 
support that?
    We are going to be the start of the Heartland Corridor in 
Portsmouth, Virginia. We are very, very proud of that. We are 
talking about a pilot program to barge containers between our 
ports which certainly would get trucks off the road.
    I want to start with Mr. Cardwell because you talked about 
something near and dear to our hearts, and that is the 
containers and these empty containers. I wasn't aware, and I 
don't think America is either, that probably 50 percent of 
those trucks you are looking at on the highway are carrying 
empty containers. So one of my questions is: Is there work 
being done right now on how to get around this issue?
    Is there some way that those containers could be shared 
between companies, almost like a lease system where you don't 
ship them back empty? They sit somewhere until they are filled 
and come back because my understanding is there is a very 
narrow window of time before they have to be sent back to where 
they originated. Maybe that is something.
    But is somebody looking at that issue?
    Mr. Cardwell. I am not sure.
    I think, again, the issue is more smart land use planning, 
putting imports where exports are. No one wants to move an 
empty, railroads, truckers. It doesn't pay to move an empty.
    So what we need to do is develop a better system where the 
importers are where the exporters are. They get immediately 
reloaded and back.
    In order to grow the ports to where they are going to be, 
there is a lot of talk of inland intermodal centers. So, again, 
you are railing 150 miles into an area where the exporters are. 
That container is unloaded. It is loaded and brought back.
    The ports do not have the capacity in the future to store 
empties. So the whole idea of future inland intermodal centers 
is to rail off the port, out with loads, to get reloaded and 
then rail those loads back onto the port and immediately put on 
the ship and out.
    You can't build enough land. If you look at the ports today 
in L.A., Long Beach, New Jersey, Oakland, California, it is 
going to have to be the model. They can't continue to handle 
the empty volume that they do and be able to handle the future 
growth that is needed by this Country.
    Mr. Uremovich. With due respect to Mr. Cardwell, I will 
tell you unequivocally that half the movements in this Country 
in containers are not empty. All right. They are simply not.
    If you look at the empty miles statistics, I am sure from 
UPS or certainly from my company, our boxes are under load at 
least 80 percent of the time. All right.
    I happen to live in Virginia Beach, so I see that all the 
time. There are some empty movements, but we would not be in 
business, and I would argue that no transportation company 
around would be in business if we were moving half the time, 
empty.
    Mr. Haas. Yes, I would agree with that. We do, on a small 
scale, have some partnerships. It is a relatively recent effort 
on our part to eliminate empty movements.
    But as an example, if we have an imbalance of loaded 
trailers on the highway network, going east to west, and the 
railroads have the exact opposite, we partner with them so that 
our empties are used. We use their containers on a chassis on 
the highway, and they use them coming back in the other 
direction.
    Mr. Cardwell. Maybe I should clarify that. Intrastate, 
intra-region, the majority of those, 50 percent of those 
containers are going to be empty. Cross-country, long-haul, I 
think they are correct. I think a majority of those are loaded.
    Mrs. Drake. That is a concern because of the number of 
trucks on the road.
    But, Mr. Mullett, just real quick because I am running out 
of time, I think everyone agrees we are under-investing in our 
transportation system across the board, and we talk a lot about 
public-private partnerships. We talk about tolling, congestion 
pricing. Are there any other things you would suggest for us to 
have in that?
    Certainly, in Virginia, we are trying to work on that 
issue.
    Mr. Mullett. Yes. I don't think there are any additional 
ones that have not been tabled. If you are looking for 
something that no one has thought about, I don't believe that 
that is the case.
    What I do believe is very, very important is that we look 
at this full range of things as tools that are in out tool box 
that we can use and don't get caught up in this one absolutely 
is the end game or this one is absolutely the end game.
    I do think that we have under-invested in our 
infrastructure. I think reasonable fuel tax increases are 
probably appropriate. I also think there is sixty to eighty 
billion dollars of private equity money sitting out there and 
funds that want to invest in our infrastructure and if we can 
put a proper framework in to allow that to happen, that that 
can probably happen.
    Now that is not to say that every public-private 
partnership is good. There need to be constraints and 
frameworks around those, but we have a lot of different 
mechanisms that we can look at. If we are not willing to look 
at them all and consider them all, I don't think we will ever 
reach the level of investment that we need to have to really 
make a difference to meet the future needs.
    Mrs. Drake. Thank you, Mr. Chairman. I yield back.
    Mr. DeFazio. I thank the gentlelady.
    Next would be Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    I have a great interest in highway movement. I worked for 
Ford Motor Company in transportation for 12 years and have a 
great interest in goods movement as well as public safety on 
the highways and increasing the support for expanding freeways 
and highways to be able to accommodate not only truck traffic 
but also people going to work, et cetera.
    Several things come to mind as I am looking at that map on 
the wall. Any of you do nighttime deliveries?
    Are you even considering looking at what is being proposed 
with maglev to be able to utilize it to be able to move big 
containers through Maglev?
    Those are ideas that are being floated around here in 
Congress and also discussed especially at the L.A. Port. Long 
Beach and Los Angeles, recently, they are looking at 
establishing in three phases maglev container movements. While 
it sounds great, they are asking for Federal funding and, of 
course, the public to pay for a lot of the transit 
improvements.
    I feel that the railroads have to great partners in this, 
and so I would like some of your opinions on this.
    Mr. Uremovich. I can't speak to the maglev at all, but I do 
know that in your area during the 2005-2006 crunch, one of the 
benefits, if you will, coming out of that was that a number of 
our customers, particularly in the Inland Empire and down in 
the Long Beach area, were willing to shift to night receipt.
    For years, many of our customers were unwilling to do that 
because it does raise their costs. Night work typically pays 
different than day work. So that is becoming increasingly 
common. It is not yet the norm.
    Mrs. Napolitano. Well, during the Olympics in Los Angeles, 
back when Mayor Bradley was in office, Ford went to nighttime 
delivery with a lot of other folks, and they found it really 
created a lot of solutions because you didn't have the 
pollution, you didn't have the traffic, you didn't have 
congestion on the highways. All they needed was to be able to 
set aside a special area where the driver had keys to make the 
delivery to. That worked. In fact, they are still doing it.
    So there are other benefits from something of that nature, 
and I was just wondering if any of you have gone to that.
    Mr. Haas. Not necessarily what you are speaking to but 
necessarily because of the way our network works, a good chunk, 
I want to say the majority of our tractor-trailer movements, 
not the ultimate delivery to your home but the tractor-trailer 
movements that we have in our movements occur at night, but it 
is just by design. It is the way our network works. We didn't 
do that to help relieve congestion during the day.
    Mr. Mullett. I can't speak about the Maglev situation, but 
I can tell you that a researcher named Jose Vargas at 
Rensselaer Polytech has done a good bit work in this notion of 
delivering at night in New York and what that might ultimately 
mean.
    I think that his research shows that depending on the type 
of deliveries that are being made, there is good applicability 
to that but that when you get into can you get everybody to 
take their delivery at night or does it create two different 
deliveries in the same area, one during the day and one at 
night, and he also did a lot of work on what does it really 
mean in terms of energy consumption and energy use for keeping 
all these places open in the evening.
    I think that the research indicated, at best, that it was 
very questionable about whether that was a good policy from 
that point of view for everything.
    Now, are there specific instances that it makes a whole lot 
of sense? Yes, and in the commercial markets we are seeing an 
awful lot of people are taking advantage of that when they can.
    Mrs. Napolitano. Do you have any suggestions then to add, 
alternatives ways to add highway capacity?
    I know we have to have investment to be able to, Federal 
investment as well as State investment to be able to do the 
upgrades or widening of roads. But consider, in some areas, you 
have an eminent domain, so that is out of the question. Would 
you then look at planning on a second level, elevated?
    Mr. Uremovich. I have no idea.
    Mr. Mullett. I am not an engineer, so I can't make. I know 
that that has been looked at different places, and it has been 
tried at different places
    Mrs. Napolitano. Well, that would add capacity.
    Mr. Mullett. Right, and I also think there are some other 
public policy things that are really hard decisions to make, 
but I think we have the ability now to do some good research in 
connectivity between modes and are there ways that we can do 
some modal shifting.
    There is also, I think, the opportunities now to do some 
research in looking at truck productivity and how do we handle 
that. We are building some constraints at our ports and our 
borders that have to do with security protocols and things like 
that.
    So that, while I think that physical infrastructure is 
definitely something that needs to be looked at and has to 
happen, there are other short-term public policy decisions that 
we can probably look at that might have some small but more 
immediate impacts.
    Mrs. Napolitano. Thank you, Mr. Chair.
    Mr. Haas. I am not an engineer.
    Mrs. Napolitano. I am sorry. Go ahead.
    Mr. Haas. I am not an engineer either, but I do believe 
that anything we set our sights on is possible. It usually 
comes down to funding, and it may surprise some people in the 
room that my company is not opposed to increases in the fuel 
gas tax, provided with the caveat, of course, that it is 
directed and we know that it is directed and there is 
accountability to its direction to increase these highways and 
the byways that we use.
    If that includes double-stacking highways on top of one 
another, I am sure that is possible, but it requires an awful 
lot of money. We understand that. We are not opposed to it as 
long as it funded to the proper place.
    Mrs. Napolitano. Thank you, Mr. Chair.
    Mr. DeFazio. I thank the gentlewoman for her questions.
    I would now turn to Mr. Brown.
    Mr. Brown. Thank you, Mr. Chairman.
    Thank you, gentlemen, for being here and part of this 
discussion this morning.
    The interstate system has certainly been a big concern of 
mine. I know we haven't really made any improvements since 
1954, thereabouts, except maybe add additional lanes. I was 
just wondering if you all could give me some input.
    My thought would be, as we look at the reauthorization 
bill, that we take a look at freight movement, traffic movement 
and maybe try to find alternative routes rather than to just 
keep expanding the original routes which we really haven't done 
much about that since the original in 1954, looking at maybe 
Interstate 2 or some aspect of that.
    You know we have the decision we are going to making pretty 
soon when the Panama Canal is completed, and a lot of that 
freight that is stopping over in Los Angeles and over on the 
West Coast is going to be coming through the canal and coming 
up to the East Coast, and the movement is going to be going in 
a different direction.
    Just for general discussion, how do you think, as we 
propose the next reauthorization, that we should address the 
interstate system.
    We will start with Mr. Mullett. That would be good. Thank 
you.
    Mr. Mullett. This is a very, very difficult question 
because, as you know, it involves an awful lot of planning and 
analysis of freight flows, future demographic changes in the 
Country. If you are going to put a brand new road in or add 
additional corridors in different areas, those things have to 
be taken into consideration.
    I subscribe to the field of dreams theory of road building, 
which is build it and they will come. It is because of the 
hydraulic nature of the freight system. If it bumps up against 
a capacity constraint some place, it is going to find an 
alternative route, whether it is an alternative mode or an 
alternative road, and we are seeing those things happen now.
    So I definitely think that that thought process has merit, 
and I know there is research underway about those long-term 
capacity flows, long-term demographic changes that might help 
shed some light on that kind of planning.
    Mr. Brown. Mr. Haas?
    Mr. Haas. Keeping in mind, as I mentioned before, this 
integrated approach because, to Mr. Mullett's point, if freight 
is an example, and I didn't come here to beat up the railroads. 
I know it sounds like I am.
    If freight on a railroad is bumping up against capacity 
issues, it is going to go on a highway, no different than the 
highway flows. If we run into one of those arteries up there 
that is severely over capacity, we are going to find another 
way to do it. If that is going back to the rail, now you are 
bumping up against the same issue.
    So, like I said before, I think the biggest piece of this 
discussion should be centered around the way to look at all of 
those modes at the same time. I think that is a better approach 
to take.
    Mr. Brown. I know you are certainly tracking your lost time 
by congestion on the highways, and it is interesting to see the 
movement on that. Are you seeing a sizeable increase?
    Mr. Haas. The best comparison I am prepared to give you, 
and this may not answer your question but I think it will, is 
our network in the Oklahoma area. I think most folks know that 
there is not a whole lot of congestion, and your map shows 
that, in Oklahoma. Our tractor-trailer drivers spend on 
average, in their 10-hour day, 21 minutes idling.
    In the New York and New Jersey area, we have an hour and 
nine minutes. Same fundamental activity, putting those tractor-
trailer units together which requires some running of the 
engine to build up the air pressure, but the vast majority of 
that difference between 21 minutes and an hour and 9 is sitting 
in traffic, not moving, with the engine running.
    Mr. Brown. So that is costing you about 10 percent of 
overhead, maybe even more, just sitting in traffic.
    Mr. Haas. Correct, in that area, yes.
    Mr. Brown. Right.
    Mr. Cardwell, in relation to the question I asked about the 
Panama Canal, do you have any advice for the eastern seaboard 
ports versus what is going to happen, I guess, when the Panama 
Canal comes with your experience on the West Coast?
    Mr. Cardwell. My understanding is there is going to be a 
lot more freight going shipped from Asia directly to the East 
Coast versus stopping on the West Coast and going over, but at 
the same time you have the Port of Houston is expanding and 
growing. The Panama Canal is certainly going to give the 
ability to bring larger ships through, and they are going to, 
in turn, get paid to do that.
    So, again, there is going to be a lot more capacity that is 
going to be coming into New York and New Jersey as well as the 
West Coast. Again, we have to find a way of making, generating 
1.5 million TEUs of capacity a year, and that may be one way of 
doing it because it is not all going to continue to go to L.A. 
and Long Beach.
    They have talked about how Seattle and Tacoma. Tacoma wants 
to grow from 2 million TEUs to 10 million TEUs. Seattle wants 
to go from two to four. However, there isn't the rail capacity 
to deal with half of that growth. So it is going to eventually 
either there will be new ports crop up or they will find other 
ways of getting to where they need to go, which is typically 
where the consumption is.
    I will just add one more thing. If we are going to think 
outside the box as far as new routes and new highways, again, a 
new rail mile is less expensive than a new highway mile. I 
think we need to think about the whole package of water, rail 
and highway.
    Mr. Brown. I think with the reauthorization of the new 
highway bill, I think that is going to be the total, also 
including air as part of that formula too.
    Thank you very much, gentlemen.
    Mr. DeFazio. I thank the gentleman.
    On the Democratic side, we now turn to Mr. Lipinski.
    Mr. Lipinski. Thank you, Mr. Chairman. I would like to 
thank you for holding this hearing today.
    It is really good to hear from out witnesses and thank you 
for your testimony. This is a really critical although, 
unfortunately, overlooked aspect of our economy and how 
important it is to our Country.
    Thank you for your testimony on this and really talking 
about having a greater investment and smarter investment in our 
transportation infrastructure.
    In particular, I would like to recognize Mr. Haas who is 
the Vice President of Transportation at the UPS facility in my 
district in Hodgkins. I will be going past there at least four 
times the next couple days.
    I think that it is no coincidence here that after the 
Chairman's questions on the Democratic side, we had a 
Representative from the New York-New Jersey area and a 
Representative from California. Well, now it is time for one of 
the other hubs that is really seeing issues with congestion in 
Chicago.
    I would like to ask Mr. Haas, where do you think we should 
be looking in terms of investing in transportation 
infrastructure in the Chicago area?
    It is very important for certainly my district and the 
people who live in the Chicago area to improve the situation 
with the congestion, but it is also critical for the Country, 
Chicago being the hub for rail, roads and also aviation 
although that is not included in here.
    I really think we have a great opportunity with Chairman 
DeFazio's leadership and Chairman Oberstar's leadership on the 
next highway bill to really do something significant.
    Mr. Haas, what do you think is most important to invest in, 
in the Chicago area?
    Mr. Haas. Okay, two things really, Congressman, on the rail 
side.
    The scenario that I painted earlier this morning when the 
westbound train is leaving to Chicago, what typically happens, 
and I know you have seen this, is that the Chicago-land area is 
such a thoroughfare for railroads in general, that when one of 
those railroads has an issue--it could be 200, 300 miles from 
Chicago--there is not enough capacity in that network so that 
it starts to back up.
    When one is late, there is another behind it. There is 
another behind that. They all converge on the City of Chicago, 
and everything comes to a grinding halt.
    You have sat at the crossroads just like I have and waited 
forever for these freight trains to come through there. That 
just sends a ripple effect that I have to believe that everyone 
else in Chicago who uses the railroads feel the same impact.
    Everything in my system backs up. A lot of it is timed and 
scheduled to take advantage of off times during the day for 
highways. When that scheduled gets thrown off, it just throws 
fuel on the fire, for lack of a better term.
    So, initially, I think this highway infrastructure 
improvement issue to be addressed. I mentioned earlier the 
possibility of a trust fund for the railroads. My intuition is 
they are not entirely in favor of that at this point, but done 
correctly, I think it is the right thing to do.
    Then from a highway standpoint, again, you and I travel 
back and forth on the same highways and byways, I am sure, 
during the rush hour in Chicago.
    I don't think it is any different from the major hubs of 
activity you see up there, but an investment in the Chicago-
land area that is a public-private partnership--and I know that 
you are thinking of a project right now that is very familiar 
to you called CREATE--would be a nice, efficient way of using a 
combination of public policy and private investment. I know 
that is not fully funded, it may never be, but in my opinion 
that is the right path to take.
    Mr. Lipinski. We are talking about CREATE. What about 
anything in terms of highway projects that you think would be 
helpful in the area to ease the congestion? Is there anything 
particular?
    Mr. Haas. Specific routes, you mean?
    Mr. Lipinski. Yes.
    Mr. Haas. Well, I think what is going on, and this is not 
going to mean much to the rest of the people in the room, but I 
think what is going on I-88 right now. As you know, all the 
growth from Chicago is going west and northwest. So that artery 
from downtown the western suburbs, there are current expansion 
plans or current expansion going on there right now.
    I got to believe that the other artery that is going to 
cause us bigger issues going forward than we recognize right 
now is 290 going up to the northwest, if you are looking for 
specific arteries.
    Mr. Lipinski. Certainly, any congestion that is going on in 
Chicago area has the impact with all the traffic that comes 
through, has an impact on freight movement through the entire 
Country. So I think all those are important.
    As I said earlier, I think it is a great opportunity that 
we have in this next transportation bill to very smartly invest 
in transportation and to really have a national plan in terms 
of a vision of what we should be doing to help move freight 
through the Country.
    I thank all the witnesses for their testimony.
    Mr. DeFazio. Okay, thank you.
    All right, we would now turn to Mr. Arcuri.
    Mr. Arcuri. Thank you, Mr. Chairman, for convening this 
hearing and, gentlemen, thank you very much. I found your 
comments very informative. It has been a real learning 
experience for me, and I appreciate your input here and your 
testimony.
    A couple of points that I would like to ask you about: We 
talk a lot around here about globalization, and we talk about 
how effective it is in terms of bringing cheaply made products 
into this Country from other places, places like China.
    Listening to you, it certainly strikes me as the fact that 
while we may be getting our widgets pretty cheaply from China, 
the cost is dramatically rising of getting those widgets to the 
consumers, the John Q Public in America. Eventually, the cost 
of getting them, if we don't do something, from where they are 
made in China to the people is going to be higher than the 
actual cost of production and eventually make it probably be 
what many of us would like to see and that is promote domestic 
production of some of these things.
    Do any of you have a comment on that?
    Mr. Uremovich. Perhaps Mr. Mullett from TRB can address 
this as well, but I think if you look at the numbers over the 
last, let's say, 10 or 20-year period of time, you will find 
that the transportation or logistics component of total cost 
has come down dramatically. As a result of increasing 
productivity in the freight business itself as well as the 
removal of some regulatory barriers and things like that, I 
think it has actually come down.
    Now that doesn't speak to the most recent, let's say, last 
year spike in fuel prices which may change things rather 
dramatically in the longer term where that is concerned.
    Perhaps Mr. Mullett has something.
    Mr. Mullett. I can't answer about the globalization notion, 
though I think that if you look back over time that as 
transportation got faster and more efficient and we kept less 
inventory, we were able to source things and use markets that 
were international and truly international.
    Your comments are right, that freight transportation and 
logistics have continued to drop as a percentage of GDP and 
goods sold until the last couple years. Most of that trend 
started to change pre the spike in fuel and oil prices. So that 
is, in large part I think, attributable to congestion and lack 
of capacity that puts strain on the system.
    When we get this shifting back and forth between is it in 
inventory or is it in movement and just in time, it becomes 
very, very scary to people that are involved in purchasing 
internationally because those lengthened supply chains have 
more risk.
    Now is that risk enough to cause them to start moving 
things back to the United States, back to North America from 
where they have been purchasing and selling now? I don't know, 
but I do anticipate that those kinds of shifts will continue to 
take place over time. I don't know that there are any models 
that accurately predict how that would happen or how we might 
be able to influence that.
    Mr. Arcuri. Thank you.
    Those comments, I think, bring me to the point that I think 
is the most important point, the question that I have. That is 
that I am looking at some of the background from the hearing, 
and I am looking at Hudson Institute projection that was made 
that showed the annual growth from 2000 to 2020. It shows that 
air freight will probably increase by 4 percent--this is their 
prediction anyway--trucking, 2.5 percent; rail, 2 percent; and 
barge, 0.7 percent.
    Now what I find interesting about that is that the two that 
are going to increase the most are probably the two most 
dependent upon fuel prices. As the fuel prices continue to go 
up, where do these projections sit?
    We try to make decisions here in this Committee as to where 
to focus our limited resources. If we are focusing our 
resources in a place that projections are saying are going to 
increase, like let's say on the roads, but gas goes up so 
dramatically that it may not be the most effective and 
efficient way to do it. So what we need is input.
    Fuel prices probably aren't going to go down. I mean we may 
see some fluctuations. We are certainly hopeful about it, but 
that may not happen. So what we need, I think, is some help 
from people you and your business to tell us where do you 
anticipate the future being in terms of moving your products.
    I mean that is the big question. That is what we are trying 
to determine. With limited amount of resources, where do we put 
it? Do we put it in fixing our roads, do we put it in improving 
our airports or do we put it in improving the rail?
    I don't mean to put you on the spot, but therein I think is 
the real conundrum for us in terms of where do we focus our 
resources. Do any of you have any thoughts on that?
    Mr. Uremovich. I can't speak specifically to the Hudson 
study because I am not familiar with the numbers and whether 
they are talking ton miles or dollars or how they took it.
    The freight business, generally speaking, moves relatively 
slowly in its changes in modes. The last big shift was the 
shift to containerization and domestic containerization in the 
late sixties, seventies and early eighties. I think that was 
the last major big shift.
    So I don't know whether. I don't see anything from our 
perspective that would significantly alter the kinds of growth 
patterns in spite of the fuel situation, at least insofar as it 
exists today. I mean if it doubled or tripled from where it is 
today, everything obviously would be out the window.
    I don't see anything that is going to cause a massive modal 
disruption that would be inconsistent perhaps with what the 
folks at the Hudson Institute or elsewhere.
    Mr. Arcuri. But I mean if the gas prices continue to rise, 
the ability to bring in cheap products from places like China 
is definitely going to affect, I think, demand.
    Mr. Uremovich. Perhaps, it might. It would most likely 
first affect modal shift. It would probably move more traffic 
toward the intermodal system because that is roughly three 
times as efficient from a fuel perspective as over-the-road 
truck.
    That doesn't work very well where you are in short-haul 
lanes, all right, the last 100 miles, your last 200 miles, 300 
miles. It is much more difficult.
    Again, there are a whole bunch of tradeoffs here, and my 
crystal ball is certainly not clear enough to describe where 
that is going to come out.
    Mr. Cardwell. I was watching the Business Channel this 
morning, and actually they were talking about the food shortage 
and the cost of food. Actually, over the last six months, the 
transportation of food has gone from 5 to 10 percent of the 
cost of producing the food.
    To answer your question, I think we need to invest in all 
the modes. Again, there isn't one fix to have just a highway 
package or just a rail. I think it is a combination of all of 
them that are going to get us out of this.
    It is just going to continue to grow, and it is just going 
to continue to get bigger. There is no one magic button to say 
let's invest 300. California has a $2 billion bond package that 
is coming out, and the majority of that is going into 
multimodal transportation.
    I just think we need to think more about multimodal. The 
railroads are great for the long haul, but that last 100 miles 
becomes extremely difficult. What are we going to do within 
that last 100 miles? What are we going to do intrastate to help 
out?
    Mr. Haas. Congressman, can I answer?
    Mr. Arcuri. Yes. Go ahead.
    Mr. Haas. I think I understand the depth of your question. 
We are struggling with it a little bit up here as you can tell.
    I think whether the product is made in Southeast Asia or, 
based on rising fuel costs, it comes back to the Southeast 
United States, if we want this economy to continue to be the 
robust world leader that we expect it to be, those goods have 
to move to the end consumer, to your point about the last 100 
miles.
    No matter what the shifts are in the economics in this 
global economy that we live in, this Nation has to have a 
transportation infrastructure that moves it no matter where it 
is made. That is really what we have been talking about all 
day.
    I am not trying to dismiss your point.
    Mr. Arcuri. No, no. I understand.
    If I may, thank you, Mr. Chairman?
    You mentioned earlier you hope that we here in Congress 
don't do things that hurt you, that we sort of give you the 
room to expand. Well, we have to look into our crystal ball, 
and we have to make determinations because there is a limited 
amount of resources that we have to apply, and we have to 
decide in which way to apply them best.
    So, please understand, I am not trying to be difficult, but 
I am trying to get some input from you as to what ways you 
believe would be the best for us to focus the limited 
resources, your tax dollars, that we have to apply to improve, 
so we can get the goods cheaply.
    Thank you, Mr. Chairman. I appreciate your indulgence.
    Mr. DeFazio. That was a good line of questioning.
    I would just observe, $2 billion for the eighth largest 
economy in the world, which is what California is, is a 
pathetic amount of money, just as the amount of money we are 
investing nationally is pathetic.
    When I took the Subcommittee to Europe, I think one of the 
most telling statistics, and it doesn't go to the particular 
issue before us today, but it is very telling. One second tier 
city in Europe, Barcelona, is investing almost as much money in 
one subway line than the entire United States of America is 
investing Federally in transit. Now that is kind of pathetic.
    So we are heading toward third world infrastructure which 
is something new. Formerly first world infrastructure quickly 
fell to the bottom of the heap with the levels of investment we 
are putting in nationally.
    Two billion dollars may sound like a lot of money, but in 
the California economy, it is nothing. Better than nothing, I 
guess, but not much.
    Ms. Hirono.
    Ms. Hirono. Thank you, Mr. Chairman.
    I hear all of you saying that what we should be focusing on 
is really an intermodal transportation system nationally. I 
think with the jurisdictional scope of this Committee as well 
as the full Committee, I hope that our decisions will be 
informed by that kind of perspective.
    I was particularly interested, Mr. Haas, in Mr. Eskew's 
Getting America Moving Again article as we were talking about 
how best to move freight as well as, in my view, passengers. I 
was interested in item five which says that we should use 
technology to make more efficient use of what we already have, 
and I am wondering.
    For example, in Hawaii, we have gridlock on every island 
but particularly on Oahu, and it occurs to me that we should be 
using technology to keep traffic moving.
    I am wondering, do you have any information as to how well 
the States and localities are doing at implementing these kinds 
of technologies at least to keep things moving on what we have 
now, our highway system now?
    Mr. Haas. I think with respect to point number five, I 
believe it was, Mike makes two points in that article. One is 
that there are systems out there to monitor traffic 
electronically. If we had this loop technology embedded in our 
highways, we could predict ahead of time where the traffic 
congestion is and give commuters and businesses like ours, 
options to bypass that traffic before we get into it.
    With respect to your question about how we are doing with 
that, I am not aware that we are doing very well at all. That 
is just a concept that we know works, that is out there but not 
being used on any large scale that I am aware of.
    The second point he makes is wrapping goods with 
technology, meaning that this lean supply chain that we have 
talked about a couple of times is enhanced by making sure that 
the goods that are moving are wrapped in technology, so you can 
make decisions on the fly.
    One of the benefits of that is to keep it moving at all 
times, so you are not warehousing product, meaning that I move 
product from Point A to a warehouse, warehouse to Point B. I go 
from Point A to Point B, and it takes congestion off our 
highway systems, one movement instead of two.
    Ms. Hirono. I think it is really important where the 
technology is already there that we do everything we can to 
encourage the local and State Governments to utilize those 
technologies.
    Then I was also looking at number eight, increase modal 
capacities, and what leaped out at me was the statement 
regarding making capacity, increasing capacity. He gives an 
example of Asian ports handle 18,500 containers annually per 
acre a facility whereas our ports only average just 3,900 
containers. What the major reasons for this kind of a 
difference in terms of handling capacity?
    Anybody?
    Mr. Uremovich. In one of my prior lives, I was Vice 
President of American President Lines in California, and we saw 
exactly the same kind of productivity differences. A lot of it 
had to do with they work the ports 24 hours a day, 7 days a 
week in Asia. They have work rules for a whole variety of 
reasons that make it more efficient in terms of a throughput 
basis, and that has not changed.
    As you probably know, we are in the midst now and have just 
begun the negotiations of the West Coast labor agreements with 
the ILWU. So that has started.
    But a lot of it had to do with structural barriers around 
the labor rules and working, the speed with which the folks 
worked on the docks, fundamentally.
    There was not a technological difference, though some of 
those ports are smaller. So they tend to have greater 
throughputs per acre just because that is the way the 
arithmetic works, and ours tend to be spread out a little more 
and be wheeled operations as opposed to grounded operations, 
primarily.
    Ms. Hirono. If you are saying that most of this is due to 
labor issues?
    Mr. Uremovich. There are a variety of issues. Among some of 
them are the way the ports are designed because, as I 
described, in the U.S., many of the ports are wheeled 
operations as opposed to grounded operations. So you tend to 
use land less efficiently, but you use other things more 
efficiently. That is not the only measure of throughput in a 
terminal.
    Secondly, yes, there were significant differences in the 
way the work rules are structured.
    Ms. Hirono. I don't want anyone to get the impression that 
hard-fought labor gains are what we are going to look at to 
make our ports more efficient.
    I think that is all the questions I have for now. This has 
been a really informative hearing, and I thank all of you very 
much for your testimony. I yield back.
    Mr. DeFazio. I thank the gentlelady.
    Unless Members have further questions or there is something 
that someone on the panel feels was said that they really want 
to enumerate further, if not, then I will thank you for your 
time and your testimony. When you come up with a grand idea on 
how we put this all together, I would be happy to take credit 
for it and insert it in the next bill.
    [Laughter.]
    Mr. DeFazio. Thank you very much.
    The Committee stands adjourned.
    [Whereupon, at 12:40 p.m., the Subcommittee was adjourned.]

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