    [Senate Hearing 113-233]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 113-233

                          EXPANDING THE PANAMA CANAL:
           WHAT DOES IT MEAN FOR AMERICAN FREIGHT AND INFRASTRUCTURE?

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

                                    HEARING

                                   before the

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 APRIL 10, 2013

                                   __________

        Printed for the use of the Committee on Commerce, Science, and
                                 Transportation

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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    20402-0001

           SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                JOHN D. ROCKEFELLER IV, West Virginia, Chairman
    BARBARA BOXER, California            JOHN THUNE, South Dakota, Ranking
    BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
    MARIA CANTWELL, Washington           ROY BLUNT, Missouri
    FRANK R. LAUTENBERG, New Jersey      MARCO RUBIO, Florida
    MARK PRYOR, Arkansas                 KELLY AYOTTE, New Hampshire
    CLAIRE McCASKILL, Missouri           DEAN HELLER, Nevada
    AMY KLOBUCHAR, Minnesota             DAN COATS, Indiana
    MARK WARNER, Virginia                TIM SCOTT, South Carolina
    MARK BEGICH, Alaska                  TED CRUZ, Texas
    RICHARD BLUMENTHAL, Connecticut      DEB FISCHER, Nebraska
    BRIAN SCHATZ, Hawaii                 RON JOHNSON, Wisconsin
    WILLIAM COWAN, Massachusetts
                        Ellen L. Doneski, Staff Director
                       James Reid, Deputy Staff Director
                         John Williams, General Counsel
                  David Schwietert, Republican Staff Director
                  Nick Rossi, Republican Deputy Staff Director
       Rebecca Seidel, Republican General Counsel and Chief Investigator

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on April 10, 2013...................................     1
    Statement of Senator Rockefeller.................................     1
    Statement of Senator Thune.......................................     3
    Statement of Senator Warner......................................    10
    Statement of Senator Scott.......................................    25
    Statement of Senator Begich......................................    36
    Statement of Senator Nelson......................................    41

                                   Witnesses

    John Vickerman, Founding Principal, Vickerman & Associates.......     5
        Prepared statement...........................................     6
    Jeff J. Keever, Senior Deputy Executive Director, Virginia Port
      Authority......................................................    11
        Prepared statement...........................................    13
    Edward R. Hamberger, President and Chief Executive Officer,
      Association of American Railroads..............................    15
        Prepared statement...........................................    17
    Philip L. Byrd, Sr., President and CEO, Bulldog Hiway Express on
      behalf of the American Trucking Associations...................    25
        Prepared statement...........................................    27

                                    Appendix

    American Chemistry Council, prepared statement...................    49
    Response to written questions submitted to John Vickerman by:
        Hon. Frank R. Lautenberg.....................................    50
        Hon. Maria Cantwell..........................................    52
        Hon. Amy Klobuchar...........................................    55
    Response to written questions submitted to Jeff J. Keever by:
        Hon. Maria Cantwell..........................................    56
        Hon. Roger F. Wicker.........................................    58
        Hon. Dan Coats...............................................    59
    Response to written questions submitted to Edward R. Hamberger
      by:
        Hon. Frank R. Lautenberg.....................................    59
        Hon. Maria Cantwell..........................................    60
        Hon. John Thune..............................................    62
        Hon. Roger F. Wicker.........................................    63
        Hon. Dan Coats...............................................    63
    Response to written questions submitted to Philip L. Byrd by:
        Hon. Frank R. Lautenberg.....................................    64
        Hon. Maria Cantwell..........................................    65
        Hon. Amy Klobuchar...........................................    67
        Hon. Roger F. Wicker.........................................    67
        Hon. Dan Coats...............................................    68

                          EXPANDING THE PANAMA CANAL:
           WHAT DOES IT MEAN FOR AMERICAN FREIGHT AND INFRASTRUCTURE?

                                  ----------

                           WEDNESDAY, APRIL 10, 2013

                                           U.S. Senate,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:38 p.m. in room
    SR-253, Russell Senate Office Building, Hon. John D.
    Rockefeller IV, Chairman of the Committee, presiding.

           OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
                    U.S. SENATOR FROM WEST VIRGINIA

        The Chairman. Greetings, all.
        I will give my opening statement. Ranking Member Thune, who
    is a wonderful person to work with, is going after that. And
    Senator Warner will be coming to introduce the Virginia
    witness.
        Before the Panama Canal was completed in 1914, it took
    13,000 miles and several months for a ship to travel from New
    York to San Francisco. It was an inefficient, dangerous, and
    costly way to do business, but for traders that relied on East
    Coast ports for exports and imports, it was the only option to
    do business.
        American business leaders needed a way to bypass South
    America. They saw what the Suez Canal had done in Egypt, what
    it did for trade between Europe and Asia, and thought about
    what connecting the Pacific and the Atlantic Oceans would do
    for North American commerce.
        Once completed, the Panama Canal was an engineering marvel,
    and remains such. I have never been there, and I am very
    embarrassed to say that. It was a marvel, one that rivals many
    great American achievements to this very day.
        The Canal dramatically improved trade routes and reduced
    transit times for goods moving between the Atlantic and Pacific
    Oceans. It transformed commerce throughout the Western
    Hemisphere for the next century, heavily affecting South Dakota
    and West Virginia.
        There you go. Right?
        Senator Thune. Yes.
        [Laughter.]
        The Chairman. By any definition, the Panama Canal was a
    success. And today roughly 15,000 vessels, which is actually
    less than I would have figured--I am not good at math, but that
    doesn't sound like a lot. But I guess they go through slowly.
    But the witnesses are going to explain that. Roughly 15,000
    vessels travel through the Canal annually, carrying over 300
    million tons of goods.
        But as with everything, cargo ships are becoming larger and
    larger and are outgrowing current infrastructure. The Canal is
    being expanded to accommodate ships carrying two and a half
    times the freight of those it currently transports. These ships
    are enormous, and they can carry an awful lot of goods. The
    Panama Canal is poised to once again dramatically affect the
    movement of goods in and throughout the Western Hemisphere.
        However, it is unclear how the expanded Canal will affect
    trade patterns. Once larger ships can travel through a newly
    widened Canal, will we see a dramatic diversion in the amount
    of goods entering and leaving the country from the West Coast
    ports to the East Coast and Gulf Coast ports? Alternatively,
    will the West Coast ports retain their stature as the busiest
    ports in the country? I don't know the answer to that. Will the
    Canal expansion result in little additional traffic to ports on
    the other side of the country? I can't speak to that, but you
    can.
        Regardless, we need to be prepared for it now and what the
    expanded Canal will do to impact our economy. In 2011, the
    maritime sector handled nearly half of U.S. exports and
    imports. Estimates put exports increasing by 6 to 8 percent
    annually as our economy gets stronger.
        One thing we know is that ports on the East Coast are
    working diligently to handle these larger ships. Now, are they
    dredging or are they preparing for larger docks or the rest of
    it? That we need to talk about. There is a big difference.
        However, there is a world beyond the ports, that businesses
    need to move their goods throughout the country. We have grown
    accustomed to an ad hoc approach to maintaining our surface
    transportation network with which many seem content, but I am
    not content with that. This lack of planning and shortsighted
    thinking does not reflect what our country truly needs: a
    strategic, long-term vision for rebuilding our transportation
    system.
        The rest of the world is already heavily investing in their
    transportation infrastructure to prepare for the next century
    of challenges. Duct tape and goodwill does not suffice when
    Asia and much of the rest of the world are readying their
    infrastructure and working to compete in the global economy.
        A strategic vision doesn't involve stop-gap measure after
    stop-gap measure, lurching from one inadequate funding bill to
    the next in the name of progress. It means taking a hard look
    at what we need from our ports, rail, and highway systems over
    the long term and then doing something about it. The country's
    transportation network, built over generations, has been
    critical to our long-term economic growth and success. If we
    can't move goods to market, into, out of, and throughout our
    country, our export-driven economy cannot thrive. In fact, it
    will begin to wither.
        There are glaring indicators that this interconnected
    system was not built to withstand the 21st century stressors
    being placed upon it. The wear, tear, and congestion from the
    increase of heavy trucks and rail have tested the
    transportation network. Our ports, roads, rails, and other
    infrastructure are in need of billions of dollars of
    investment, and our current policy of looking the other way has
    kind of run out.
        I firmly believe that the Federal Government has a critical
    role to play in the process, just as it always has in building
    our nation's transportation networks. We need to lead by
    creating a coherent and unified mission for our Federal surface
    transportation programs. Our nation's economic growth demands
    that.
        And in order to develop strategic plans and maximize the
    return on taxpayer dollars, we need good information about
    emerging trends and expectations for how freight will move in
    the coming years. That is why we are here today.
        The ports and railroads and trucking companies are all
    navigating what investments and strategic decisions are
    necessary to take full advantage of the opportunities or, in
    some cases, possible threats the expanded Canal will present.
        While no one may know the true outcome of the expansion's
    effect on freight movement until it happens, one thing is clear
    right now: We can invest in a strategic, long-term vision for
    our country's role in this new global economy or we can be
    stuck with inadequate infrastructure because we were unwilling
    to make the tough choices on investing in a strategic, long-
    term vision for our country's role in the new economy.
        That finishes my statement, and I turn now to my good
    friend, Senator Thune.

                     STATEMENT OF HON. JOHN THUNE,
                     U.S. SENATOR FROM SOUTH DAKOTA

        Senator Thune. Thank you, Mr. Chairman. Thank you for
    holding this hearing today.
        And I want to thank our panelists for their willingness to
    come up and give us the benefit of their insights.
        The widening of the Panama Canal presents a great economic
    opportunity not only for port states but for the nation as a
    whole. More than 90 percent of American imports and exports
    move by ship, so the widening of the Canal will have an impact
    throughout the United States, including in places, like my home
    state of South Dakota, that are roughly 1,000 miles away from
    either coast or from the Gulf of Mexico.
        A little farther away than West Virginia.
        The Chairman. A little bit.
        [Laughter.]
        Senator Thune. As global trade increases, we will need to
    find new ways to move freight effectively and efficiently. This
    will require increased coordination among the various modes of
    transportation as well as with local, state, and Federal
    officials.
        It is also crucial that we not overlook the needs of rural
    states such as South Dakota. Rural states are the source of
    many of our nation's exports when it comes to agricultural
    products and manufacturing and the destination of many of our
    country's imports. I am particularly encouraged by the fact
    that the widening of the Canal can increase opportunities for
    American exports. The Army Corps of Engineers estimates that
    the ability to employ large bulk vessels is expected to
    significantly lower the delivery cost of U.S. agricultural
    exports to Asia and other foreign markets.
        Canal expansion will also make it easier for the United
    States to export liquid natural gas and other sources of
    energy. The energy industry has been a bright spot of our
    economy over the past several years. Domestic energy production
    is increasing and creating American jobs in the process. In
    2011, for the first time since 1949, the United States exported
    more energy than it imported. This is an encouraging
    development. And as domestic energy production increases, the
    need for ways to export these materials will increase.
        Moving forward, Congress must be sure not to impose
    burdensome regulations on the transportation industry that will
    harm productivity or discourage private sector infrastructure
    investment. We must also recognize the need for continued
    investment in our nation's transportation infrastructure and
    work to find financing mechanisms that engage the private
    sector and that will not place an undue burden on the American
    taxpayer.
        I look forward to hearing from our witnesses today
    regarding preparations for the likely impacts of widening the
    Panama Canal, including their assessments of what remains to be
    done to ensure that we reap the predicted economic benefits of
    the Canal's expansion.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator Thune.
        Senator Scott, do you want to put in an opening statement?
        Senator Scott. No, sir.
        The Chairman. No? Positive?
        Senator Scott. Positive.
        The Chairman. Rare opportunity.
        [Laughter.]
        Senator Scott. Let me say thank you.
        The Chairman. Oh.
        [Laughter.]
        Senator Scott. I will have a couple questions, though. I am
    sure I will have some questions after hearing some of the
    testimony.
        The Chairman. OK. All right.
        Senator Thune. I like the way he works, Mr. Chairman.
        Senator Scott. I am still ``House-broken,'' sir. I
    apologize. I am not Senate-trained yet.
        [Laughter.]
        The Chairman. I see. OK.
        Senator Scott. I am coming, though.
        The Chairman. All right.
        Now, we have a very distinguished witness list. John
    Vickerman, Founding Principal of Vickerman and Associates. I
    like that.
        [Laughter.]
        The Chairman. You know, you just--you found a company, you
    say, ``I'm it. My name shows that I'm it. So come hither to
    me.''
        [Laughter.]
        The Chairman. Jeff Keever, Senior Deputy Executive Director
    of the Virginia Port Authority.
        And, Jeff, unfortunately you can't speak until Mark Warner
    gets here, because he wants so badly to introduce you.
        [Laughter.]
        The Chairman. And he is coming. OK?
        Ed Hamberger, who is President and Chief Executive Officer,
    Association of American Railroads, and a longtime acquaintance.
        I am very glad that you are here, Ed.
        Mr. Hamberger. Glad to be here.
        The Chairman. I think you have lost weight, Ed.
        Mr. Hamberger. Thank you, sir.
        [Laughter.]
        The Chairman. Philip Byrd, First Vice Chairman, American
    Trucking Association.
        All right. Now, we will start with Mr. Vickerman.

                STATEMENT OF JOHN VICKERMAN, PRESIDENT,
                         VICKERMAN & ASSOCIATES

        Mr. Vickerman. Thank you, sir. And I am it. So, yes.
        [Laughter.]
        Mr. Vickerman. Good afternoon, Chairman Rockefeller and
    Ranking Member Thune and the distinguished members of the U.S.
    Senate Committee on Commerce, Science, and Transportation.
        My name is John Vickerman. I am President of Vickerman &
    Associates. We are a firm that specializes in the strategic and
    tactical planning for ports worldwide. There are 90 deepwater
    ports in North America. We have done the strategic planning on
    67 of those 90 ports. And I am pleased today to be here to
    share with you some insights in that process.
        Before you, you have a slide that depicts the current
    operation of the Panama Canal today. This is a 4,800-twenty-
    foot-equivalent-unit, TEU, vessel moving through the lock
    system. After the expenditure of nearly $5.2 billion, sometime
    after June 2015--it has been delayed about 6 months because of
    the construction issues----that capability will be expanded to
    12,600 TEUs, as illustrated on the graphic that you see before
    you.
        As indicated by the Ranking Member, containers are not
    everything, and, in fact, there are fleet sizes that will be
    greatly benefited by the expansion. And here you can see some
    global fleet percentages. The crude oil will go from zero
    percent of ships able to make it through the Canal to 42
    percent of the global crude oil fleet having the capability of
    moving through the Canal when expanded. For LNG, 10 percent
    now, 90 percent after the completion. And for dry bulk that
    moves a lot of our agricultural product, it would go from 55
    percent to 80 percent in that process.
        There is a significant issue and a competitive issue to the
    Panama Canal, and it is called the Suez Canal. By moving
    vessels through the Suez what I call backward, through the Red
    Sea, past the Port of Said, through the Suez, to the U.S., we
    are able to move, if we did it on sprint service, actually move
    product from Southeast Asia to the U.S. one day faster than
    going across the Pacific. It is a strategic link.
        And the pricing that has not been announced for the Panama
    Canal holds a great deal of competitive dynamic vis a vis the
    Suez Canal. And I will talk more about that in a minute.
        A less understood dynamic in Panama is the investment that
    the Panamanian ports are making. Last year, they indicated that
    they have moved 6.8 million TEUs through the Panamanian ports.
    In 1996, they only had 300,000 TEUs, so they have been growing
    rapidly.
        The Panama Canal, now that it has the expansion under way,
    is looking at investing in value-added logistics services to
    expand their capability. If we look at the Pacific entrance,
    the Canal is considering the construction of a new port, five
    berths, high capacity. And that, coupled with the current
    expansion program for the PSA terminal, would add 6 million
    TEUs of capacity to 6.8 million reported last year, for over 12
    million TEUs at capacity.
        This will foster what we call a transshipment hub. And it
    is, in fact, the vision of Panama to become the single port of
    Latin America. The centroid of transshipment is in the
    Caribbean today. It has now moved and will move to Panama.
    Thus, transshipment, which moves cargo from large ships to
    feeder ships, may stimulate significant amounts of vessel
    movements and will become the center in the Caribbean service
    and may influence the kinds of vessels and the numbers of
    vessels calling in the United States today.
        The depiction you see before you here is Maersk's new
    Triple-E vessel. I just want to point out to you that this
    vessel is four times larger than the current Panama Canal, and
    after the Canal is completed, it will be one and a half times
    larger. So I guess if you are getting a running start, maybe
    you can get through it; no, it won't work. So there are lines
    and ocean carriers that are building much bigger vessels in
    that process.
        And I would like to just point out to you, 3 days ago
    Maersk Line decided not to call on the Panama Canal. They are
    going to move backward from Asia to the U.S. via the Suez
    Canal. And they have abandoned their services or their vessels
    going through the Canal. The quote from their president is,
    ``Larger container ships will help the company to generate
    greater profits by using the Suez Canal.''
        So we have to be careful that we take a global, systemic,
    competitive view of what is going on, for the Canal is
    dependent on the whole global logistics, and fully understand
    the impact. If we have larger vessels coming to us via the
    Suez, we will need significant improvements to our ports. And
    we still need to consider the vessels that would transit the
    Panama Canal.
        It is my pleasure to be here with you today, and thank you
    for allowing me to make these remarks.
        [The prepared statement of Mr. Vickerman follows:]

    Prepared Statement of John Vickerman, President, Vickerman & Associates
        Good afternoon Chairman Rockefeller, Ranking Member Thune and
    distinguished members of the U.S. Senate Committee on Commerce,
    Science, and Transportation.
        Thank you for inviting me to testify this afternoon. My name is
    John Vickerman and I am the Founding Principal and President of
    Vickerman & Associates. I am a licensed professional civil engineer and
    registered architect in 21 U.S. states and I specialize in the port and
    intermodal industry. Sixty-seven of the 90 North American deep-water
    general cargo ports have benefited from our strategic port planning.
    The Current Panama Canal Expansion Program Plus Potential New Added
            Value Components
        The expansion of the Panama Canal, is scheduled to be operational
    in 2015, and will more than double that waterway's capacity by allowing
    dramatically larger ships to pass through its canal system.
        Less understood and appreciated, the current Canal expansion
    program may also foster expansion related to marine transshipment cargo
    logistics and the feeder vessels that serve those transhipment markets.
        In short, Panama is taking steps to go beyond the mere canal
    expansion program already underway and add new logistics value by
    preparing Panama to become the Transhipment Logistics Center for Latin
    America, akin to Singapore in the Fareast.
        Between 1970 and 2009, the number of vessels going through the
    Panama Canal leveled off but the size of the vessels continued to get
    larger and larger. Today's Panama Canal container vessel capacity is
    depicted in the slide.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Canal expansion program for container vessels is illustrated
    below permitting a 12,600 TEU vessel transit:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Additionally, a larger share of other vessel types will be able to
    transit the Canal fully loaded as illustrated on the slide:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Panama Canal Authority is currently evaluating several
    strategic projects that would add logistics value to the current canal
    expansion program by investing in:

            Significant Port Expansion particularly on the Pacific Entrance
            to the Canal. The proposed Corozal Port Terminal Complex with
            potentially five new high capacity port container berths
            coupled with the container expansion program already underway
            by the Panama PSA Terminal on the western side of the canal's
            Pacific entrance could nearly double the current port capacity
            in Panama.

            The graphic slide depicts the rapid historic expansion of the
            Panamanian Ports from less than 300,000 TEUs in 1996 to a
            record 6.8 million TEUs by the end of 2012. The currently
            envisioned port expansion program described could nearly double
            this throughput capacity to more than 12 million TEUs.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            The Panama Canal Expansion plus the added value projects
            currently being considered could move today's Caribbean
            Transhipment Center Point from the middle of the Caribbean to
            Panama and may change U.S. Gulf Coast and U.S. Southeast port
            logistics.
    The Path Forward for the U.S.
        Given the above Panamanian expansion potential, how should the U.S.
    logically respond to the Panama Canal Expansion Program? The answer
    must consider and evaluate the Panama Canal's expansion in the context
    of competitive global trade logistics. The perspective cannot be
    focused only in the Western Hemisphere and North America.
        Even with the Canal expansion program complete, the amount of
    container shipments going through the Panama Canal may not increase
    significantly unless the Canal toll rates are set to be competitive
    with the Suez Canal.
        On the other hand, if the Panama Canal tolls are competitively set
    considering global competition we could see significant increases in
    freight flows and changes in vessel types and their routings
    particularly to U.S. Ports.
    The Suez Canal Competitive Dynamic
        The Suez Canal seaway is Europe's jugular marine connection to
    Asia. This route using ``sprint services'' could deliver cargo to New
    York a day faster than transiting the Pacific.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Consider the new Maersk Triple-E vessels, which have a container
    capacity of 18,000 TEUs, and can fit through the Suez Canal but will be
    too large for the Panama Canal even after it is expanded in 2015.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The Suez Canal Alternative for Larger Vessels
        Three days ago, Maersk Lines, the largest ocean container carrier
    in the world, announced it had stopped using the Panama Canal to
    transport goods from Asia to the U.S. East Coast. As reported by their
    President ``Larger container ships will help the company to generate
    greater profits by using the Suez Canal''.
        Not all U.S. Ports will see larger vessels because of the Panama
    Canal Expansion. Many will experience smaller feeder vessel logistics
    due to the competitive dynamics in the Caribbean Transhipment Zone.

        The Chairman. Well, we are going to have a lot of questions
    for you, a lot of questions. That was very interesting.
        Senator Warner is now going to proceed.

                    STATEMENT OF HON. MARK WARNER,
                       U.S. SENATOR FROM VIRGINIA

        Senator Warner. You may have heard at some point the
    description of Virginia being known as the best-managed state
    and the best state for business.
        The Chairman. But only when you were Governor.
        Senator Warner. Well, I am not going to go into that. But a
    big reason for that----
        [Laughter.]
        Senator Warner.--was because we had an incredible port that
    we made investments in, that we realized, with the changes
    coming in the Panama Canal, was going to be an asset not just
    for Virginia but for much of the East Coast.
        And so I am very proud that Jeff Keever, who I have had the
    opportunity to travel the world with, literally, trying to
    promote the Port of Virginia, is here making a presentation.
        Thank you, Mr. Chairman, for the time.
        The Chairman. And it is up to you, Jeff.

    STATEMENT OF JEFF J. KEEVER, SENIOR DEPUTY EXECUTIVE DIRECTOR,
                        VIRGINIA PORT AUTHORITY

        Mr. Keever. Thank you, Mr. Chairman.
        And thank you, Senator Warner, for your kind remarks.
        Since the founding of Jamestown when the colonists arrived
    more than 400 years ago, the Port of Virginia has been a leader
    in international shipping. And, over the last several decades,
    the port has been at the forefront of containerization in the
    United States. And my remarks are going to be more along the
    container side of it rather than the broader remarks that Mr.
    Vickerman made.
        This ability to grow and evolve along with the trends in
    shipping and global trade is part and parcel of success. Port
    infrastructure typically requires years, even decades, of
    planning, design, and construction before it can be brought on
    line.
        Future needs must be anticipated early. Inadequate
    infrastructure, such as shallow channels, outdated terminals,
    insufficient roads, bridges, and rail routes, increases the
    transportation costs associated with getting goods to market.
    Higher transportation costs impair our ability to compete for
    exports and make our imports more expensive for consumers.
        Realizing that successful infrastructure improvements
    cannot be reactive, decades ago Virginia began deepening our
    channels and improving our port facilities to accommodate the
    next generation of cargo ships by championing a number of
    initiatives. In 1997, we started planning for the eastward
    expansion of Craney Island, which will double our capacity. In
    2003, discussions began with Norfolk Southern Railway about
    clearing the coalfield routes through West Virginia for the
    Heartland Corridor to get to market quicker. In 2006, we
    completed the deepening of our shipping channels to 50 feet,
    which was authorized in WRDA of 1986. In 2011, we added a new
    double-stacked rail service to the chemical, furniture, retail,
    and agricultural businesses near Greensboro, North Carolina.
        We did all of these things because it was good business.
    And it comes as no surprise to us in Virginia that, with the
    opening of the expanded Panama Canal in 2015, the Port of
    Virginia is currently ready for the larger ships that will
    transit the Canal. And we are currently receiving many of those
    larger ships, as Mr. Vickerman indicated, through the Suez
    Canal.
        Growth in East Coast cargo resulting from the expansion of
    the Panama Canal will not happen overnight, and total trade in
    and out of the U.S. is unlikely to change significantly as a
    result of the Canal expansion. Trade patterns and the cost of
    goods may shift, guided by market trends and driven by the need
    for competition and low-cost transportation.
        From the shipper's perspective, the shift is already
    beginning to occur in terms of ship sizes. According to the
    U.S. Army Corps of Engineers, post-Panamax vessels will make up
    62 percent of total containership capacity by 2030. These ships
    are already calling at West Coast ports. The Suez Canal is
    already handling post-Panamax containerships, bringing goods
    via an all-water route to the U.S. East Coast, and Virginia is
    accommodating those today.
        It remains only for the tolls at the expanded Panama Canal
    to be set for shippers to determine whether the all-water route
    from Asia to the U.S. East Coast through the Canal can help
    them realize additional economies of scale.
        The Port of Virginia is post-Panamax-ready, and other East
    Coast ports are trying to follow suit. Baltimore recently
    completed a post-Panamax-capable berth at the Seagirt Marine
    Terminal. At the Port of Miami, dredging has been approved and
    post-Panamax cranes have been ordered. New York-New Jersey will
    be able to handle the larger ships by the end of 2015, the
    funding required to raise the Bayonne Bridge having now been
    cleared. Charleston is currently in the study phase of a 50-
    foot channel-deepening project, with construction completed in
    2022. Savannah, due to environmental conditions, is only
    approved to dredge to 47 feet, and the project has been in the
    planning stage for more than 13 years.
        While ports up and down the East Coast are striving to make
    infrastructure improvements in time for the Canal's opening, it
    must be acknowledged that these projects are big, expensive,
    and take a long time to complete. Ports use various funding
    mechanisms: state funds, Federal funds, terminal revenues, bond
    issuance, public-private partnerships that Virginia just
    recently terminated. All of these methods are used to obtain
    funding for improvements. But the return on that investment is
    comparatively small. The lion's share of the benefit is
    captured by U.S. consumers, in terms of available and
    affordable goods.
        Port facilities are only part of the global supply chain.
    More infrastructure investment is needed in roads, bridges,
    rail, intermodal facilities, and other supporting
    infrastructure to more efficiently reach inland markets, as you
    indicated earlier. And according to the World Economic Forum,
    on global competitiveness, the U.S. ranks 25th in the world in
    terms of quality of overall infrastructure, behind countries
    like South Korea, Spain, Portugal, Iceland, Singapore, and the
    Netherlands; 19th in the world for the quality of port
    infrastructure.
        The message is clear: Our global competitors are invested
    in making smart long-term infrastructure investments to meet
    the demands of the world economy.
        The Panama Canal project essentially shines a light on the
    inadequacies of U.S. freight and transportation infrastructure.
    It has been 6 years since the last WRDA bill was passed, and
    the U.S. currently has between $60 billion and $80 billion of
    backlog of authorized but unfunded Corps projects, with just
    over $5 billion planned for Fiscal Year 2013.
        For instance, the Craney Island eastward expansion project
    that was authorized by WRDA 2007 has a 50-50 cost-share between
    the Army and the Port Authority. However, current Federal and
    Corps policies are in disagreement as to how to fund it. At
    this point, the Virginia Port Authority has paid approximately
    70 percent of the money spent to date. Clear policies are
    needed to allocate the remainder of the funds for the project,
    which is anticipated to create American jobs, lower the cost of
    goods, and save the nation billions in transportation costs.
        Perhaps it is time to consider doing more on a Federal
    level. Regional port authorities and state governments are
    doing their best with the limited funds, unclear national
    policies, and lengthy project-development and permitting
    process. If the U.S. is to regain its competitive edge in the
    world market, we need a robust national infrastructure
    supported by a clear national policy, accelerated process, and
    dedicated funding stream.
        Thank you.
        [The prepared statement of Mr. Keever follows:]

    Prepared Statement of Jeff J. Keever, Senior Deputy Executive Director,
                            Virginia Port Authority
        My name is Jeff Keever and I am the Senior Deputy Executive
    Director for the Virginia Port Authority--the Commonwealth's leading
    agency for international transportation and maritime commerce. The Port
    operates and markets the cargo terminals in Hampton Roads, Richmond,
    and Front Royal, and is a major driver for Virginia's economy,
    producing an estimated $41 billion in business activity and supporting
    an estimated 343,000 jobs around the Commonwealth. I am proud to say
    that in 2012, The Port of Virginia was the fastest growing container
    port on the East Coast.
        Since the Jamestown colonists arrived more than 400 years ago, The
    Port of Virginia has been a leader in international shipping. Over the
    past several decades, The Port has been at the forefront of
    containerization in the U.S.--first with dual hoist cranes, first with
    26-wide container cranes, first with semi-automated terminals, and the
    first to attain 50-foot shipping channels. This ability to grow and
    evolve along with the trends in shipping and global trade is part and
    parcel of The Port's success.
        Port infrastructure typically requires years--even decades--of
    planning, design, and construction before it can be brought online.
    Future needs must be anticipated early. Inadequate infrastructure, such
    as shallow channels, outdated terminals, insufficient roads, bridges
    and rail routes, increases the transportation costs associated with
    getting goods to market. Higher transportation costs impair our ability
    to compete for exports, and make our imports more expensive for
    consumers.
        Realizing that successful infrastructure improvements cannot be
    reactive, decades ago, Virginia began deepening our channels and
    improving our port facilities to accommodate the next generation of
    cargo ships by championing a number of initiatives:

       In 1997, we started planning for the Craney Island Eastward
            Expansion, which will double The Port's capacity and is
            currently under construction.

       In 2003, we approached Norfolk Southern about clearing the
            Coalfield Route through West Virginia to allow double-stack
            intermodal rail service from The Port to Midwest markets. The
            Heartland Corridor, as it came to be called, was completed in
            2010 through a public-private partnership with several Federal
            and state stakeholders.

       In 2005, we completed major renovations to Norfolk
            International Terminals so that it can accommodate 100-foot-
            gauge container cranes capable of reaching 26 containers across
            Post-Panamax vessels.

       In 2006, we completed the deepening of our shipping channels
            to 50 feet, with authorization to deepen them to 55 feet.

       In 2011, we added regular double stack intermodal rail
            service between The Port and the regional concentration of
            textile, chemical, furniture, retail, and agriculture
            businesses near Greensboro, North Carolina.

        We did all these things because it was good business, and it comes
    as no surprise to us that, with the opening of the expanded Panama
    Canal in 2015, The Port of Virginia is ready for the larger ships that
    will transit the canal.
        Growth in East Coast cargo resulting from the expansion of the
    Panama Canal will not happen overnight, and total trade in and out of
    the U.S. is unlikely to change significantly as a result of the canal
    expansion. Trade patterns and the cost of goods may shift, guided by
    market trends and driven by the need for competitive, low cost
    transportation.
        From the shipper's perspective, the shift is already beginning to
    occur in terms of ship sizes. According to a recent U.S. Army Corps of
    Engineers report,\1\ post-Panamax vessels will make up 62 percent of
    total container ship capacity by 2030. These ships are already calling
    at West Coast ports. The Suez Canal is already handling post-Panamax
    container ships bringing goods via an all-water route to the U.S. East
    Coast. It remains only for tolls at the expanded Panama Canal to be set
    for shippers to determine whether the all-water route from Asia to the
    U.S. East Coast via the expanded Canal can help them realize additional
    economies of scale.
    ---------------------------------------------------------------------------
        \1\ U.S. Port and Inland Waterways Modernization: Preparing for
    Post-Panamax Vessels.
    ---------------------------------------------------------------------------
        The Port of Virginia is post-Panamax ready, and other East Coast
    ports are following suit:

       Baltimore recently completed a post-Panamax-capable berth at
            Seagirt Marine Terminal.

       At the Port of Miami, dredging has been approved and post-
            Panamax cranes have been ordered.

       The Port of New York/New Jersey will be able to handle
            larger ships by the end of 2015, the funding required to raise
            the Bayonne Bridge having now been cleared.

       Charleston is currently in the study phase of a 50-foot
            channel deepening project, with construction completion
            anticipated in 2022.

       Savannah, due to environmental conditions, is only approved
            to dredge to 48 feet and the project has been in the planning
            and study stage for more than 13 years.

        While ports up and down the East Coast are striving to make
    infrastructure improvements in time for the Panama Canal opening, it
    must be acknowledged that these projects are big, expensive and take a
    long time to complete. Ports use various funding mechanisms--state
    funds and Federal funds, terminal revenues, bond issues, public-private
    partnerships--to obtain the money needed for improvements, but the
    return on that investment is comparatively small. The lion's share of
    the benefits is captured by U.S. consumers in terms of available,
    affordable goods
        But Port facilities are only part of the global supply chain. More
    infrastructure investment is needed in roads, bridges, rail, intermodal
    facilities, and other supporting infrastructure to more efficiently
    reach inland markets and realize greater economic benefits for the
    U.S.--in terms of jobs, tax revenues, and the availability of
    affordable goods.
        According to the World Economic Forum's 2012-2013 Global
    Competitiveness Report,\2\ the U.S. ranks 25th in the world in terms of
    quality of overall infrastructure, behind countries like South Korea,
    Spain, Portugal, Iceland, Singapore, and the Netherlands; and 19th in
    the world for quality of port infrastructure in particular. The message
    is clear--our global competitors are invested in making smart, long-
    term infrastructure investments to meet the demands of the world
    economy. Many of these countries have access to infrastructure banks
    that attract private capital to fund major projects.\3\
    ---------------------------------------------------------------------------
        \2\ Source: http://reports.weforum.orgglobal-competitiveness-
    report-2012-2013#=
        \3\ Source: http://www.brookings.edu/blogs/up-front/posts/2013/01/
    23-crumbling-infrastructure-galston
    ---------------------------------------------------------------------------
        The Panama Canal Expansion Project essentially shines a light on
    the inadequacies of U.S. freight and transportation infrastructure, as
    well as the limitations of the funding mechanisms and processes we have
    in place to bring infrastructure improvements about. It has been six
    years since the last WRDA bill was passed, and the U.S. currently has a
    $60-to $80-billion backlog of authorized but unfunded Army Corps Civil
    Works projects \4\ with just over $5 billion planned for FY13
    distribution.\5\
    ---------------------------------------------------------------------------
        \4\ http://www.nwra.org/content/articles/bipartisan-senators-
    release-wrda-ahead-of-wednesda/
        \5\ http://www.usace.army.mil/media/newsreleases/
    newsreleasearticleview/tabid/231/article/269/
    ---------------------------------------------------------------------------
        For instance, the Craney Island Eastward Expansion project was
    authorized by WRDA 2007 legislation at a 50/50 cost share between the
    Army Corps of Engineers and the Virginia Port Authority; however,
    current Federal and Corps policies are in disagreement as to how much
    of it to fund. At this point, the Virginia Port Authority has paid
    approximately 70 percent of the monies spent to date. Clear policies
    are needed to allocate the remainder of the funds for this project,
    which is anticipated to create American jobs, lower the cost of goods,
    and save the Nation billions of dollars in transportation costs.
        Perhaps it is time to consider doing more on a Federal level.
    Regional port authorities and state governments are doing their best
    with limited funds, unclear national policies, and lengthy project
    development and permitting processes. If the U.S. is to regain its
    competitive edge in the world market, we need a robust national
    infrastructure supported by a clear National policy, accelerated
    processes, and a dedicated funding stream.

        The Chairman. I thank you, sir. A lot of moving parts on
    this thing. Washington doesn't usually do very well with many
    moving parts, so we need to talk about that.
        Ed Hamberger is the President and Chief Executive Officer
    of the Association of American Railroads.
        Welcome.

    STATEMENT OF EDWARD R. HAMBERGER, PRESIDENT AND CHIEF EXECUTIVE
               OFFICER, ASSOCIATION OF AMERICAN RAILROADS

        Mr. Hamberger. Thank you for the invitation to participate
    here this afternoon, Mr. Chairman, Ranking Member Thune, and
    members of the Committee.
        Mr. Chairman, before I get into my prepared remarks, it
    dawns on me that this is the first opportunity I have had to be
    before you since you announced your future plans last January.
    And I think it is fair to say that my members and I look at
    some rail issues, not all, but we look at some rail issues
    through a different prism than you do. Notwithstanding those--
    --
        The Chairman. But don't you represent the small railroads?
        [Laughter.]
        Mr. Hamberger. We do, sir. And we very much appreciate--
    that is one where we are right together on the 45G tax credit.
        [Laughter.]
        The Chairman. Thank you.
        Mr. Hamberger. Thank you for your leadership on that, sir.
    You are exactly right. That is why I say on some issues we look
    through a different prism.
        But notwithstanding those limited policy disagreements, I
    just wanted to say publicly here today, on behalf of my
    members, how much we respect you and how much we appreciate
    your service in the Senate.
        Indeed, you will have left your mark not only in the
    transportation sector, but in so many other areas, from health
    care, trade, tax policy, energy, environment,
    telecommunications, foreign policy. The list goes on and on.
        And I know you still have 2 years left, and so it is a
    little early for testimonials, so I will stop here. But I
    didn't want this opportunity to go----
        The Chairman. Why stop, Ed?
        [Laughter.]
        The Chairman. I will tell you, I mean, nobody--Sharon has
    never said anything like that to me.
        [Laughter.]
        The Chairman. But I am deeply appreciative of it. And, you
    know, I respect the differences that we had.
        Mr. Hamberger. Exactly right.
        The Chairman. And we were forthright about it, and we
    fought away at it. And, you know, so be it. Now we are talking
    about a different part of the future, in which you are, along
    with trucking, et cetera, very, very much involved, and I look
    forward to that. But thank you for that.
        Mr. Hamberger. Thank you. Well, again, just our respect----
        Senator Thune. Mr. Chairman?
        Mr. Hamberger.--not only as an individual but as an
    industry, for you personally----
        Senator Thune. I am just interested in knowing what the
    truckers are going to do to top that.
        [Laughter.]
        Senator Scott. Mr. Byrd, we will work together on that one.
    How is that?
        [Laughter.]
        Mr. Hamberger. Well, I should point out that in 2013 I
    think trucking will become our number-one customer base. I
    think intermodal will exceed coal in 2013. So we are happy to
    be here with our----
        Mr. Byrd. Partners.
        Mr. Hamberger.--best customers and partners, absolutely.
        Again, Senator, thank you for your leadership in the
    Senate----
        The Chairman. Thank you, sir.
        Mr. Hamberger.--and this committee.
        As we have just heard, the expansion of the Canal will
    allow for passage of much larger container ships than those
    currently navigating through Panama. Over time, it is
    anticipated that more and more cargo moving between Asia and
    the eastern coast of the United States is likely to be
    transported on these larger post-Panamax ships.
        And when evaluating what the impact will be, we don't
    really know. As you said in your opening comments, Mr.
    Chairman, it is hard to know exactly what the shift in traffic
    patterns will be. Will they still continue to disembark on the
    West Coast, or will they take the all-water route around to the
    East Coast? I can't tell you that.
        I can tell you that there is a laundry list of factors that
    I am sure Mr. Vickerman can get into in more detail, but those
    include things like the time sensitivity of the freight, the
    fuel costs, the capital costs of the new vessel, the efficiency
    both of the port operation and the ensuing land surface
    transportation movement, the Canal and port fees, environmental
    considerations, availability of warehouse space, and so on.
        But what I can say is that the railroad industry is working
    to be prepared regardless of that outcome. When recently asked
    about the expansion of the Canal, Norfolk Southern's CEO, Wick
    Moorman, responded as follows: ``We are preparing and planning
    so that if the traffic comes in from the east and needs to move
    inland, we will be there to handle it. If the traffic comes in
    from the west and comes to a western gateway with one of the
    western rail carriers, we will be ready to handle it.''
        Now, while Mr. Moorman was speaking specifically on behalf
    of his company, Norfolk Southern, his statement applies to the
    freight industry as a whole. And my message to you today is
    quite simple: We will be ready to handle it.
        By way of background, the U.S. rail intermodal volume was
    3.1 million containers and trailers in 1980, rising to a peak
    of 12.3 million in 2006. The recession did impact that, and it
    fell below that in the last few years. 2012 saw a rebound to
    almost the 2006 levels. And based on the first quarter of 2013,
    we think we will set a new record for intermodal
    transportation.
        One of the big factors behind the growth of intermodal, of
    course, is the investment that the industry has made on new or
    expanded inland intermodal terminals to facilitate the transfer
    of containers both between the trucking partner and between the
    maritime partner at the ports. Clearances have been raised
    along key routes to accommodate the additional height required
    to operate double-stacked trains, and a variety of new
    intermodal car types have been introduced for use throughout
    the national intermodal network.
        These intermodal-specific investments are part of a broader
    investment strategy that the industry has carried out: over
    $500 billion in the last 30 years spent on locomotives, freight
    cars, tracks, bridges, tunnels, other infrastructure and
    equipment. All this investment is aimed at keeping the U.S.
    freight rail industry second to none in the world. And I
    reemphasize that it has been private investment.
        This investment has also made intermodal far more
    efficient, reliable, and productive today than it was just a
    few years ago. Moreover, railroading's tremendous flexibility
    and the vast scope of the network means that they can respond
    quickly and effectively to new traffic patterns and new market
    challenges, including those that could present themselves with
    the expansion of the Panama Canal.
        And just as an aside, when I mentioned the need for
    consistent, reliable service, it comes as a surprise to many--
    and I see Tom Jensen from UPS in the room--that our single
    largest customer is United Parcel Service. And so what
    ``Brown'' does for you every day we do for ``Brown'' every day.
    And that requires a very, very tightly run rail network to meet
    the requirements of UPS.
        The expansion of the Panama Canal is just one more in a
    long series of cases in which railroads are stepping up to meet
    the challenge of providing safe, reliable, and cost-effective
    service and to help our customers and the economy grow.
        We look forward to continuing to work with you, Mr.
    Chairman and members of this committee, as you address
    transportation policy issues. And, again, thank you for the
    opportunity to be here.
        [The prepared statement of Mr. Hamberger follows:]

        Prepared Statement of Edward R. Hamberger, President and Chief
              Executive Officer, Association of American Railroads
    Introduction
        On behalf of the members of the Association of American Railroads
    (AAR), thank you for the opportunity to testify about railroads and the
    expansion of the Panama Canal.
        Freight railroads are an indispensable part of America's
    transportation system. Whenever Americans grow something, eat
    something, make something, turn on a light, export something, or import
    something, it's likely that railroads were involved somewhere along the
    line.
        More than 560 freight railroads operate in the United States
    today--only Hawaii does not have at least one--over nearly 140,000
    route-miles. In addition, every major U.S. port is served by at least
    one major railroad. Nearly all of America's freight railroads are
    privately owned and operated. Unlike trucks, barges, and airlines, the
    freight railroads operate almost exclusively on infrastructure that
    they own, build, maintain, and pay for themselves.
        A healthy economy requires an efficient logistics system based on
    sufficient transportation infrastructure to meet growing demand. In my
    testimony below, I will discuss how freight railroads are positioning
    themselves to meet future transportation demand in this country,
    including transportation demand related directly or indirectly to the
    expansion of the Panama Canal.
    Overview of the Panama Canal Expansion
        As members of this committee know, the Panama Canal currently has
    two lock chambers, the dimensions of which limit the size of container
    ships that can traverse the canal. So-called ``Panamax'' ships, the
    largest ships that can currently use the canal, can carry a maximum of
    around 4,500 containers. However, a larger third lock chamber is under
    construction--with completion likely in 2015--that will allow much
    larger ships to pass through. These larger ``post-Panamax'' ships will
    be able to carry up to approximately 12,500 containers, or nearly three
    times the maximum number carried by existing ships that use the canal.
        The big unknown is where ships carrying cargo that are bound for,
    or coming from, the eastern part of the United States will go. Today, a
    significant portion of the cargo from Asia destined for the eastern
    part of the United States is offloaded at West Coast ports (such as Los
    Angeles, Long Beach, Seattle, Tacoma, Vancouver, or Prince Rupert in
    British Columbia), and then transported inland on trucks, railroads,
    or, in some cases, rivers. Going the other way, cargo headed to Asia
    from the eastern part of the United States often travels via rail or
    truck to West Coast ports, where it is loaded onto ships heading west.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        It is not uncommon for existing Panamax (or smaller) ships coming
    from Asia with cargo bound for the eastern United States, as well as
    ships with cargo from the eastern United States heading to Asia, to go
    through the Panama Canal on an ``all-water'' route, rather than use the
    land bridge (via truck or rail) across the country described in the
    previous paragraph. Some observers believe that the huge capital costs
    of the newer vessels and other factors will cause these ships to remain
    primarily on routes to the West Coast. Many others, though, think that
    a post-Panamax ship is just as likely to find it cost effective to use
    the ``all-water'' route to or from the eastern United States. Of
    course, if an all-water route is to be used, the eastern ports must be
    able to handle the post-Panamax vessels, which is the rationale for the
    efforts by a number of ports on the East Coast, the Southeast, and the
    Gulf of Mexico to dredge deeper channels, install new cranes, and/or
    build new dock capacity to accommodate post-Panamax ships. Meanwhile,
    ports on the West Coast are pursuing many of these same kinds of
    improvements to better position themselves as the preferred destination
    for ocean carriers even after the canal expansion is complete.
        To summarize a very complicated issue, the interplay of many
    different factors will determine which ports and routes are used. These
    factors include the time sensitivity of the freight being carried,
    inventory carrying costs, the capital costs of the new vessels, fuel
    costs, time in transit, canal toll fees, port fees, inland
    transportation costs, the speed by which containers are able to be
    moved inland, environmental considerations, the efficiency of port
    operations, availability of warehouse space, and many other factors.
    Taken together, these factors will determine which ports offer shippers
    the best value for their money (resulting in higher traffic volumes and
    market share growth for those ports), and which ports lag behind,
    resulting in lower traffic volumes (or traffic volumes that increase
    less rapidly than they otherwise would) and lower market share.
        Frankly, I don't know which ports will be the ``winners'' and which
    will be the ``losers'' of this competitive battle. I do know, though,
    that from the point of view of our Nation's rail industry as a whole,
    it doesn't really matter. The fact is, whether the freight is coming
    into or leaving from Long Beach or Savannah or Miami or Houston or
    Seattle or Norfolk or any other major port, our Nation's freight
    railroads are in a good position now, and are working diligently to be
    in an even better position in the future, to offer the safe, efficient,
    cost-effective service that their customers at ports and elsewhere want
    and need.
        In a June 4, 2012 interview, in response to a question about the
    Panama Canal expansion, the CEO of Norfolk Southern said, ``We are
    preparing and planning so that if the traffic comes in from the East
    and needs to move inland, we'll be there to handle it. If the traffic
    comes in from the West and comes to a western gateway with one of the
    western carriers, we'll be ready to handle it.'' \1\ He was speaking on
    behalf of his railroad, but his statement applies equally well to the
    rail industry as a whole. I'm confident that railroads will be ``ready
    to handle it.''
    ---------------------------------------------------------------------------
        \1\ ``Q&A with Wick Moorman, CEO of Norfolk Southern,'' The
    Virginian-Pilot, June 4, 2012.
    ---------------------------------------------------------------------------
    Overview of Rail Intermodal
        Although other types of ships use the Panama Canal, container ships
    are the focus of the canal's expansion. When a container ship at a port
    is unloaded, the containers on it are moved inland through a variety of
    means. They might be loaded directly onto a truck and delivered to
    their final destination, especially if the final destination is
    relatively nearby. Or, containers might go by truck a short distance to
    a nearby rail yard, then loaded onto trains for movement inland. At
    some ports, containers are loaded at ``on dock'' terminals from the
    ship to railcars.\2\,\3\
    ---------------------------------------------------------------------------
        \2\ There are other possibilities as well. For example, cargo in a
    container might be transloaded into other larger containers and then
    moved inland, or it might be stored in a warehouse near the port for
    later shipment.
        \3\ The situations are reversed when containers arrive at port for
    export.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        In any case, when a container is moved by railroad, it becomes part
    of what's known as inland ``intermodal'' service. Intermodal--the long-
    haul movement of shipping containers and truck trailers by rail, often
    combined with a (usually much shorter) truck movement at one or both
    ends--has been growing rapidly for more than 25 years. U.S. rail
    intermodal volume was 3.1 million containers and trailers in 1980,
    rising to 5.9 million in 1990, 9.1 million in 2000, and a record 12.3
    million in 2006. Intermodal volume fell sharply during the recession,
    but rebounded to 12.3 million units in 2012--only 15,000 units shy of
    2006's record. Through the first three months of 2013, U.S. rail
    intermodal volume is well ahead of 2006's record pace.
        Intermodal is used to transport a huge variety of goods that
    Americans use every day, from greeting cards and furniture to frozen
    chickens and computers. In fact, just about everything you find on a
    retailer's shelves might have traveled on an intermodal train.
    Intermodal is also used to transport large amounts of industrial and
    agricultural products like grain and auto parts. More than 50 percent
    of rail intermodal consists of imports or exports (reflecting
    railroads' vital role in international trade), but a large and growing
    share of rail intermodal consists of purely domestic movements. Much of
    the increase in the domestic share of intermodal traffic consists of
    freight that used to move solely by truck but which has been converted
    to rail intermodal.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        There are a number of reasons why rail intermodal has grown. Two of
    the most important are the huge investments in intermodal facilities
    that railroads have made (as discussed below) and the tremendous
    efforts railroads have made to improve their intermodal service.
    Railroads know that reliability is crucial to successful intermodal
    operations. That's why they've put enormous effort into improving their
    intermodal service. Today, rail intermodal is far more efficient,
    reliable, and productive than it was even just a few years ago. In
    addition, because railroads, on average, are four times more fuel
    efficient than trucks, using rail saves fuel and fuel costs. Moreover,
    when rail intermodal is used, truck driver shortages are much less of a
    problem.
    The Development of the U.S. Rail Intermodal Network
        Today's U.S. rail intermodal network is the most advanced and
    efficient such network in the world. It was developed over the past
    couple of decades by more fully utilizing existing rail network
    capacity and through tens of billions of dollars in investments in new
    infrastructure and equipment directly connected to intermodal
    operations. These investments include:

       New or expanded inland intermodal terminals to facilitate
            the transfer of containers and trailers between rail and truck;

       New near-dock intermodal terminals to facilitate the
            transfer of containers between ship and rail;

       Introducing a variety of new intermodal car types throughout
            the national intermodal network;

       Raising clearances along certain routes to accommodate the
            additional height required to operate doublestack trains;

       Adding track capacity and advanced signaling systems to
            accommodate faster, more frequent trains of all categories in
            the rail network; and

       Modernizing the locomotive fleet resulting in greater
            reliability for rail customers.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        These intermodal-specific investments are part of a much broader
    set of some $525 billion in rail investments since 1980--paid for with
    railroads' own funds, not government funds--on locomotives, freight
    cars, tracks, bridges, tunnels, and other infrastructure and equipment.
    That's more than 40 cents out of every revenue dollar. In recent years,
    despite the recession, America's freight railroads have been
    reinvesting more than ever before--including $25.5 billion in 2012 and
    a similar amount projected for 2013--back into a rail network that
    keeps our economy moving.
        Intermodal is a key market segment for each of the major U.S.
    freight railroads, and each has devoted significant resources toward
    expanding their intermodal capabilities to keep supply chains fluid and
    effective. Just a few examples:

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       Through its capital commitments, since 2000 BNSF has
            invested $41.9 billion in the railroad. Later this year, and as
            part of its planned $4.1 billion capital program for 2013, BNSF
            is scheduled to open its new $250 million intermodal facility,
            Logistics Park Kansas City (LPKC). This 443-acre logistics park
            will be able to initially handle more than 500,000 units each
            year and 1.5 million units when it is fully built out. BNSF is
            also moving forward on its $500 million Southern California
            International Gateway project (SCIG) near the Ports of Los
            Angeles and Long Beach. SCIG will allow containers to be loaded
            onto rail just four miles from the docks, rather than
            travelling 24 miles on local roads and the 710 freeway to
            downtown rail facilities. SCIG will allow 1.5 million more
            containers to move by more efficient and environmentally
            preferred rail through the Alameda Corridor each year. It will
            greatly improve the efficiency of cargo transfer from ports to
            customers and will eliminate millions of truck miles annually
            from local freeways in Southern California, all while utilizing
            state-of-the-art and environmentally preferred technology,
            including wide-span all-electric cranes, ultra-low emissions
            switching locomotives, and low-emission yard equipment.

       CSX's National Gateway is an $850 million public-private
            partnership launched in 2008 to alleviate freight bottlenecks
            in the Midwest by creating a double-stack cleared corridor for
            intermodal rail shipments between the Midwest and mid-Atlantic
            ports. Phase One of the project, scheduled to be completed this
            spring, creates double-stack rail access between CSX's new
            intermodal terminal in Northwest Ohio and its terminal in
            Chambersburg, Pennsylvania. The entire project is scheduled to
            be completed in 2015, about the time the Panama Canal expansion
            is expected to be complete.

       Union Pacific has invested over $1.1 billion in recent years
            on intermodal terminals. Among these investments is the new
            Joliet Intermodal Terminal, opened in August of 2010. Joliet
            Intermodal Terminal is a state-of-art intermodal terminal which
            provides significant capacity in the important Chicago market
            with service to and from the major West Coast and Gulf Coast
            ports. Union Pacific is currently building a $400 million
            intermodal and multi-purpose rail facility in Santa Teresa, New
            Mexico, on UP's 760-mile ``Sunset Route'' between Los Angeles
            and El Paso. Once completed in 2014, the facility will include
            200 miles of track and 26 buildings for yard operations. The
            state-of-the-art facility will include fueling facilities, crew
            change buildings, an intermodal yard and an intermodal ramp
            with an annual lift capacity of up to 250,000 intermodal
            containers. Construction of this facility is part of UP's
            commitment to invest approximately $3.6 billion in 2013 in
            capital investments across its 32,000-mile network.

       Kansas City Southern's Meridian Speedway rail corridor
            connecting Dallas, Texas, and Meridian, Mississippi, continues
            to grow in significance. It allows KCS to partner with other
            railroads to offer efficient, cost-effective intermodal service
            between the southeast and the southwest. KCS's international
            intermodal corridor connects central Mexico with the central,
            south central and southeastern regions of the United States.
            KCS expects to invest approximately 18 percent of revenue in
            2013 on capital expenditures, including intermodal terminal
            expansion.

       In 2012, Norfolk Southern opened new intermodal facilities
            in Memphis and Birmingham, both part of the company's Crescent
            Corridor project. The Crescent Corridor is a 2,500-mile rail
            network serving more than 30 new intermodal lanes in the
            Northeast, Southeast, Texas and Mexico. NS recently announced
            plans to spend $2 billion on capital improvements in 2013,
            including the expansion of its Bellevue, Ohio rail yards,
            construction of a new intermodal terminal in Charlotte, North
            Carolina (also part of the Crescent Corridor), and the
            completion of a new locomotive service facility in Conway,
            Pennsylvania.

       Canadian National, which operates more than 6,000 miles of
            railroad in the United States, plans to spend approximately
            $1.9 billion in capital expenditures in 2013 across its North
            American network. Projects include construction of a new
            intermodal terminal in Joliet, Illinois; the acquisition of new
            locomotives and intermodal equipment; advanced information
            technology that will improve service and operating efficiency
            throughout the railroad's network; and transloading operations
            and distribution centers to transfer freight efficiently
            between rail and truck.

       Canadian Pacific (CP) also operates more than 6,000 miles in
            the United States. Its U.S. operations include four intermodal
            terminals, and it also serves the ports of New York and
            Philadelphia through operating agreements. The railroad is
            projecting capital expenditures of around $1.1 billion in 2013,
            with significant amounts directed toward delivering seamless
            service at ports and the railroad's network of intermodal
            terminals.

       It's not just Class I railroads that are heavily involved in
            intermodal transportation and preparing for future growth. For
            example, Florida East Coast Railway, a regional railroad
            operating over more than 350 miles in Florida, recently
            announced a partnership with the ports of Miami and Port
            Everglades to build on-dock rail yards that will help to
            increase South Florida's intermodal traffic to about 20 percent
            of port volume, up from about 10 percent today. In conjunction
            with deepening of the ports, the partnership is aimed at
            positioning South Florida as a gateway for post-Panamax ships.

        All of these investments, and many more like them, are aimed at
    helping to ensure that the U.S. freight rail network remains second to
    none in the world, and that railroads have the ability to move
    containers and other cargo to and from ports safely and efficiently.
        Of course, as America's economy grows, the need to move more people
    and goods will grow too, irrespective of what happens with the Panama
    Canal. Recent forecasts reported by the Federal Highway Administration
    (FHWA) found that total U.S. freight shipments will rise from an
    estimated 17.6 billion tons in 2011 to 28.5 billion tons in 2040--a 62
    percent increase.\4\ Railroads are getting ready today to meet this
    challenge.
    ---------------------------------------------------------------------------
        \4\ Federal Highway Administration, Freight Analysis Framework,
    version 3.4.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The map below shows most of the major intermodal terminals on the
    U.S. rail network. Many of these terminals did not exist five years
    ago. Their breadth and scope are a testament to the seriousness with
    which railroads treat their customers' capacity and service needs. In
    that sense, the expansion of the Panama Canal is just one more in a
    long series of cases (crude oil is another recent example) in which
    railroads have stepped up to meet the challenge of providing safe,
    reliable, and cost-effective service to help their customers and the
    economy grow.
    Railroads and Rail Intermodal as an Alternative to Overreliance on
            Highways
        No one, and certainly not railroads, disputes that motor carriers
    are absolutely indispensable to our economy and quality of life, and
    will remain so long into the future. That said, because of the enormous
    cost involved in building new highways, environmental and land use
    concerns, and other factors, it is highly unlikely that sufficient
    highway capacity can be built to handle expected future growth in
    freight transportation demand.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The United States currently has the world's most highly developed
    highway network, built and maintained at enormous public cost over the
    years. According to data from the FHWA, in 2010 alone, states disbursed
    nearly $95 billion just on capital outlays and maintenance for
    highways.\5\ Adding in other expenses such as administration and
    planning, law enforcement, interest, and grants to local governments
    brings total disbursements for highways to $146 billion in 2010. Even
    this huge level of spending, however, is widely considered inadequate
    to meet present-day, much less future, needs.\6\
    ---------------------------------------------------------------------------
        \5\ Federal Highway Administration, Highway Statistics 2010, Table
    SF-2.
        \6\ For example, the American Society of Civil Engineers, in its
    2013 Report Card for America's Infrastructure, said ``While the
    conditions have improved in the near term, and Federal, state, and
    local capital investments increased to $91 billion annually, that level
    of investment is insufficient and still projected to result in a
    decline in conditions and performance in the long term. Currently, the
    Federal Highway Administration estimates that $170 billion in capital
    investment would be needed on an annual basis to significantly improve
    conditions and performance.''
    ---------------------------------------------------------------------------
        Fortunately, freight rail in general, and intermodal rail
    specifically, represents a viable and socially beneficial alternative.
    Today, rail intermodal takes millions of trucks off our highways each
    year, and its potential to play a much larger role in the future is
    enormous, both in traditional transcontinental markets and in new
    short- and middle-distance lanes. In the context of ports specifically,
    railroads offer tremendous potential in safely and efficiently moving
    freight to and from port facilities, thereby greatly enhancing overall
    transportation productivity. In addition, a significant portion of the
    merchandise that railroads transport in their carload business (as
    opposed to in intermodal containers or trailers) is directly truck
    competitive. Shippers choose to move this freight on railroads because
    they find that the value railroads offer, in terms of cost and service,
    is superior. Railroads recognize that they will have to continue to
    work hard to earn this business, which is why they are constantly
    searching for ways to further improve productivity, reduce costs for
    their customers, and enhance their service offerings.
        This does not mean that we should stop building highways or that we
    should no longer recognize the importance of trucks and highways in
    meeting our Nation's transportation needs, but it does mean that
    policymakers should be doubly aware of the role railroads play, and can
    play, in meeting freight transportation demand. As manufacturing has
    become more global and as supply chains have become longer and more
    complex, the railroads' intermodal service has come to play a critical
    role in making the supply chains of a wide variety of shippers
    efficient--particularly for those that depend on imported or exported
    materials and goods, including the goods that might be affected by the
    expansion of the Panama Canal.
    Conclusion
        America's railroads move vast amounts of just about everything,
    connecting businesses with each other across the country and with
    markets overseas over a 140,000-mile network. They save their customers
    billions of dollars each year in shipping costs while reducing
    pollution, energy consumption, and greenhouse gas emissions; relieving
    highway congestion; and enhancing safety.
        Demand for freight transportation will surge in the years ahead due
    to population and economic growth. Railroads are the best way to meet
    this demand. Railroads are safe, save fuel, keep trucks off overcrowded
    highways, and reduce greenhouse gas and other emissions. And they do it
    while providing affordable, reliable transportation to America's
    manufacturers, farmers, energy producers, retailers, and consumers.
    Moreover, their tremendous flexibility, the vast scope of their
    networks, and their ability to invest for changing markets mean that
    they can respond quickly and effectively to new traffic patterns and
    new market challenges, such as those that could present themselves with
    the expansion of the Panama Canal.
        Railroads are working hard to ensure that adequate capacity exists
    to meet our future freight transportation needs. Meanwhile, they look
    forward to continuing to work with members of this committee, others in
    Congress and the Obama administration, and other policymakers to find
    effective solutions to the transportation challenges we face.

        The Chairman. Thank you, Mr. Hamberger, very much.
        Senator Scott is going to introduce Philip Byrd.
        Senator Thune. I am feeling left out.

                     STATEMENT OF HON. TIM SCOTT,
                    U.S. SENATOR FROM SOUTH CAROLINA

        Senator Scott. Thank you, Chairman Rockefeller.
        It is my pleasure to introduce a great South Carolinian and
    a personal friend, Philip Byrd, to Washington. Phil has made
    great contributions to our state and national economy as
    President and CEO of the largest single carrier in the
    Charleston area and a leader in the American Trucking
    Association.
        Bulldog Hiway Express is a great South Carolina success
    story, without any question. Founded in 1959 with a $1,000 loan
    and a Chevy pickup truck, now they operate throughout the
    entire continental U.S. and Canada.
        I welcome Philip and look forward to hearing how we can
    support small businesses like Bulldog and improve our overall
    freight transportation strategy and leverage the new
    opportunities that will arise from the expansion of the Panama
    Canal.
        About the Chairman, I believe I can quote Mr. Byrd in
    saying that Chairman Rockefeller is an amazing American, a
    marvelous Chairman, a brilliant orator, and a fabulous friend-
    to-be.
        Mr. Byrd. Thank you for that, sir.
        Senator Scott. Yes, sir.
        [Laughter.]
        Senator Scott. Mr. Chairman?
        The Chairman. I am speechless.
        [Laughter.]
        The Chairman. Would you proceed, sir?

     STATEMENT OF PHILIP L. BYRD, SR., PRESIDENT AND CEO, BULLDOG
     HIWAY EXPRESS ON BEHALF OF THE AMERICAN TRUCKING ASSOCIATIONS

        Mr. Byrd. I will.
        Chairman Rockefeller and Ranking Member Thune and members
    of the Committee, thank you for the opportunity to testify
    today on behalf of the American Trucking Association. ATA
    represents more than 34,000 trucking companies throughout the
    United States. And my name is Phil Byrd, and I am President and
    CEO of Bulldog Hiway Express of Charleston, South Carolina. And
    I am also honored to serve as the First Vice Chairman of the
    American Trucking Association.
        And, as Senator Scott just remarked, Bulldog was founded in
    1959 with one truck and a $1,000 loan, and today we literally
    operate hundreds of trucks and trailers throughout the United
    States and Canada. Our participation in international freight
    container transportation started in our early history, as we
    moved the first containers to come off a vessel in the Port of
    Charleston. Bulldog Express is now the single-largest carrier
    in the area.
        First and foremost, let me begin by stating that the
    trucking industry eagerly anticipates the completion of the
    Panama Canal expansion and the increased transportation that
    will result from the project's completion. Our industry is
    incredibly adaptable and prepared to handle the increased need
    and demand.
        That being said, in order to understand the impacts of the
    Panama Canal widening on our intermodal freight system, which
    is why we are before the Committee today, it is important to
    first understand how containers are handled at ports. Where,
    how many, and when trucks are deployed in the container-
    transport sector is dictated by decisions made by ocean
    carriers, 3PLs, brokers, railroads, terminals, and shipping
    companies, and not by the motor carriers.
        Ocean carriers often make short-term decisions to reroute
    vessels to a different port based on fuel price variances, port
    labor unrest, and increased operating costs due to terminal and
    gate inefficiencies. Over the long term, world or regional
    economic conditions will determine cargo flows throughout the
    international intermodal freight system irrespective of today's
    Panama Canal expansion-related efforts. So projecting what
    infrastructure investments are appropriate as a result of the
    Panama Canal expansion is certainly not an exact science.
        Two ports on the East Coast already have a harbor channel
    depth of 50 feet to handle the largest ships when the Canal
    expansion is completed in 2015. Other major container ports,
    including New York-New Jersey, Charleston, Savannah, Miami,
    Houston, and New Orleans, have projects in various phases that
    will allow them to handle the bigger ships, as well. And, as
    has been stated, the New York-New Jersey Port complex is
    planning to raise the height of the Bayonne Bridge at a cost of
    $1 billion to accommodate the larger vessels.
        My homeport of Charleston is preparing for a surge in
    container traffic, as well. Our port authority has approved a
    10-year, $1.3 billion capital plan that includes major
    investments in facilities, equipment, and information systems.
    Additionally, the state of South Carolina is investing $700
    million in port-related infrastructure improvements, including
    $300 million to dredge Charleston's harbor. We are working
    cooperatively with the Corps of Engineers to expedite the
    project so that the harbor project will be completed and we can
    compete in the expanding all-water market to the East Coast.
        However, and most importantly, from a trucking perspective,
    the biggest challenge to accommodating increased freight
    volumes lies outside the port gates: specifically, the ability
    of our congested highways to handle increased freight.
        The latest report by the American Society of Civil
    Engineers found that while ports are making investments to
    improve terminal infrastructure, connections to the roads,
    rail, and water channels have suffered from inadequate Federal
    funding. The report also concludes that 42 percent of America's
    major urban highways remain congested, annually costing the
    economy an estimated $1.1 billion in wasted time and fuel; and
    that $170 billion in capital investment would be needed on an
    annual basis to significantly improve conditions and
    performance.
        Roads were given a grade ``D'' by the ASCE. Clearly, while
    port infrastructure may potentially be ready to handle the
    increased container volumes, outside the port gates our
    intermodal connectors and our highway systems are not.
        I am also very concerned about the impact of Federal
    regulations, particularly the new hours-of-service rule
    scheduled to go into effect this July. The rule will likely
    reduce truck productivity by 2 to 3 percent, but in port
    operations like mine the impact will be much greater. And there
    is no scientific basis for the new rule change, and that is
    unfortunate.
        Nevertheless, I want to reemphasize that the trucking
    industry is fully capable of meeting the transportation needs
    resulting from the expansion of the Panama Canal. Given the
    proven adaptive and flexible nature of our industry, we believe
    we will be able to handle these container freight increases
    wherever they actually occur in the American port system.
        That concludes my remarks, and I look forward to the
    questions. Thank you.
        [The prepared statement of Mr. Byrd follows:]

     Prepared Statement of Philip L. Byrd, Sr. President and CEO, Bulldog
         Hiway Express on Behalf of the American Trucking Associations
        Chairman Rockefeller, Ranking Member Thune, and Members of the
    Committee, thank you for the opportunity to testify before you today on
    behalf of the American Trucking Associations (ATA). ATA is the national
    association representing the trucking industry. Through its affiliated
    state trucking associations, affiliated conferences and other
    organizations, ATA represents more than 34,000 trucking companies
    throughout the United States.
        My name is Phil Byrd, and I am the President and Chief Executive
    Officer of Bulldog Hiway Express headquartered in Charleston, South
    Carolina. I also serve as ATA's First Vice Chairman. Bulldog was
    founded in 1959. We began with one 1954 Chevrolet truck with a twelve
    foot van body. Today, the company consists of several hundred company-
    owned power units and approximately 500 trailers, including flatbeds,
    vans, and intermodal chassis. Our participation in international
    freight container transportation started early in our history--we moved
    the first container to come off a vessel in the Port of Charleston.
    Bulldog Hiway Express is now the largest single carrier in the area.
        Since plans to widen the Panama Canal were approved six years ago,
    freight forecasters, logistics experts, transportation sector
    consultants, container freight stakeholders and government officials
    have undertaken numerous research projects and had many discussions
    regarding the widened canal's impacts on world container trade. Early
    predictions routinely estimated that East Coast and Gulf Coast ports
    would see double digit increases in volume. In part, the projected
    growth was predicated on the diversion of mini-bridge traffic from West
    Coast ports due to larger container vessels that will make all water
    transport to the East and Gulf Coasts more attractive. Over time,
    however, the projected double-digit increases have moderated to single
    digits, and potential West Coast diversion impacts have become less
    certain.
        The Panama Canal expansion, expected to be completed in 2015, will
    double the capacity of the canal by increasing throughput and allowing
    much bigger ships (13,000 standard 20 foot containers, or TEUs) to pass
    through the locks than the currently sized 5,000 or less TEU vessels.
    Port investments and port and intermodal traffic planning and marketing
    are proceeding at a fever pace, with most port locations claiming they
    will be ready when the Panama Canal expansion is completed. Indeed, we
    are not aware of any East Coast/Gulf Coast port facility that has
    concluded it will not benefit from the expansion if it acts to upgrade
    its port infrastructure. And while there has been some speculation
    about diversion of freight from West Coast ports, they too project
    container freight volume increases.
        Depending upon which studies are referenced, on the East Coast, the
    ports of Baltimore and the Norfolk-Port of Virginia already have the
    requisite harbour channel depth (50 feet) necessary to handle the new
    ships. As noted above, most other ports have projects in various phases
    that they believe will allow them to handle the bigger ships by 2015 or
    soon thereafter. To be competitive and gain a share of the expected
    panama container transport growth, ports and many supporting inland
    distribution center complexes are dredging to deepen harbors, and are
    improving bridges, tunnels, rail lines, and interconnector highways to
    accommodate the larger ships and expected higher cargo volumes. At a
    cost of $1 billion, the Port Authority of New York and New Jersey is
    planning to raise the height of the Bayonne Bridge to accommodate the
    larger vessels.
        My home Port of Charleston has been successfully working its way
    out of the recent recession, and we are actively preparing for
    increased freight volumes from the canal widening. Our port is
    celebrating its twelfth consecutive month of year-over-year growth.
    Container volume at the port rose about 11 percent in February to
    131,634 TEUs, the highest level since October 2008.
        Our port authority has approved a 10-year, $1.3-billion capital
    plan that includes major investments in both new and existing
    facilities, equipment and information systems. Additionally, the state
    of South Carolina is investing nearly $700 million in port-related
    infrastructure, including $300 million to fund Charleston's harbor
    deepening project. Working cooperatively with the Corps of Engineers to
    expedite dredging will ensure that the deepening of Charleston Harbor
    to 50 feet will be completed five years earlier than initially
    projected.
        When evaluating the adequacy or advisability of the ongoing port
    improvement activities, it is important to note that there has not been
    a high degree of planning or coordination among foreign-owned ocean
    carriers, domestic ports, state Departments of Transportation,
    transportation modes etc. as to whether, and more concerning, where,
    freight increases will actually occur. As a result, a great deal of the
    investments being contemplated or undertaken are based on, at best,
    speculative information regarding final container freight flows.
        Clearly, projects related to canal expansion should include greater
    stakeholder input not only to ensure that the investments are
    warranted, but to avoid investments that could actually have a negative
    impact. For example, as previously mentioned, the Port Authority of New
    York and New Jersey plans to raise a bridge to allow bigger ship
    service, and will finance the project in part by doubling truck tolls
    on Port Authority bridges and tunnels. However, raising tolls on the
    very trucks that move port containers in and out of the port terminals
    will likely make the port less competitive, and undercut the NY/NJ
    projected freight increases which justified the expensive bridge
    project in the first place.
        In order to understand the impacts of the Panama Canal widening on
    our intermodal freight system from a trucking perspective, and consider
    whether the trucking industry will indeed be ready to move the
    projected freight increases that may occur in a particular port, it is
    important to first understand how we do business in the port container
    ``dray'' transport sector. As you will note in the detailed description
    of port trucking logistics provided at the conclusion of this
    testimony, where, how many, and when port intermodal trucks are
    deployed in the container transport sector is actually dictated by
    decisions made by ocean carriers, 3PLs, brokers, railroads, terminals
    and shipping customers . . . Not by the motor carriers. Moreover, in
    any short-term port freight movement analysis, fuel price variances,
    potential port labor unrest and increased operating costs quickly
    impact the ocean carriers' decision on which ports or coastal locations
    they will route, or reroute, vessels to for cargo delivery. In the
    longer term analysis, world or regional economic conditions will reduce
    or increase cargo flows throughout the international intermodal freight
    system irrespective of today's port-Panama expansion efforts, i.e.,
    more cargo will move in good times, less in bad. Therefore, predicting
    accurate container transport needs much further into the future is not
    an exact science.
        At this time, we are aware of no systemic trucking capacity
    shortages impacting freight movement at our port facilities. However,
    there have been, and will continue to be, chassis (the metal trailer
    frames with tires, brakes and lights that are designed for intermodal
    over-the-road transportation of standard-sized international shipping
    containers) imbalances (not enough in one facility too many in another)
    at some locations, which cause trucking company resources to be used
    for chassis repositioning. Moving empties around is obviously not the
    most efficient use of trucking resources, but it is often a port
    trucking fact of life.
        Driver resources remain a challenge. Pending Hours of Service (HOS)
    changes, particularly restrictions related to the 34-hour restart, will
    negatively impact driver availability and productivity. We will also be
    challenged by systemic port gate-terminal operational inefficiencies
    and real or threatened port labor disruptions.
        Despite these obstacles, barring federally imposed barriers to
    efficiency or labor-related difficulties, we believe we will be able to
    handle volume increases wherever they occur. That said, one additional
    challenge that may impact our ability to handle increased container
    freight volumes is chassis ownership and deployment changes that are
    taking place within the industry. Over the last several years, ocean
    carriers have announced or already executed plans to exit the chassis
    ownership and deployment market, in which they have traditionally
    provided motor carriers with chassis from regional chassis pool
    facilities on a no-charge or cost pass-through basis. The chassis
    business model is now changing to a private leasing company structure
    in which companies own and deploy the chassis for a daily rental fee
    paid, initially, by the motor carrier. The long-term impacts on port
    trucking operations of transitioning from a ``free'' chassis system to
    a daily rental system are unknown.
        From a congressional oversight and planning perspective, the most
    significant challenge to accommodating increased freight volumes is
    likely ``outside the gate.'' As I am sure you are aware, the recently
    released report by the American Society of Civil Engineers (2013 Report
    Card for America's Infrastructure) gave U.S. ports a grade of C,
    because it was determined that a greater investment in port
    maintenance, modernization, and expansion is necessary for the U.S. to
    continue to compete globally. Most importantly, ASCE found that . . .
    ``While ports have made investments to improve terminal infrastructure,
    it is critically important to note that their connections to roads,
    rail, and water channels have suffered from inadequate Federal funding.
    The report also found that more dredging will be necessary to take
    advantage of higher trade capacity once the expanded Panama Canal opens
    in 2015.''
        ASCE also reported that forty-two percent of America's major urban
    highways remain congested, costing the economy an estimated $101
    billion annually in wasted time and fuel. While the report indicates
    that conditions have improved in the near term, and federal, state, and
    local capital investments increased to $91 billion annually, that level
    remains insufficient, and still projects to result in a decline in
    conditions and performance in the long term. The Federal Highway
    Administration estimates that $170 billion in capital investment would
    be needed on an annual basis to significantly improve conditions and
    performance. As a result, Roads were given a grade of D by ASCE.
        Of further concern, several ports affected by the canal widening
    are located in cities, identified by the Texas Transportation
    Institute, among the most congested in the Nation. This includes New
    York City, Houston, Miami, and Baltimore, among others. Indeed,
    according to a report prepared by the American Transportation Research
    Institute for the Federal Highway Administration, four of the top five
    highway freight bottlenecks in the Nation are near ports that will
    potentially be affected by the widening of the canal. Additional port
    activity could significantly impact congestion on highways serving the
    port complexes, affecting both passenger and freight travel costs. To
    illustrate, Figure 1 below shows the flow of truck traffic generated by
    the Port of Charleston. While significant volume is focused around the
    port complex itself, the map shows that trucks moving in and out of the
    port have a significant impact on travel throughout the metropolitan
    area and beyond. The map further demonstrates that the efficiency of
    port-related deliveries can be impacted by highway bottlenecks well
    beyond those highways in the immediate vicinity of the port. Because
    these impacts are a result of traffic that primarily serves interstate
    commerce, Federal investment in the affected highway infrastructure is
    both appropriate and necessary.
        MAP-21 included a requirement for the identification of a National
    Freight Network of highways critical to goods movement, including
    bottlenecks on these highways. It is likely that many of these
    bottlenecks will be associated with port traffic, which will possibly
    be exacerbated in some locations by the widening of the Panama Canal.
    Unfortunately, the bill did not provide separate funding to address
    these bottlenecks. ATA strongly urges Congress to create a new,
    dedicated funding stream to address freight-related highway bottlenecks
    that significantly undermine freight transportation efficiency. Given
    the limited resources available for highway investment, spending
    decisions must be more focused on infrastructure projects that are of
    strategic national importance.
    Figure 1

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        In conclusion, the widening of the Panama Canal and the resulting
    container volume increases hold great promise for America's port-
    related businesses, and should enhance our intermodal container freight
    sector's economic contribution to the country's prosperity. Preparation
    for handling the bigger ships and increased freight volumes is well
    underway, but it is not clear at this time whether the underlying
    investments are being made in the right locations. U.S. port trucking,
    however, is ready to meet the challenges ahead, and we look forward to
    working with the Committee and Members of Congress, and also with
    Federal and state officials, to establish the regulatory framework and
    transportation infrastructure necessary to facilitate this process.
    Thank you once more for the opportunity to testify before the
    Committee.
                                     ______

    Port Trucking Logistics
        U.S. intermodal motor carriers generally handle the first and last
    segments of container transportation that utilizes a ship or railroad
    for the major portion of the container line haul, i.e., the segment
    between the off shore international manufacturer and the port or
    terminal, and then to the final customer. Our length of haul varies
    from a few miles to a few hundred miles. Intermodal truckers generally
    do not arrange for the entire transportation movement from container
    pick-up to delivery; instead, a third party often arranges the
    transportation segments and chooses to use a trucker for a designated
    portion of the container move.
        Trucking container moves contractually involve ocean carriers,
    railroads, warehouses, port terminals, brokers, freight forwarders and
    other third-party entities that make up the maritime transportation
    logistics system. The container moves may be made between numerous
    port-terminal facilities, rail facilities, nearby or distant
    warehousing facilities, or nearby or distant distribution or final
    customer store locations, which may also be in a state that is
    different from the port of origin. The company that pays for our
    trucking-drayage service may be a third party logistics provider, the
    shipper or consignee, or a steamship line.
        Finally, a critical motor carrier container logistics requirement
    concerns the final return transport of the empty container. Following
    the container delivery in the various truck moves described above,
    motor carriers are responsible for returning the empty containers to
    port, terminal or designated container drop yards as directed by the
    entity contractually controlling the container.
        Motor carriers operating in any of the port services described
    above are notified of the arrival of a customer's containers in a
    variety of ways: through shared software, by phone, by facsimile, via
    e-mail, etc. The freight arrives in an ocean-going container of
    standard dimensions (20 or 40 foot containers) which fits onto the
    intermodal chassis. The chassis are traditionally owned and provided by
    the ocean carriers or railroads but, as discussed above, are today
    owned and provided by chassis leasing companies.
        The necessary freight documents for truck container transport are
    developed in a variety of ways, but generally involve a delivery order
    and a bill of lading for a particular container. The containers are
    off-loaded from the ships to staging areas and then placed in terminals
    where they are either stacked for later pickup or off-loaded onto
    highway chassis for immediate pickup by motor carrier dispatched
    trucks. Motor carrier dispatched drivers--the vast majority of whom are
    independent owner-operators--pick up the containers during available
    port operating hours and move them as ``dray'' to various locations, as
    described above.
        Often, containers are moved to warehouse locations in close
    proximity to the ports. Some motor carriers simply drop the containers
    off at the warehouses or railheads and have no further role in the
    handling of the international cargo. Other motor carriers also operate
    terminals and provide the cross-dock and trans-loading services
    discussed above.

        The Chairman. Thank you, sir.
        It is almost impossible to know where to start. I was just
    thinking, Mr. Vickerman, if you could put up that first or
    maybe the second slide. That is it.
        In other words, it doesn't make sense to me, somehow, that
    the eastern ports and the Gulf Coast ports would be affected
    but that the West Coast would not. I mean, they are a very long
    way from the Suez. I need you to explain, backing up, what you
    mean by that.
        And I need you to explain--if you can get the one that has
    the most arrows on it.
        [Laughter.]
        The Chairman. There is a big red arrow. That is the one I
    am looking for. Can you do that?
        That is it. OK.
        Because, I mean, to me, it is interesting because it shows
    a relatively small degree of impact and does not--maybe it is
    the isthmus of northern Mexico, but it doesn't get to the West
    Coast. And I would just like to have that straight in my mind.
    Am I wrong about that, or am I right about that?
        Mr. Vickerman. No, sir, you are not.
        If we look at Asian manufacturing, the centroid of
    manufacturing, it has moved from the Japans and the Koreas to
    Southeast Asia. So, coming from Southeast Asia, the dominant
    movement of ships is across the Pacific to the West Coast of
    the United States. In large measure, then, the cargo is moved
    intermodally by truck and by train.
        And if it comes to New York, let's use New York as a
    consumption zone, it would be transferred in on the West Coast
    to road or rail in that process. It may end up in Chicago. We
    call that a mini or a micro land bridge, from a rail
    standpoint.
        So that movement, then, has an ocean component and a land
    component. The movement through the Panama Canal is what we
    call all-water. The longer time that cargo can stay on a
    vessel, the cheaper its total cost movement. On a scale of 1 to
    10, if we looked at the least-cost movement of freight, it
    would always be by water. Let's say that is on an increment of
    1 or 2. The next increment up would be by rail, the next more
    costly increment up. And then beyond that would be by truck and
    ultimately by air, if you wanted to include that mode.
        So the----
        The Chairman. Also making the point--and I am interrupting
    slightly, but it really clears it up for me. You are saying
    that the direct present routes from Asia to the West Coast,
    north and south, will handle it. They are going to work still.
        Mr. Vickerman. Yes. In fact, nothing involved with the
    Panama Canal expansion----
        The Chairman. Hurts.
        Mr. Vickerman.--would hurt, in my opinion, sir, would hurt
    the West Coast. And, in fact, I believe that we are going to
    revisit problems of capacity and congestion as the growth of
    the market overall climbs.
        We have seen that coming up to the recession of 2009, that
    growth path looks surprisingly like the growth path after the
    recession going forward. If you look at L.A.-Long Beach right
    now, it is estimated in the next 30 years that cargo will
    increase more than 300 percent. So I don't anticipate that we
    are going to have the West Coast shrivel or reduce its import.
        What the Panama Canal does is allow a greater capacity
    using an all-water routing from Asia to the East Coast in that
    process. The cargo stays on the vessel longer. It is generally
    cheaper, although you would have to look at specifics of origin
    to destination to really calculate that.
        But to answer your question, sir, in my opinion, at least,
    we are going to see continued pressure on the West Coast as the
    cargo grows. And what we are talking about here is a two-and-a-
    half-times increase in container capacity, as an example, by
    using all-water route through the Panama from Asia to the East
    Coast.
        That would still be a competitive move to what we just
    talked about with the vessels coming into the West Coast and
    then transferring intermodally to road or rail.
        The Chairman. Because it is just interesting, the West
    Coast is where the population is growing the fastest. I mean,
    we went through this with the Federal Aviation slots and all
    that. That is where the population is. It takes 38 states to
    make up the population of California? Something of that sort.
    It is very dramatic.
        Mr. Vickerman. Senator, from a consumption zone standpoint,
    there was an interesting study called the 2050 Planning Study
    by the Planning Association that actually looks at consumption
    zone growth. And we have New York-New Jersey, we have
    California, we have Chicago, we have Atlanta, and the like. In
    2050, they have looked at the consumption zones in Chicago and
    Atlanta and New York merging. That, coupled with the Panama
    Canal, is starting now to control traffic from the Midwest.
        If we look at two of our rail brethren, CSX and NS, they
    have established major logistics centers. Where? In Ohio. Both
    railroads have established major logistics centers there.
        So we are seeing the Midwest not only from an agricultural
    production standpoint, but also this merging of consumption
    zones will have an impact on what controls traffic over the
    long period of time.
        The Chairman. OK. I appreciate it, and I have overstayed my
    time, but this is so interesting, this whole concept.
        Senator Thune?
        Senator Thune. Thank you, Mr. Chairman.
        Mr. Hamberger, as I mentioned earlier in my remarks, the
    Army Corps of Engineers estimates that the widening of the
    Canal may create an opportunity for increased agricultural
    exports to Asia and other markets. And I am wondering if you
    agree with that assessment.
        Mr. Hamberger. Yes, sir.
        Senator Thune. Do you expect a significant increase in the
    amount of agricultural products being shipped by rail as a
    result of the Canal widening? And what are your members doing
    to plan for such increases if you believe they will occur?
        Mr. Hamberger. In my testimony, I have focused more on the
    intermodal side than on the bulk commodities side, and I would
    like to be able to get back to you in writing, if I might.
        I did anticipate, having read Mr. Vickerman's testimony,
    this might come up. Certainly, my members do believe that for
    all bulk commodities, whether it is grain, perhaps LNG, coal,
    that the larger ships that can transit the Panama Canal will
    lower the cost and therefore make U.S. products more
    competitive in global markets and do expect that growth.
        I just don't know and haven't talked to them about whether
    or not that would offset what is currently a very robust export
    market through the Pacific Northwest. And so I don't know what
    that trade-off would be, but if I could beg your indulgence----
        Senator Thune. Sure.
        Mr. Hamberger.--and get back to you in writing.
        Senator Thune. But, I mean, do you assume there will be
    some uptick in real traffic?
        Mr. Hamberger. Oh, yes. Yes.
        Senator Thune. Yes. OK.
        Yes, sir, Mr. Keever?
        Mr. Keever. If I could just add to that, we are in
    discussions with a major agribusiness that is looking to build
    a facility on deepwater for exports of American ag business
    going to China, as we speak, that would be served by both Class
    I railroads in Virginia.
        I can't say any more than that, but it just amplifies
    exactly what your thoughts are, sir.
        Senator Thune. Yes.
        I know this may be a question to maybe come back to Mr.
    Hamberger, and it may be too specific to know at this point,
    but are there particular commodities that are likely to see an
    increase in traffic, in your judgment?
        Mr. Hamberger. I don't have a good answer.
        Senator Thune. OK. OK.
        Mr. Vickerman, if you combine the fact that the larger
    Panamax vessels will lead to lower shipping costs and the
    recent increases in domestic oil and natural gas production,
    can you explain what, if any, changes we can expect in
    manufacturing and in in-sourcing of jobs here in the U.S., here
    at home?
        Mr. Vickerman. Senator, I believe the lower overall origin-
    to-destination costs could, in fact, affect where manufacturing
    might be. In fact, we are actually seeing some movement in
    manufacturing back to being collocated closer to the
    consumption zone, which would mean that Mexico and the like
    might see a resurgence of that issue.
        However, from a global standpoint, we are still seeing very
    low wage rate issues in Southeast Asia. If we look at the
    average wage rate in 2015 for India, it will be 78 cents. The
    current wage rate in Vietnam is a little over $1.10. And we
    anticipate that those wage rates will influence where
    manufacturing will be.
        However, the opening of the Canal, based on what we just
    said, could influence sourcing and manufacturing closer to the
    consumption, ourselves, and thus could influence where the
    location of that manufacturing would be sourced.
        Senator Thune. And I would direct this to either Mr. Keever
    and/or Mr. Byrd, but trucking companies often express concern
    about the amount of time it takes for trucks to get into and
    out of a port. Time spent idling hurts productivity, and it
    wastes fuel.
        And I guess the question is, how would you assess the
    efficiency? And maybe for Mr. Keever, the Port of Virginia
    specifically, and then maybe Mr. Byrd more broadly. But is
    there anything that can be done to get trucks in and out of
    port more quickly?
        Mr. Keever. Sure, that is an issue that has been around for
    a long time. And I think often we hear of the anecdotal one and
    two really difficult problems, as opposed to what occurs on a
    regular, routine basis, where we are turning trucks
    consistently at about 45 minutes. We have automated gates in
    place at one of our facilities. We are making improvements to
    put in automated gates at our other facilities that will speed
    that process up. And I think most ports are looking to automate
    that.
        But those are typically, I think, the rare occasions that
    sort of rise to the surface.
        Mr. Byrd. In a broader sense, I would just echo what has
    been said, is that technology has entered the marketplace as it
    pertains to turn time in ports. And I think there has been a
    lot of progress made in most ports relative to turn time. But
    there is still a great opportunity there to gain additional
    productivity and efficiencies, no doubt about it.
        Mr. Vickerman. Senator, if I could just add, in my opinion,
    the idea of automation in our ports is still one to be nurtured
    and to increase the efficiency of transfer, both truck and
    rail. If you look at automatic-guided vehicles, Europe is in
    its fifth generation, the U.S. is in its zero-th generation. We
    have not embraced automation in that regard.
        A very good example of the benefits of automation is the
    newest terminal in the Port of Virginia, APMT, one of their
    most productive terminals, which has what I will call a partial
    automation in that process. Using automation, bringing
    information technology, and making the interface between road
    and rail at our ports is a potential venue that could
    substantially increase the productivity of our ports in North
    America.
        Senator Thune. Thank you.
        Thank you, Mr. Chairman. My time is up.
        The Chairman. Thank you, Senator Thune.
        Senator Scott, to be followed by Senator Begich and Senator
    Warner.
        Senator Scott. Thank you, Mr. Chairman.
        This is a question to Mr. Byrd. The deepening of the
    Charleston Harbor to 50 feet is predicted to provide
    significant economic benefit to the Southeast region and the
    entire nation, with over $100 million in net benefit to the
    nation estimated on an annual basis.
        Mr. Byrd, in your testimony, you raised concerns about the
    new hours-of-service rule that is scheduled to go into effect
    on July 1st. What impacts will this new rule have on your
    business as you see the expanded opportunity with the
    restriction in hours?
        Mr. Byrd. Senator, the hours-of-service rule scheduled to
    go into effect July of this year is one that is not
    scientifically proven to add any safety benefit to America's
    highways. And, in fact, if you look at statistics over the last
    number of years, you will find that the current regulation has
    provided the highest grade of safety to America's highways that
    we have ever seen by commercial motor vehicles.
        So there is no scientific proof in it. It will, in fact,
    add cost. It will delay America's cargo. It will interrupt the
    flow of goods that currently move today.
        For example, in my business, we serve the Port of
    Charleston, as well as our domestic business serving
    manufacturers. The Port of Charleston is typically open from 7
    a.m. on Monday morning until 5 p.m. on Friday afternoon every
    week. The new regulation has a stipulation in it called the 34-
    hour restart provision that would require 2 days back-to-back
    that would incorporate 1 a.m. and 5 a.m. before a driver could
    start out with a new, fresh book of hours to begin a new week.
    What that means is that freight moving out of Charleston to a
    destination, for example, to Atlanta 336 miles away, could not
    leave until 5 a.m., which further exacerbates traffic
    congestion on our highways and it delays cargo.
        The way it typically works is our drivers take a 34-hour
    break today, unencumbered by 2 back-to-back days of 1 a.m. and
    5 a.m.; take 34 hours off, they can start with a fresh clock.
    They can take their first load of America's commerce, have it
    delivered to destination or be waiting at destination with a
    full legal break of time so that they can deliver, pick up, and
    move America's commerce.
        This new regulation will in many ways impede the movements
    of our goods.
        Senator Scott. Thank you, Mr. Byrd.
        One other question for you. As the largest carrier, single
    carrier in the Port of Charleston, as such, when you look at
    the opportunities and the challenges facing your company in
    Charleston and other companies in other ports throughout this
    country, what actions are your company having to take to gear
    up for the increased traffic at the Port of Charleston? And how
    quickly can you adjust to changing conditions?
        And as a person who has been involved in the American
    Trucking Association for a very long time, what do you see as
    the impact of gearing up throughout the country? From the labor
    force, I can't remember the statistic, but it was something
    like 100,000 truckers that we needed, and we had about 80,000,
    something like that.
        Mr. Byrd. Right. There has been a well-identified driver
    shortage throughout our industry, there is no question about
    that.
        We are very appreciative as an industry on the
    consideration that has been given through Washington through
    veterans programs to help expedite the process of getting
    veterans into the license process and into the seat of
    commercial vehicles delivering America's freight.
        But, yes, we have a driver shortage issue. Still, with that
    issue out there and looming, we still are procuring, hiring,
    and training drivers on a daily basis to move America's goods.
        We as a business, we are adding to our fleet, we are buying
    assets. And we are a total asset-based company. We don't use
    any independent contractors in our fleet. We own our trucks, we
    own our trailers, and our drivers are employees. We are
    constantly investing in technology that will prove to bring
    about efficiencies, both in safety and productivity, to our
    fleet.
        But the things that concern me most as a businessman are
    those things we have absolutely no control over. And that is
    highway congestion, and that is inefficient highway
    infrastructure. And we really need your help. We need
    assistance to improve America's highways.
        No matter how much freight comes to the West Coast, to the
    East Coast, or how much goes by rail or by water or by truck,
    trucks are still going to be a majority of the process in
    moving America's goods. And without an efficient highway
    system, we simply can't do it.
        Senator Scott. Thank you, Mr. Byrd.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much.
        Senator Begich?

                    STATEMENT OF HON. MARK BEGICH,
                        U.S. SENATOR FROM ALASKA

        Senator Begich. Mr. Chairman, thank you very much.
        Mr. Vickerman, let me, if I can, ask you a couple
    questions. I know in your testimony, you had a chart showing a
    90 percent potential increase in LNG. Can you give me the
    predicted LNG tanker traffic once the Canal opens up? As you
    know, a very small percentage can get through that now. Once it
    is wider, then there will be more traffic flow.
        Do you have any commentary, and you may not be prepared to
    answer this, but give me first thoughts on what you see as a
    shipment increase, and what does that mean to the world market,
    and what will happen with traffic flow potentially going this
    way from the map?
        Mr. Vickerman. I will give you my impression. Clearly, I
    think LNG is going to be a major mover through the Panama
    Canal. And, as indicated, currently about 10 percent of the
    global fleet in LNG moves through the Panama Canal. After the
    expansion, about 90 percent of its fleet would be capable of
    doing that.
        My own view is that LNG is going to be a significant growth
    market. I am concerned about this single third lane ultimately
    being congested. I was talking with Jeff beforehand that, from
    crude oil to LNG to the dry bulk to the containers, I am still
    worried that with the potential growth that we are seeing after
    the recession, that I would be worried about congestion in that
    third lane.
        And let me just talk about LNG for a minute. Several months
    ago, for the first time in the world, we have had a
    containership operator decide to power the ship by LNG. I see
    that the large ship I showed you on the diagram, the Triple E
    from Maersk, there was a decision point between diesel and LNG,
    and it went diesel, but I believe the next generation of
    vessels will have heavy LNG capability.
        Senator Begich. TOTE, for example, is----
        Mr. Vickerman. TOTE.
        Senator Begich. We helped them move along. That is a great
    project.
        Mr. Vickerman. TOTE announced several months ago the first
    construction of a containership using LNG.
        Senator Begich. That is right.
        Mr. Vickerman. Now, the impact of that is going to be that
    the ports are going to have to start to bunker LNG.
        Senator Begich. Right.
        Mr. Vickerman. And the ability to bunker and distribute
    LNG, which is a lot more of a concern for safety than the
    current marine fuel distillate bunkering, is a concern. But----
        Senator Begich. Do you think we are ready for that growth?
        Your pause gives me the answer.
        [Laughter.]
        Senator Begich. I mean, I think it is great what TOTE is
    doing. Of course, you know, from Alaska we love to sell gas, so
    we are all OK with this. But, it is also a cleaner-burning
    fuel, it has a lot of other aspects to it.
        But in order to make that network, what you have just
    described is going to be a serious problem. Because no one
    wants to have an LNG receiving terminal because they all think
    it is bad. In reality, LNG is one of the safer products when it
    comes to petroleum products.
        Mr. Vickerman. I do know the Panama Canal is considering
    adding----
        Senator Begich. A bunker?
        Mr. Vickerman.--LNG bunkering, in addition to their
    logistics park, in addition to the new ports, all on top of the
    existing Panama Canal expansion, in order to service that
    market.
        Now, I do know certain ports which are known for their
    leadership, like the Virginia Port Authority, have started to
    entertain the LNG. My concern would be that we are not all at
    that level.
        Senator Begich. OK.
        Mr. Vickerman. LNG bunkering, because of the increased flow
    in LNG, particularly through Panama--and I believe it is a
    trend in the future, where we are going to have a lot more
    containerships and a lot more of our vessels powered by LNG.
        Senator Begich. And then there is the other piece,
    obviously. As we develop more gas supplies in the country,
    moving gas/LNG from this country to markets, the Pacific Rim,
    will be a whole new opening. And also it will change, probably,
    the global pricing, right?
        Mr. Vickerman. Yes.
        Senator Begich. Because it is cheap around here, quadruple
    over in the Pacific Rim.
        Mr. Vickerman. Yes.
        Senator Begich. So there is probably going to be some
    incredible impact on pricing. Is that a fair statement?
        Mr. Vickerman. It is, sir. And the indication that I gave
    you, if you go from 10 percent of the global LNG fleet being
    capable to move through the Panama Canal to 90 percent, it is
    an indicator of the viability of that logistics distribution.
        We need to do more in planning for that as a future vessel
    propulsion fuel. And that goes along with actually embracing
    and planning for the future, where I think that and other
    aspects need to be incorporated.
        Senator Begich. If I can ask you one quick question as we
    close out my questions, and that is, up in the Arctic,
    obviously there is a lot of change that is occurring. The
    Bering Sea is increasing traffic flow significantly. It is
    estimated that once, in the next 2 to 3 decades, that becomes
    ice-free, China, Asian markets can move to Europe at a 45
    percent less cost than going other routes.
        Have you thought about that impact? Because, I mean, that
    is real. That is not a pipedream. It is happening.
        Mr. Vickerman. No, sir, my response to you, it is
    absolutely real. Right now, two and a half months out of every
    year, we can move product across the top of the globe without
    icebreaker capability. If we look at the flow from Asia to
    Europe, we can get across the top of the globe in half the time
    and half the distance.
        Canada has already created an admiralty up there. So the
    issue is, we should look at dynamics of alternative routings,
    like the Panama Canal's expansion. And that just tells us that
    we need to look at all of our competitive issues on a systemic
    but global basis to anticipate issues like we are talking about
    going across the globe.
        But if we can move product across there in half the time
    and half the distance, and if it is already being effected,
    which it is----
        Senator Begich. It is.
        Mr. Vickerman.--and many of us, although we may not be
    environmentalists, believe that we will have greater and
    greater windows of opportunity to move vessels across the top
    of the globe.
        Senator Begich. Very good. Thank you very much.
        Thank you, Mr. Chairman.
        The Chairman. Senator Warner?
        Senator Warner. Thank you, Mr. Chairman.
        And I want to follow up on Senator Begich, not so much on
    the shipping, but just back to the question, the issue that Mr.
    Keever raised and I think Mr. Byrd raised as well, this need
    for additional investment in infrastructure.
        I know Mr. Hamberger constantly makes the point that
    freight rail does it privately, but ultimately they intersect--
    --
        Mr. Hamberger. Absolutely.
        Senator Warner.--with multimodal facilities that have
    public investment.
        And, as has been mentioned, some of the Federal programs
    right now, in terms of Federal matches in our ports, are not
    being met. The President's current budget, for example, on the
    Craney Island expansion doesn't have the Federal match that is
    required.
        So I know you and I know that you do as well, Mr. Chairman,
    have interest in looking at best practices from around the
    world. One of those best practices is the creation of a
    national infrastructure bank, a model that has been used
    successfully in Europe, in the U.K., that states have used on
    various bases.
        I think many of us point to the success of TIFIA as one of
    our transportation programs, which, by the way, is a record
    with no loss of governmental funds. I know you have
    legislation, I have some bipartisan legislation that I hope to
    solicit some additional cosponsors on, building on what Senator
    Hutchison and Senator Kerry did last time, that would create an
    infrastructure bank that would be about loan guarantees, that
    would also be about making sure that we have a financing
    vehicle available. When you are talking about projects that
    have a 50-year life, trying to get financing that goes beyond
    the 20-year frame of most of the commercial financing, it is
    just not out there. So the ability to get 25- to 40-year
    financing that would be part of an infrastructure bank is, I
    think, terribly important.
        I want to make clear to particularly my colleagues on the
    Republican side and the Ranking Member, that this would only be
    something that would have first-dollar private capital loss. So
    any backstop would be far down the line.
        And the proposal the President has put out, or the proposal
    that we had last time with about a $10 billion initial
    capitalization, because it wouldn't guarantee all the loans,
    could generate in the neighborhood of $300 billion to $500
    billion worth of infrastructure investment. And after that
    initial capitalization, it would become self-financing and
    requires no additional governmental exposure or governmental
    funding. The Export-Import Bank is an example of that.
        And I would point out, one of the things I am concerned
    about--and this is going to get to a short question at the end;
    it is as much a commercial as anything--is that, you know, we
    are continuing to create pockets of these loan guarantee
    programs: one over here on energy, TIFIA over here on
    transportation. There is a WIFIA idea now on the water
    projects. And I just worry, as someone who feels like we have
    to protect taxpayer investment when we need this infrastructure
    investment, if we want to avoid future Solyndras, we ought to
    put any kind of project financing expertise that is going to be
    done on a national level, that is needed for these multimodal
    projects, multistate projects, in an independent, separate
    entity that would not be able to have political influence, that
    would have the project finance expertise.
        Because one of the things with TIFIA that is holding back
    its success right now with the increased funding is you can't
    get the project finance expertise to come and work for what may
    or may not be a long-term project.
        So my hope is that this will be something that we can--as
    we hear from Mr. Byrd and Mr. Keever, but I think even Mr.
    Vickerman and Mr. Hamberger would agree, if we are going to
    stay competitive, no matter where we are going to ship across
    the seas, at some point it is going to hit American
    infrastructure. And we have to have infrastructure that is
    competitive with the rest of the world, and we have to think
    creatively about how we would do that. And I would think there
    would be ways with improving upon models that have been used
    elsewhere in the world in getting this done.
        And so with that I will turn this into a question, Mr.
    Keever, do you have any thoughts about an infrastructure bank,
    a national infrastructure bank, and how that might help ports
    and/or multimodal projects?
        Mr. Byrd, you may want to comment, as well, in my remaining
    29 seconds.
        [Laughter.]
        Mr. Keever. Absolutely. I think such a concept makes
    great----
        Senator Warner. I guess that is a yes?
        Mr. Keever. Yes. Thank you very much.
        Senator Warner. No, go ahead, please. I am sorry.
        Mr. Keever. I will defer to Mr. Byrd.
        Senator Warner. Oh, no, I didn't mean to interrupt.
        Mr. Keever. We think something like that would certainly
    help provide another opportunity to advance the infrastructure
    that is woefully needed to accommodate the continued growth,
    whether the freight moves through the West Coast or the East
    Coast. And I think you have heard from each of us that there
    are opportunities on the ports side, there are opportunities on
    the rail side, opportunities on the roads side.
        And the trade is going to continue to come with or without
    this expansion. It doesn't matter which side it is coming from,
    but the United States is obviously a major player in
    international trade. It is not going to diminish; it is going
    to continue to grow. And we need to be prepared for that as we
    go forward. Many of the facilities are in need of improvement,
    and I think this concept would be very, very beneficial.
        Senator Warner. Mr. Byrd, I know my time has expired, but
    maybe the Chairman will give me 30 seconds.
        Mr. Byrd. Thank you.
        The trucking industry and the American Trucking Association
    is not opposed to an infrastructure bank. However, we do feel
    the need for an increased revenue stream, such as a remodeling,
    if you will, of the motor fuel tax. We feel that this is the
    most efficient mechanism by which to generate funds to fund our
    highway infrastructure needs, both into the future and the
    maintenance of our current system.
        Perhaps looking at some sort of indexing of the motor fuel
    tax, you know, into the future would be a feasible thing to do.
    But any mechanism by which we can direct funds to our highway
    system for improvement and our bridge needs for improvements,
    we are very much interested in looking at that.
        Senator Warner. And, again, I will just close out. I know
    my time has gone over. But I agree, it is not an either/or. You
    need a stable revenue source. We all know that the highway
    transportation trust fund is bankrupt, basically. But trying to
    create expertise in project finance, recognizing as well the
    value of a loan guarantee, and recognizing the fact that the
    term of being able to finance these projects is something that
    is an idea that I know you have worked on a long time, Mr.
    Chairman. And I hope that we will get a chance with this
    Committee and with our members to, you know, press on and twist
    it around a little bit.
        I think there are improvements on making sure that we can
    get the kind of responsibility to the taxpayer--that this is
    not going to be the next GSE, and models that I look forward to
    working with you and others to share.
        Thank you.
        The Chairman. Thank you, Senator Warner, very much. And I
    will follow up on that after the distinguished Senator from
    Florida makes his presence known. His name is Nelson, Bill
    Nelson.

                    STATEMENT OF HON. BILL NELSON,
                       U.S. SENATOR FROM FLORIDA

        Senator Nelson. Mr. Chairman, thank you.
        Are you all of the opinion that 2015 is a reasonable time
    for the Canal to be completed?
        Mr. Vickerman. No, sir.
        Senator Nelson. I was down there 2 years ago, and at the
    time I think they were shooting for 2014, and I thought that
    wasn't going to make it. What is your most reasonable guess?
        Mr. Vickerman. The December 2015 date, I believe, was
    established by the President of Panama to coincide with the end
    of the 100th anniversary of the construction of the Canal. They
    have had some construction delays and some labor issues that
    have now delayed it, in my opinion, to June, perhaps July 2015.
        I think we may experience an even greater issue. They are
    now indicating that by the end of 2015, perhaps early 2016,
    that the Canal may come on line in that process.
        Senator Nelson. Given the fact that, whenever it does open,
    there are certainly economies that can be experienced since one
    of these ships can carry about three times what the existing
    size of the ships that can go through the Canal. So you get a
    lot more economies.
        Now, the railroads and the trucks, of course, are not going
    to be doing all the long haul across the country that you do
    now, where the ships come in on the West Coast. But you are
    going to have plenty to transport once they get to an East
    Coast port, are you not?
        Mr. Hamberger. Yes, sir. And, of course, I think there
    still will be some offloading in the West Coast ports, as well.
        But I just would draw attention to my testimony where your
    constituent, Florida East Coast Railway, is working closely
    with the Port of Miami and the Port of Everglades to be ready
    to take double the amount of intermodal containers that they
    can handle once the Canal opens to move that traffic north.
        I know the railroads are also working with both the Port of
    Charleston and Virginia and other areas around the country to
    make sure that we have that capacity when the post-Panamax
    ships begin sailing.
        Senator Nelson. How about----
        Mr. Byrd. I would concur with the statement. It is going to
    be a great deal more freight to move, sir. And that is the
    reason we need you to fix the highway system.
        [Laughter.]
        Senator Nelson. Amen to that. Matter of fact, could you
    help us lobby some of our colleagues here about putting money
    into infrastructure? That would be most helpful.
        Mr. Byrd. We have some of the most astute lobbyists in
    Washington, sir, and they work on it all the time.
        Senator Nelson. Well, they haven't been especially
    successful recently.
        [Laughter.]
        Mr. Byrd. We will make them work harder, sir.
        Senator Nelson. Maybe you ought to put them on the
    incentive system.
        [Laughter.]
        Senator Nelson. So the railroads and the trucks are going
    to be ready, but all these ports on the East Coast and the Gulf
    Coast, they would all love to have these big ships coming in,
    but we can't dig that many channels. We are not going to have
    the money, through the Corps of Engineers, to dig that many
    channels. What do you recommend about that?
        Mr. Keever. Well, there are a couple of ports that are
    currently already deep enough to accommodate the larger ships,
    and they are coming to these ports today through the Suez
    Canal.
        With the scarce dollars, certainly the market is going to
    determine where those larger vessels are going to go. Many of
    the ports on the East Coast are striving to get to the deeper
    water. Without a reasonable funding stream and a reduced
    process, I am not sure they are going to get there.
        You may want to make the analogy, Senator, that, do you
    need an Atlanta airport every 100 miles or so? You probably
    don't.
        Senator Nelson. That is well said. Now, in Virginia, you
    are all set. You are dredged down to 50 feet because of the
    aircraft carriers.
        Mr. Keever. Yes, we are at 50 feet. That was authorized in
    WRDA of 1986 for the coal exports, U.S. coal exports, where 50
    feet inbound we are actually authorized to dredge to 55 feet.
        Senator Nelson. But south of you, there is no port on the
    East Coast that is dredged down to 50 feet. How about Houston?
        Mr. Keever. No, Houston is not at 50 feet.
        Mr. Vickerman. Houston is considering a new six-berth
    terminal in back of Pelican Island accessible into the--the
    initial channel has that capability, but it is not all the way
    down through Houston. But not only Houston but New Orleans,
    Mobile, and the like are starting to anticipate that.
        Everybody is using 50 feet as the criteria. Let me just
    reiterate that the vessel you see there, Maersk 3 days ago said
    that they weren't going to call in the Panama Canal any longer.
    They are going to go backward, as we talked about, through the
    Suez with those larger ships. That will create a ripple in the
    fleet, and I anticipate we are going to have 9,000, 10,000,
    11,000 TEU ships or larger, and eventually, and I am sorry to
    say it, we are going to see ships that are larger than the
    Panama Canal, once it is completed, calling on the East Coast.
        And we are using this magical 50 feet as a criteria. I
    happen to believe that we will continue to see pressures to
    have even greater capability and service greater capability. If
    Maersk Line is going to take that vessel and service Asia and
    Europe and we are going to see greater flow through the Suez
    because they won't call on the Panama, then not only are we
    having the current Panama Canal pressures, but we are going to
    have greater pressures in the future to have more capability to
    service these larger vessels.
        Senator Nelson. What depth does that ship require?
        Mr. Vickerman. We have vessels that are in the 54-foot
    range. In general, as the vessels get wider and longer, they
    don't necessarily get deeper. I like to say that Archimedes--
    there was no containership in Archimedes' time. Archimedes said
    that the depth of a containership is not proportional to TEU;
    it is proportional to displaced water volume, or buoyancy.
        So we are seeing with much longer vessels, in the 1,200-
    foot range. With widths of containerships at 22 to 23--13 is
    Panamax right now--22 to 23, the depth is smaller. And I would
    assume that 50 to 54 is probably the maximum range. But we may
    see vessels that would ask for even greater depths than 50 feet
    in the future.
        Senator Nelson. Well, if you have that and if they are
    wider, so that means you are dredging up a lot of sand, not
    only deeper but wider, what ports on the East Coast can handle
    that?
        Mr. Vickerman. Clearly, the Port of Virginia, with its 50-
    and 55-foot channel capability, has the entrance channel
    dynamic to do that. But even Virginia will be taxed with wider
    ships. The maximum Panamax cranes right now are 19 out?
        Mr. Keever. We have 26. We have 26 outreach.
        Mr. Vickerman. Yes. So the maximum would be that. We are
    going to see more and more of those cranes have to be deployed
    against those bigger vessels.
        Mr. Keever. And let me just add, I want to be clear that
    the Port of New York-New Jersey will be dredged to 50 feet.
    Baltimore is at 50 feet. Charleston is trying to get to 50
    feet. Savannah is trying to get to 47 feet. Miami is expecting
    to be at 50 feet. So there are efforts that are ongoing.
        Senator Nelson. Thank you.
        The Chairman. Thank you, Senator Nelson.
        I am going back to what Senator Warner was talking about. I
    see two strands of evolution, neither of which are very
    promising unless we react to them. One is the industry, that
    is, the shipping industry, that guy, and larger iterations of
    that guy off in the future. Because industry is always looking
    for--or should be looking for a way to do something with more
    capacity, more weight, more capacity. And then, all of a
    sudden, that running up against an infrastructure situation in
    the United States which is wholly inadequate. To handle that in
    its present form, they have already decided to go, you know,
    elsewhere, that ship.
        And then the general question of, Americans have always
    assumed--I think it is part of our optimistic nature, both
    business and people, more business, perhaps, than people--that
    if we put forward a viable product which has a tremendous
    capacity for raising the quality of life in this country and
    improving the distribution of goods, that somehow the body
    politic, however that is defined--that could be public-private
    partnerships or whatever that they will rise to the occasion to
    make that possible.
        And what I am suggesting, that the way things are now, and
    I think Senator Warner might agree with this, is that this is
    no longer clear thinking, because I don't think one can depend
    upon it in the way that we are now thinking about spending
    resources.
        So the second point I would make, and I have never
    understood this, I have always believed in user taxes.
        You have, too?
        I just believe in them. I believe that the public has a
    responsibility to pay for roads. I remember when I was
    Governor, I took down a couple of the costs of small toll
    bridges over small rivers and thought that was a pretty nifty
    thing to do. And it really wasn't. It wasn't. You need every
    single source of revenue that you can possibly get to take on
    the absolutely gargantuan task not only on the sea, on the
    land, but in the air.
        We now have no clear possibility of being able to build a
    modern air traffic control system unless budgets change and
    priorities change. Without an air traffic control system, our
    whole sort of air future becomes a very different situation to
    look at.
        So what I am really suggesting is that, to me, this hearing
    will be always memorable because it is sort of the time when
    the pressure for progress and the possibility of progress--
    often the possibility of progress is much-fragmented, but it
    isn't now. There is sort of a clear stream of cooperation and
    continuity and intermodal this and that, transshipment. It
    works. Comes up against sort of like post-9/11, when you had
    all the silos in the intelligence community. And the first bill
    we passed after 9/11 was a bill which allowed the CIA to talk
    to the FBI, which I think is hilariously embarrassing, but we
    had to do that in order for that to happen.
        And people are slow to become part of an intermodal
    process, which is in the way of funding what has to be funded
    in order for this country to survive. I mean, this discussion
    is really about the future of America in the world economy. And
    we are either up to it or not. We are going to have to decide
    whether or not to be up to it. We have various views about
    revenue, and I think they are going to overrun us. I think they
    are going to overrun us.
        And so I wish you well with your lobbyists, not for the
    sake of being a Democrat and not a Republican or a Republican
    and not a Democrat, but just a real fear that we are at a
    juncture now where all of a sudden the chickens have come home
    to roost and there is no pen in which to put them. And I will
    take that last one back, but you understand what I am saying.
        I think we are at a tremendous crisis point. You are
    planning as if this can work. We are not acting in a way to
    allow it to work. That is a crisis. My time is up.
        Senator Thune. Thank you, Mr. Chairman.
        I really don't have any more questions. I just appreciate
    very much the subject, and it is an important one. And moving
    freight and goods and keeping our economy competitive has to be
    job number one for us, and we have some real opportunities to
    do that in the days and weeks and months and years ahead, and
    we need to be making the right decisions now in order to enable
    that to happen.
        So I appreciate you all's perspective.
        And was Archimedes a West Virginian, by any chance?
        [Laughter.]
        Senator Thune. Was he? That is fascinating. He sure knew a
    lot about ships for a guy from West Virginia.
        [Laughter.]
        Senator Thune. But, anyway, thank you very much.
        And thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Thune.
        I might just add, you know, that South Dakota and West
    Virginia do all right in this process, West Virginia
    specifically, with Prichard and with other areas. I mean, all
    of this--you all are doing your work. You are doing your work.
    You are finding out that, no, they are not going to go through
    the enlarged Panama, they are going to go back to the Suez. And
    you are figuring out where the lines are, where they intersect,
    where the goods will go, how you get them to the next sector.
        And we, clearly, are not prepared to rise to the challenge
    that you offer us, which is not one of self-interest but which
    is clearly one of national interest because of our economic
    position in the world.
        Yes?
        Mr. Hamberger. Could I just get one positive thing on the
    record here? And that is that the American Society of Civil
    Engineers' quadrennial report, which came out last month, did
    give the railroad industry, including Amtrak, commuter rails,
    and freight railroads----
        The Chairman. I saw that.
        Mr. Hamberger--the biggest move up, from a C-----
        The Chairman. To a C+.
        Mr. Hamberger.--to a C+. It is not----
        The Chairman. I would note that.
        Mr. Hamberger. I personally think we should be rated higher
    than that, but at least they recognized our movement up.
        The Chairman. And I was going to send flowers and roses; I
    really was.
        [Laughter.]
        Mr. Hamberger. Thank you.
        The Chairman. And everything else was a D, wasn't it?
        Mr. Hamberger. I believe we were number two, behind solid
    waste.
        The Chairman. OK.
        [Laughter.]
        The Chairman. I don't know, this is important stuff. It is
    just important stuff. And, Bill, I will stop and you go ahead.
        But it is that wonderful thing which people say about
    politicians, that we love to talk about what should happen and
    then decline to do what makes it possible for that to happen.
    And that shell game comes to a halt right around this point, I
    think.
        Yes, sir?
        Mr. Vickerman. Mr. Chairman, I just want to accentuate
    that. Mechanisms like infrastructure banks and the mechanism
    that would allow us to do that is woefully needed out there.
        The marine carriers do not use North America as a best-case
    practice. Our best terminal in North America, compared to the
    best terminal internationally, fails by a factor of more than
    four to one.
        If we do not create mechanisms to take the planning we have
    talked about here and create the reality that your vision
    sees--we need that capability. We need those infrastructure
    banks. We need those mechanisms that would allow the U.S. and
    North America to be a best-case practice.
        The Chairman. And you have to know that they are going to
    be there decades from now. It is very much like, you know,
    charting our fall in math and our fall in science. And we see
    it repeatedly in television commercials and feel awful about it
    and then otherwise really don't react. And you can play that
    game while you are the world's most prosperous country until
    suddenly you can't play that game.
        Please.
        Senator Nelson. Well, I thank you for holding this hearing.
        You know, all of this is under the assumption that the
    Panama Canal Authority continues doing the professional job
    that they are doing. And, of course, there was fear and
    trepidation back decades ago when the U.S. turned it over to
    the Panama Canal Authority.
        Do any of you all have any concern about, going forward,
    the operation of the Panama Canal Authority?
        Mr. Vickerman. Sir, from my perspective, no.
        I had the same concerns. When Alberto Aleman, the head of
    the Panama Canal Authority, took over, I had some concerns not
    only for our security when we moved our forces back to Florida
    from their protection of the Canal. But I am here to tell you,
    currently working for the Panama Canal and having worked for
    them in the past, the Panamanians and the Panama Canal
    Authority have done a wonderful job. And my anticipation is
    that they will continue to do that into the future, and I do
    not have, sir, hesitation at all as to their prowess and
    capability in managing the new Canal.
        The Chairman. But that makes me--and then this will be my
    last statement, I promise. It takes me back to the Carter days
    when we were voting on the Panama Canal. And I was a Governor
    at the time and was brought into the White House. And I was
    just, without really giving it a whole lot of thought, it was
    such an obvious thing to be for. The only problem was I was the
    only person in the state of West Virginia that felt that way.
        [Laughter.]
        The Chairman. Because you just don't do that. I mean, you
    don't go into some foreign land and, you know, be a Teddy
    Roosevelt and just purchase it.
        But the point was that we constantly fail to rise to the
    challenge, and we have to find out a way to make us rise to the
    challenge, and not out of political theory or ideology but out
    of sheer fear of our economic future.
        Sir?
        Mr. Byrd. Mr. Chairman, if I can just make one comment
    about your most recent remarks relative to the things that have
    not been done that could have been done to have improved our
    highway infrastructure and to have made America's commerce even
    that much stronger, I just want to bring light to the fact that
    oftentimes some of the things that are done are called
    burdensome regulations that have unintended consequences that
    impede the safe and efficient flow of goods throughout this
    country.
        We spoke earlier about this hours-of-service regulation,
    and I only referenced one component of that regulation, and
    that was the 34-hour restart. But another component would
    simply be that, in this new regulation, trucks all throughout
    America would have to break every 5 hours for 30 minutes. We
    don't have enough room to park trucks today for a 10-hour
    regulation. And we are concerned as an industry, where do the
    trucks park, where do they go? And does a 30-minute break time
    in a 5-hour span come to be an hour or an hour and a half
    because drivers are looking for places to park those vehicles?
        So I would just call attention to the fact that oftentimes
    some of the things we do have unintended consequences and
    impede the flow of America's goods.
        The Chairman. I understand that, and your objection is duly
    noted. I am trying to think on a larger scale here. I am not
    thinking about a rule or a regulation, an EPA, or anything of
    that sort. I am trying to think on a larger scale. And I think
    we have to.
        The hearing is adjourned. And you have all been terrific.
        [Whereupon, at 4:11 p.m., the hearing was adjourned.]
                                A P P E N D I X

              Prepared Statement of the American Chemistry Council
        The American Chemistry Council (ACC) is submitting this statement
    for the record for the Senate Committee on Commerce, Science and
    Transportation hearing ``Expanding the Panama Canal: What Does it Mean
    for American Freight Infrastructure'' on April 10, 2013.
        The ACC represents the world's leading companies in the business of
    chemistry, a $760 billion enterprise and one of America's most
    significant manufacturing industries. Our members apply the science of
    chemistry to make innovative products that make people's lives better,
    healthier and safer. Chemical products are in 96 percent of
    manufactured goods, and are the building blocks of the modern world.
    The industry employs 800,000 Americans in skilled, high wage jobs, with
    average annual salaries over $83,000, which is 41 percent higher than
    the average manufacturing wage. Chemistry is also a highly capital
    intensive industry, and it finances over $33 billion in capital
    investments annually, including structures and equipment, and over $56
    billion in research and development.
    The Chemistry Renaissance in the United States
        The business of chemistry is set to expand dramatically in the
    United States with the discovery of vast new supplies of shale gas.
    America's chemical companies use ethane, a natural gas liquid derived
    from shale gas, as a feedstock in numerous applications. Additionally,
    natural gas is being used to power chemical facilities, and ample
    supplies are rapidly lowering U.S. production costs. After years of
    high, volatile natural gas prices, the availability of cheap and
    abundant shale gas has created a competitive advantage for domestic
    chemical producers, and will lead to new investment and growth. ACC
    estimates that more than 400,000 new jobs and $132 billion in new
    economic output could be realized with a modest increase in the natural
    gas supply.
    Chemical Products Exports
        The business of chemistry accounts for 12 percent of U.S. exports,
    $187 billion annually, and it is the largest exporting sector in the
    United States. Boosting U.S. exports is a top priority for the chemical
    sector, and ACC has advanced a five-point plan to increase exports
    based on key policy changes in the areas of trade, energy, regulation,
    transportation and tax. Sustainable export growth depends on getting
    key policies and regulations right, and ACC looks forward to providing
    Congress with the industry's input on this important topic. Please
    visit http://www
    .americanchemistry.com/Policy/Trade/Keys-to-Export-Growth-for-the-
    Chemical-Sector.pdf to view the full report.
        Improvements to the Panama Canal should be a positive influence on
    this national effort to enhance our exports. The increased capacity of
    the Panama Canal will be a positive for the chemical industries'
    ability to move its products efficiently around the world. Added
    capacity and larger vessels should help reduce transportation costs for
    the industry, giving the U.S. a competitive global advantage as a place
    to manufacture. However, we encourage policymakers to closely monitor
    U.S. ports as they prepare for the larger vessels and the associated
    increased flows to ensure that the necessary land-based infrastructure
    is in place to handle the resulting traffic levels.
    Growing Exports by Fixing America's Freight Infrastructure
        Chemical manufacturers are one of the Nation's largest shippers,
    moving over 847 million tons of products every year. Rail provides a
    vital link for U.S. chemical manufacturers to reach the global market
    and, for many chemicals rail is the only economically viable choice for
    transportation in both interstate and international commerce. Many ACC
    members depend on the Nation's railroads to move a wide array of
    products, including plastics, chlorine, fertilizers, bulk
    petrochemicals, and industrial chemicals. The chemical industry shipped
    186 million tons of products by rail in 2010 with at least 14 million
    tons of those shipments headed directly to ports and borders for
    export.
        This means that the success of the chemical sector in the United
    States is inexorably tied to our freight rail infrastructure, as
    transportation costs have a large influence on America's relative
    attractiveness as a manufacturing location. In 2012, the chemical
    industry paid over $9 billion in rail transportation costs, and has
    seen rapid increases in rail rates over the last decade. Between 2005
    and 2010, there was a 77 percent increase in premium rail rates despite
    the concurrent recession, according to a recent study conducted on
    behalf of ACC. Likewise, 27 percent of ACC members reported that rail
    transportation issues have hindered their own domestic investments. The
    full studies and summaries can be found at http://www
    .americanchemistry.com/RailResearch. ACC strongly encourages
    legislators to closely examine these trends to ensure that the
    manufacturing renaissance is not undermined by policies that protect
    railroads from competing with each other.
        The President's Exports Council stated that ``America's
    transportation infrastructure is also America's export infrastructure''
    and listed Surface Transportation Board (STB) reform involving rail
    competition as one of the steps needed to enhance exports. We believe
    policy reforms at the STB will reduce the need for government
    regulation of the freight rail industry by strengthening market forces
    and increasing access to multiple railroads. Despite dramatic changes
    and consolidation in the rail industry, the STB has not been
    reauthorized since its inception in 1995. ACC encourages the Commerce
    Committee to modernize the STB, empowering the agency to allow
    competition and market forces to flourish in the railroad industry.
        We appreciate the opportunity to offer our views on an issue that
    is critical to the growth of our industry in the United States, and our
    Nation's economy. We hope that we continue to work with you to help
    build a freight infrastructure that will meet the expanding needs of
    the country now and well into the future.
                                     ______

    Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
                                 John Vickerman
        Question 1. The Panama Canal is scheduled to open to larger vessels
    in 2015. East Coast ports like the Port of New York and New Jersey are
    rapidly preparing port infrastructure to accommodate larger Panamax
    vessels. In your assessment, which ports are the Panamax vessels most
    likely to call on?
        Answer. As indicated in my remarks above to other QFR responses, I
    believe there may be two kinds of vessel impacts associates with the
    Panama Canal Third Lane Improvement Program:

       Larger Container Vessel Impacts: (up to 12,600 TEUs from the
            current 4,800 TEU Panama Canal vessel capacity). I believe
            larger container vessel will transit the Panama Canal and the
            new vessel work horse for the Canal may well be container
            vessels in the 9,000 to 12,000 TEU range. These larger
            container vessels will be deployed to gateway ports in North
            America with superior landside multimodal seamless logistical
            access to regional consumption load centers like Chicago (if
            Chicago was a port it would be the largest port in the U.S.),
            Houston, Atlanta and New York regional population and
            consumption areas. However even larger vessel, perhaps in the
            16,000 to 18,000 TEU range may well be deployed to the emerging
            new transhipment port hubs planned at both entrances of the
            Panama Canal and especially at the Western Entrance to the
            Canal.

       Smaller Transhipment Feeder Container Vessel Impacts: The
            emerging future impact not only of the expanded Panama Canal
            but the additional related improvements being invested in the
            new Panama Canal like new port transhipment port infrastructure
            at the Canal entrances, new barge and RO/RO vessel services
            within the Canal, new Canal Logistics Parks adding value to
            international transhipment operations, new LNG Vessel Bunkering
            capabilities within the Canal, etc. may well be dramatically
            larger numbers of smaller feeders vessels to and from the U.S.
            to Panama's transhipment centers.

        Question 2. When can ports expect to see freight volume increases?
        Answer. As indicated in previous QFR responses, I do not believe
    there will be a ``big surge'' or ``tsunami'' in cargo instantaneously
    created at the opening of the Panama Canal Third Lane Expansion Program
    (mid to late 2015). However, over time and definitely within the first
    several years of the Canal's Expansion Program opening we will begin to
    experience continuing greater maritime freight flows through the Panama
    and the Suez Canals to North America.

        Question 3. Are East Coast ports investing enough in our ports and
    surrounding infrastructure to be ready for the Panama Canal expansion?
        Answer. The leadership in many East Coast ports, particularly New
    York, Baltimore, Virginia, Savanah and selective Florida ports is
    investing in systemic intermodal and multi-modal infrastructure
    improvements that will make the U.S. ready for the eventual increased
    freight flows through the Panama Canal. Yet these investments are not
    without flaws, limitations and inconsistencies with overall systemic
    national freight system needs and requirements.

        Question 4. The U.S. has no strategic national freight plan to
    guide Federal investments. However, the ``Moving Ahead for Progress in
    the 21st Century Act'' (MAP-21) requires the Department of
    Transportation to create a national plan. What key areas should the
    Department address to ensure that Federal freight investments are
    prioritized to more efficiently and effectively move goods across all
    freight modes?
        Answer. I have addressed some of my concerns in earlier QFR
    responses to other Senators. I am pleased that the U.S. will finally
    initiate Federal programs that will lead toward a true National Freight
    Policy and an implementation of a proactive Freight Mobility Strategic
    Plan. The U.S. needs a multi-modal/intermodal National Freight Policy
    that could lead to rationalizing and optimizing our current multi-modal
    freight flows that must continue beyond the end of Fiscal Year 2014. In
    my opinion, Federal policy should focus on elimination of ``modal
    system impediments'' and provide incentives for multi-modal/intermodal
    investments which could possibly include the following examples:

       Tax incentives

       Tax credits

       Streamlining and simplifying of environmental regulations of
            multimodal/intermodal project permit timing

       Expansion of State Infrastructure Banking instruments to
            foster intermodal investments

       Pinpoint chokepoints within today's freight logistics supply
            chain system and investment in the elimination of the
            chokepoints without concerns for creating winners or losers in
            terms of state contributions

       Provide incubator investment to incentivize intermodal/
            multi-modal investment

        Question 5. Chairman Rockefeller and I have introduced the
    ``American Infrastructure Investment Fund Act,'' which would establish
    financing and grant programs at the Department of Transportation to
    leverage private dollars to advance large-scale, critical
    infrastructure projects. Will current Federal and state investments be
    able to cover the cost of building infrastructure to address freight
    needs in the U.S., especially in light of the Panama Canal expansion?
        Answer. In my opinion no. Senator, the bill introduced by you and
    Senator Rockefeller, the ``American Infrastructure Investment Fund
    Act'' is, as I understand it, an important strategic legislative effort
    to establish a $5 billion fund that could provide incentives for
    investments in critical transportation projects all across the U.S. by
    providing eligible projects with financial assistance which is
    undoubtedly needed for the U.S. to compete more effectively in the
    global marketplace. This legislation could also be used to improve the
    efficiency of a national or regional transportation network by
    improving the condition, performance, or long-term cost structure of
    existing infrastructure.

        Question 6. If not, how would incentivizing private investment help
    us meet these infrastructure needs?
        Answer. Incentivizing private sector investment in a Public Private
    Partnership (PPP) is exactly what is needed to initiate and incubate
    needed competitive future strategic U.S. intermodal/multi-modal freight
    projects. Many times there are insufficient funds available for initial
    planning and design of very worthwhile strategic intermodal/multi-modal
    projects. Incentives like the ``American Infrastructure Investment Fund
    Act'' could greatly help propel these needed projects forward. It is
    important that every project undertaken meets the litmus test of
    demonstrating a substantive real ``value added'' logistics benefit to
    the National intermodal/multi-modal systemic freight system. Thus the
    overarching objectives and resulting project funds as a result of this
    legislation must be to invest only in transportation projects of
    regional and national significance that provide measurable improvements
    and quantifiable productivity enhancements to the economic
    competitiveness of the United States.
                                     ______

       Response to Written Questions Submitted by Hon. Maria Cantwell to
                                 John Vickerman
        Question 1. As you know, the U.S. Department of Transportation
    (USDOT) announced the creation of a Freight Policy Council made up of
    senior Departmental leadership in August 2012. The Council is charged
    with developing a national multi-modal freight strategic plan and
    implementing other freight provisions included in Moving Ahead for
    Progress in the 21st Century (MAP-21). More recently, the application
    process closed for a new National Freight Advisory Committee (NFAC)
    that will bring key freight stakeholder input into the USDOT decision-
    making process. I've been proud to have worked with Secretary LaHood to
    bring these steps to fruition, but personally believe there is more to
    be done. Do you believe these steps will lead USDOT to have a more
    multi-modal perspective on freight mobility?
        Answer. I am pleased that the U.S. will finally initiate Federal
    programs that will lead toward a true National Freight Policy and an
    implementation of a proactive Freight Mobility Strategic Plan. The U.S.
    desperately needs an intermodal/multi-modal National Freight Policy
    that could lead to rationalizing and optimizing our current multi-modal
    freight flows and investments creating a world class competitive
    platform for the US.
        However, I question if the new programs will lead the USDOT to a
    robust multi-modal understanding and ability to cut across mature
    transport modal ``stove pipes'' for the benefit of freight mobility and
    effectiveness for shippers and beneficial cargo owners (BCOs). I am
    reminded of the failed internal restructuring of the USDOT organization
    (ONEDOT) that attempted to reorganize the USDOT into a crosscutting
    multimodal structure but could not overcome the industry's and USDOT's
    transport modal biases.
        Regarding the National Freight Advisory Committee (47 voting
    members) it is noted that only three significant U.S. Ports are
    represented (Miami-Dade County (Port of Miami); Port Authority of New
    York and New Jersey; and Port of Houston). Will this committee and its
    recommendations really be truly multimodal or will the proceedings
    revert to the usual highway truck centric thinking? Shipping freight
    via our gateway ports, rail and inland waterways is typically far more
    efficient and less polluting way to move goods, while taking trucks off
    our congested roadways.
        The recently signed new bipartisan transportation reauthorization
    bill, the ``Moving Ahead for Progress in the 21st Century Act'' (``MAP-
    21''; P.L. 112-141) or MAP-21 includes a number of important provisions
    to improve the condition and performance of the national freight
    network and support investment in freight-related surface
    transportation projects. The $109 billion, two-year bill does not
    significantly alter total funding from the previous authorization, but
    it does include many significant reforms. I have high hopes and
    expectations for the success of MAP-21.

        Question 2. What more needs to be done on a Federal policy level to
    recognize the importance of safe and efficient goods movement to
    America's economic success?
        Answer. In my opinion, Federal policy should focus on elimination
    of ``modal system impediments'' and provide incentives for multi-modal/
    intermodal investments which could possibly include the following
    examples:

       Tax incentives

       Tax credits

       Streamlining and simplifying of multimodal/intermodal
            project permit timing

       Streamlining and simplifying of environmental regulations of
            multimodal/intermodal project permit timing

       Expansion of State Infrastructure Banking instruments to
            foster intermodal investments

       Pinpoint chokepoints within today's freight logistics supply
            chain system and investment in the elimination of the
            chokepoints without concerns for creating winners or losers in
            terms of state contributions.

       Provide incubator investment to incentivize intermodal/
            multi-modal investment

        While the Federal Government has historically worked in cooperation
    with U.S. Public Port Authorities to maintain and strengthen America's
    transportation infrastructure, in recent years the Federal Government
    has fallen behind in maintaining that partnership agreement.
        The American Society of Civil Engineers (ASCE) has recently
    reported that America's ports need greater investment from all levels
    of government as well as by the private sector in order to protect
    hundreds of thousands of jobs and trillions of dollars of investment.
    Making robust competitive investments in U.S. gateway ports will
    improve their efficiency, productivity and capacity. Fully funding the
    USDOT MARAD Port Infrastructure Development Program could be a step in
    the right direction.
        The MARAD program as envisioned would involve planning and
    engagement with stakeholders to increase public and private investment
    in ports and integrating port authority planning with Metropolitan
    Planning Organizations (MPOs), State DOTs, and other regional planning
    councils, as well as assisting ports in securing financing sources to
    implement sound infrastructure investment plans

        Question 3. As you know, Moving Ahead for Progress in the 21st
    Century (MAP-21) expires at the end of Fiscal Year 2014. As Congress
    begins to turn its eye towards the next surface transportation
    reauthorization, what do you think are the top three Federal policy
    priorities/programs that we should include to assist the efficient and
    safe movement of intermodal freight?
        Answer. The surface transportation bill, Moving Ahead for Progress
    in the 21st Century, or MAP-21 includes a number of provisions to
    improve the condition and performance of the national freight network
    and support investment in freight-related surface transportation
    projects that must continue beyond the end of Fiscal Year 2014.
        The top Federal freight transportation priorities should include:

       Solve the Harbor Maintenance Trust Fund (HMTF) lack of
            funding for the Nation's harbor maintenance needs and cease use
            of the fund for Washington's unrelated programs. Perhaps this
            condition is the reason we have has so many ear marks for
            dredging projects since the HMTF was ``unavailable'' for port
            harbor maintenance.

       Solve the lack of severely needed investment and maintenance
            in the Nation's inland waterway system. Revitalize the Inland
            Waterway Trust Fund.

       Provide legislation that will truly cut across modal ``stove
            pipe'' impediments and result in increased intermodal/
            multimodal freight capacity and productivity for the Nation.
            The world's global marine ocean carriers and international
            terminal operators do not use North America as a ``best case''
            example. We continue to lack substantial port terminal
            automation. Our throughput productivity does not come close to
            world standards.

        Question 4. I'm sure everyone would agree that mainline capacity--
    whether for waterways, highways, or rail--is important to the movement
    of goods. But many major freight bottlenecks occur in the ``last mile''
    as goods are arriving to, or leaving, a major transfer point. Do you
    believe that last mile and intermodal connections should be an integral
    part of Federal freight policy or should they be considered more of a
    state and local transportation policy issue?
        Answer. Yes, the last mile of intermodal/multimodal connectivity is
    very important to the overall freight system. However, focusing on the
    ``last mile'' to the detriment of, or in the absence of improving the
    entire freight system improvements would be meaningless.

        Question 5. Do you believe Federal freight policy accurately
    captures the importance of last mile and intermodal connections? If
    not, what additional steps should be taken?
        Answer. Properly, and consistently measuring the productivity and
    throughput capacity for each element of the freight logistics system
    and making improvements in the entire system at key choke points in the
    transport logistics system will bring true systemic freight
    improvements. The national and statewide freight systems are like an
    ``analogous pipeline'' . . . why connect different diameter pipes and
    expect the throughput of the largest pipe segment. The system will be
    dictated by the smallest diameter analogous pipe segment (the choke
    point). Investing in these systemic chokepoints is the only rational
    way forward. Although this chokepoint elimination strategy will
    undoubtedly create some winners and losers in the process particularly
    at the local and regional level, the overall freight logistics system
    will be dramatically improved.

        Question 6. Do you believe there is a stronger Federal role needed
    in coordinating planning of or contributing funding to addressing major
    bottlenecks at last mile and intermodal connectors? If yes, what
    additional steps should be taken?
        Answer. A stronger Federal role in coordinating strategic national
    systemic freight planning in addressing major national bottlenecks is
    definitely needed. The effort needs to go beyond just ``last mile and
    intermodal connector programs''. Please refer to the QFR answers above.

        Question 7. Do you believe that states, local governments, and
    industry have the appropriate resources to address last mile and
    intermodal connection infrastructure needs over the next decade? If
    not, what would an appropriate Federal role look like?
        Answer. In large measure we have the appropriate resources and
    planning skills to address these issues. Intermodal and multimodal
    terminal automation is in its infancy in North America. From a port
    perspective, Europe is in its fifth generation of Automatic Guided
    Vehicle (AGV) technology and the U.S. is in our ``Zeroth'' generation
    with new fully automated port terminals just now emerging on the West
    Coast Southern California region this year. States, local governments,
    and industry must work with our transport labor unions, particularly
    the longshoremen's labor components to achieve improvements . . . ``a
    rising tide will lift all boats.''

        Question 8. Several weeks ago at the annual conference of a
    nationwide trade and freight mobility advocacy group, Mark Szakonyi,
    Associate Editor of the Journal of Commerce, stated that, ``Our readers
    question how well DC understands our business. Many in Congress believe
    there will be a big surge in cargo volumes to the East Coast with the
    widening of the Panama Canal. Many of my readers, however, believe
    there will be zero to single digit growth at most.'' In light of those
    comments, do you think there is a disconnect between policymakers in
    Washington, D.C. and industry on the possible effect of the Panama
    Canal? Why or why not?
        Answer. Yes, I do believe there is a distinct disconnect between
    the maritime and intermodal freight industry and our policymakers in
    Washington, D.C.
        I do not believe there will be a ``big surge'' or ``tsunami'' in
    cargo instantaneously created at the opening of the Panama Canal Third
    Lane Expansion Program (mid to late 2015). However, over time and
    definitely within the first several years of the Canal's Expansion
    Program opening we will begin to experience continuing greater freight
    flows through the Panama and the Suez Canals.
        Please consider this for the Panama Canal Expansion Program:

       I am concerned about potential new bottlenecks in the
            expanded Panama Canal. Although the majority of future freight
            cargo flow through the Panama Canal Expansion will be via
            container vessels with increases in vessel size from 4,800 TEUs
            to 12,600 TEUs other large vessel sizes will increase as well:

         Crude Oil Tankers from 0 percent of the current fleet
                now to 42 percent after the Canal Expansion

         LNG vessels from 10 percent of the current fleet now
                to 90 percent after the Canal Expansion

         Dry Bulk vessels from 55 percent of the current fleet
                now to 80 percent after the Canal Expansion

         IF: West Coast Ports & Rail become/remain congested .
                . . and East Coast Ports continue to accommodate the big
                ship draft requirements . . . and the Panama Canal cost
                remains price competitive with Suez Canal . . . and Freight
                cargo trade volumes continue to Increase . . . and if
                Canal's infrastructure keeps pace with Growth . . .

         Then: I believe Global Ocean Marine Carriers will
                route as much traffic via the expanded Panama Canal as it
                can handle . . .

        Question 9. Nationwide, ports, the transportation industry, and
    shippers are taking a variety of steps to prepare for the impact of the
    Panama Canal--whether to increase capital asset flexibility, port
    infrastructure, or addressing intermodal bottlenecks. Do you believe
    that those steps would have occurred even if the Panama Canal was not
    being widened--that is to say, could intermodal growth (recent and
    projected) be the major driver of those improvements instead?
        Answer. Yes to some degree. The expansion of the Panama Canal has
    presented unique issues such as the need for 50 foot channel depths and
    more capable port and intermodal rail terminal throughput capabilities.
    Some impacts from the Panama Canal Expansion are yet to be fully
    realized and appreciated in North America. I believe that another less
    talked about impact of the Panama Canal Expansion program will be the
    potential for significant increases in the number of feeder vessels
    generated by the emergence of the Panama Canal as a major transhipment
    zone for Latin and South America. In fact I believe Panama will become
    the Singapore of Latin America. Substantial new transhipment port
    development is planned for the Western entrance to the Panama Canal
    that could nearly double the entire throughput of the Panamanian port
    system in the near term.

        Question 10. Mr. Vickerman, as an expert in intermodal issues, I'm
    interested to hear your opinion on establishing a revenue stream to
    specifically fund multi-modal transportation infrastructure. Do you
    believe that public-sector investment in multi-modal transportation
    assets--whether intermodal connectors, grade separations, access
    improvements, or last-mile connections--is adequate to serve existing,
    new, and planned intermodal facilities?
        Answer. No. I believe that continuing international trade increases
    through our gateway ports will out strip our collective intermodal/
    multimodal need and requirements. I am also concerned about the
    consistency and deliberate investment in chokepoints in our freight
    systemic system which may be hampered by politics and trivial
    investments without leveraging our limited resources.

        Question 11. Do you believe that a new funding stream should be
    established specifically to improve multimodal freight infrastructure?
    If not, would you support a so-called ``set-aside'' of existing revenue
    collections?
        Answer. I would support a new dedicated secure funding stream
    specially for improvements to our multi-modal freight system and
    especially to improve our gateway port productivity.

        Question 12. Mr. Vickerman, you mentioned in your testimony that
    ``Three days ago, Maersk Lines, the largest ocean container carrier in
    the world, announced it had stopped using the Panama Canal to transport
    goods from Asia to the U.S. East Coast. As reported by their President
    `Larger container ships will help the company to generate greater
    profits by using the Suez Canal'.'' How much do you think regional
    stability and the threat of piracy will affect the potential for
    increased shipments from Asia through the Suez Canal bound for the U.S.
    East Coast?
        Answer. I believe this trade route for the U.S. East and Gulf
    Coasts is essential to not only the U.S. economy but indeed is a
    jugular critical issue for the European to Asia trade exchange.
    Regional stability in the Suez region has always been a vital concern
    for international shipping. The threat of piracy has also been a long
    time concern. Recently, several weeks ago, an RPG attack on a COSCO
    container vessel in the Suez entering Port Said has heightened industry
    concerns regarding Suez Canal continued stability and the resilience of
    the Suez Canal to remain open and operational.
                                     ______

        Response to Written Question Submitted by Hon. Amy Klobuchar to
                                 John Vickerman
        Question. Mr. Vickerman, farmers and businesses in Minnesota rely
    heavily on the inland waterway system to transport soybeans, corn, and
    other commodities from Minnesota to terminals in southern Louisiana.
    They're then loaded onto an ocean vessel, transit the Panama Canal, and
    are eventually delivered to trading partners in Asia. Minnesota
    businesses have developed strong trading partnerships with countries
    like China, Singapore, and Korea and will increasingly rely on the
    inland waterway system to move their product. Will the Panama Canal
    expansion project unlock greater capacity for American companies to
    trade in places like Asia, and how best can we spread the word to
    American businesses so they can fully take advantage of new markets?
        Answer. The general answer is yes, please refer to my other QFR
    Responses. The best way, in my opinion, to spread the word to American
    businesses is through a proactive and interactive professional
    educational outreach efforts coordinated through industry associations
    and professional industry groups.
        Your preamble to this question, I fully endorse and understand.
    Three times in the last 18 months I have traveled to Japan, China, and
    Indonesia on behalf of the U.S. Soybean Export Council (USSEC) and U.S.
    Soybean interests to educate the buyers of U.S. soybeans (particularly
    ``Identity Preserved Soybeans'') as well as U.S. Grain on the dynamics
    of shipping U.S. Agricultural products to Asia. The USSEC and U.S.
    Grain interests have participated in multiple overseas conferences and
    meetings to provide the Asian customer, on his own turf, with a full
    understanding of how U.S. Agricultural products are shipped and the
    logistic dynamics associated with the shipment of U.S. Agricultural
    product. This educational effort was in addition to and in concert with
    the U.S. Agricultural product production education. These international
    outreach educational venues have been received by the foreign buyers
    and processors with great appreciation and interest.
        An emerging beneficial program that could greatly expand and unlock
    greater capacity for American companies to trade in places like Asia,
    is the United Soybean Board (USB) Freedom to Operate Action Team
    Initiative that will conduct an analysis examining the feasibility of a
    privately financed process for dredging and deepening the lower
    Mississippi River to 50 foot depth in order to substantially increase
    the economic viability of soybean and grain exports through the lower
    Mississippi River region.
                                     ______

       Response to Written Questions Submitted by Hon. Maria Cantwell to
                                 Jeff J. Keever
        Question 1. As you know, the U.S. Department of Transportation
    (USDOT) announced the creation of a Freight Policy Council made up of
    senior Departmental leadership in August 2012. The Council is charged
    with developing a national multi-modal freight strategic plan and
    implementing other freight provisions included in Moving Ahead for
    Progress in the 21st Century (MAP-21). More recently, the application
    process closed for a new National Freight Advisory Committee (NFAC)
    that will bring key freight stakeholder input into the USDOT decision-
    making process. I've been proud to have worked with Secretary LaHood to
    bring these steps to fruition, but personally believe there is more to
    be done. Do you believe these steps will lead USDOT to have a more
    multi-modal perspective on freight mobility?
        Answer. Yes, we do. The Freight Policy Council and NFAC certainly
    have the potential to succeed in gaining additional perspectives from
    stakeholders to identify critical needs that can be incorporated into
    the decision-making process. The Committees can formally provide in-
    depth and expanded multi-modal perspectives from different sectors of
    the freight industry which can assist policy makers in hearing all
    sides of the issue.

        Question 2. What more needs to be done on a Federal policy level to
    recognize the importance of safe and efficient goods movement to
    America's economic success?
        Answer. There is much more to be done on a Federal policy level to
    recognize the importance of safe and efficient goods movement to
    America's economic success. While not all inclusive, several critical
    components of recognizing/incorporating the importance of competitive
    freight movement include:

       Decoupling the needs of freight from overall population-
            based congestion measures. While there is certainly a
            relationship between where population resides and where freight
            is consumed, that ignores critical transportation system
            components having a direct effect on U.S. competitiveness in
            the global marketplace. Getting agricultural and commodity
            exports to market continues to increase in importance as
            emerging economies raise their standards of living and consume
            more. Having competitive exports is a key to reducing trade
            imbalances.

       International gateways such as marine terminals and cargo
            handling airports need to be efficient and have seamless
            intermodal connections across the Nation. Many ports of entry
            evolved near heavily populated urban locations. Last miles,
            multi-modal connections and efficient freight routing systems
            have not kept pace.

       A better articulation of having an efficient freight system
            and its value to the U.S. population is needed. The cost of
            infrastructure is easily disseminated along with views on how
            it is funded, be it increased revenues from taxes and users
            fees such as tolls or other means. The costs (``hidden taxes'')
            that all would bear because of inefficient infrastructure come
            from the increased costs of basic goods and services. The fact
            that these costs often exceed the investment in infrastructure
            has been poorly communicated to the public.

        Question 3. As you know, Moving Ahead for Progress in the 21st
    Century (MAP-21) expires at the end of Fiscal Year 2014. As Congress
    begins to turn its eye towards the next surface transportation
    reauthorization, what do you think are the top three Federal policy
    priorities/programs that we should include to assist the efficient and
    safe movement of intermodal freight?
        Answer. The uncertainty that comes from Congress' inability to pass
    a long-term Highway Bill is detrimental to the freight industry and the
    private sector. A clear Federal policy, accelerated processes, and a
    dedicated funding stream are needed to assist the efficient and safe
    movement of intermodal freight.

        Question 4. I'm sure everyone would agree that mainline capacity--
    whether for waterways, highways, or rail--is important to the movement
    of goods. But many major freight bottlenecks occur in the ``last mile''
    as goods are arriving to, or leaving, a major transfer point. Do you
    believe that last mile and intermodal connections should be an integral
    part of Federal freight policy or should they be considered more of a
    state and local transportation policy issue?
        Answer. If the U.S. is going to increase its competitive standing
    in the global economy, last mile and intermodal connections should be
    an integral part of Federal freight policy, not state or local
    transportation policy. From a Federal perspective, ``last mile''
    transportation investment is a small fraction of a total systems cost,
    but for localities these projects can break the bank. Costs can
    increase exponentially when undue delays, inconsistent performance and
    lack of timely access occur in last miles. Often, the view is only on
    the increased cost of transportation, which can be considerable. It is
    often ignored that U.S. companies tie up billions of dollars in cash to
    maintain on-hand inventories to combat supply chain uncertainty. Those
    are much needed funds that can be reinvested in America.

        Question 5. Do you believe Federal freight policy accurately
    captures the importance of last mile and intermodal connections? If
    not, what additional steps should be taken?
        Answer. Many critical last miles are not appropriately acknowledged
    or addressed at the Federal level, often because they are classified as
    state or local facilities, making them difficult to gain public support
    for and fund. The U.S. has critical freight assets of national
    significance that should be incorporated into the Federal policy-making
    process.

        Question 6. Do you believe there is a stronger Federal role needed
    in coordinating planning of or contributing funding to addressing major
    bottlenecks at last mile and intermodal connectors? If yes, what
    additional steps should be taken?
        Answer. We believe that a stronger Federal role is needed in
    prioritizing and contributing funding to projects that address major
    freight bottlenecks at last mile and intermodal connectors because of
    the scale and expense of such projects. However the design and
    construction process should be coordinated by state or local government
    entities.

        Question 7. Do you believe that states, local governments, and
    industry have the appropriate resources to address last mile and
    intermodal connection infrastructure needs over the next decade? If
    not, what would an appropriate Federal role look like?
        Answer. States, local governments, and industry do not have the
    appropriate resources to address last mile and intermodal connection
    infrastructure needs over the next decade. The U.S. has certain assets,
    such as global gateways and high volume production points of
    commodities and goods, which should be incorporated into Federal policy
    to create a competitive system at the same level as the Federal
    interstate highway system.

        Question 8. Several weeks ago at the annual conference of a
    nationwide trade and freight mobility advocacy group, Mark Szakonyi,
    Associate Editor of the Journal of Commerce, stated that, ``Our readers
    question how well DC understands our business. Many in Congress believe
    there will be a big surge in cargo volumes to the East Coast with the
    widening of the Panama Canal. Many of my readers, however, believe
    there will be zero to single digit growth at most.'' In light of those
    comments, do you think there is a disconnect between policymakers in
    Washington, D.C. and industry on the possible effect of the Panama
    Canal? Why or why not?
        Answer. We do believe that there is a disconnect between
    policymakers in Washington, D.C. and industry on the possible effect of
    the Panama Canal, but there are also disconnects within the industry
    about the possible effects. Certainly the expansion will cause larger
    ships to come to the East Coast, but it will be a gradual process. We
    have been told consistently by ship lines that 8,000-10,000 TEU ships
    will be expected at ports that are prepared, and there will be a
    redistribution of cargo to the smaller ports.

        Question 9. Nationwide, ports, the transportation industry, and
    shippers are taking a variety of steps to prepare for the impact of the
    Panama Canal--whether to increase capital asset flexibility, port
    infrastructure, or addressing intermodal bottlenecks. Do you believe
    that those steps would have occurred even if the Panama Canal was not
    being widened--that is to say, could intermodal growth (recent and
    projected) be the major driver of those improvements instead?
        Answer. The Panama Canal expansion presents a tangible point that
    is measurable for considering U.S. needs, regardless of the Canal. As
    emerging trade with Asian countries outside of China increases the
    ``large ship'' advantage via the Suez Canal, more retail products will
    be imported. An efficient intermodal system is needed for retail in
    particular to reach the entire population. The Panama Canal presents a
    point on the calendar and an opportunity for the U.S. to address and
    take advantage of a need that exists now and will continue regardless
    of whether the Canal is expanded or not.

        Question 10. Mr. Keever, you mentioned in your testimony that ``If
    the U.S. is to regain its competitive edge in the world market, we need
    a robust national infrastructure supported by a clear National policy,
    accelerated processes, and a dedicated funding stream.'' As you know,
    there is no funding stream currently dedicated exclusively to
    multimodal freight mobility improvements. Can you please expand on what
    sort of dedicated funding stream you would support?
        Answer. The mechanics should be viewed as immaterial of the funding
    stream (user fees, tolls, tax revenues). It is well-documented that
    benefits to the Nation exceed the cost. We are in favor of funding that
    which both achieves the objective and does not unfairly burden one mode
    or segment, making them uncompetitive.

        Question 11. Do you believe that a new funding stream should be
    established specifically to improve multimodal freight infrastructure?
    If not, would you support a so-called ``set-aside'' of existing revenue
    collections?
        Answer. We would support either a new or ``set-aside'' funding
    stream specifically to improve multimodal freight infrastructure. A
    combination of funding mechanisms will be necessary to address freight
    mobility needs in the U.S., but these funding mechanisms should not
    disadvantage U.S. ports in their ability to remain competitive.
    Programs such as ``projects of national significance'' that was
    initiated under SAFETEA-LU'' work well for large freight projects. If a
    freight trust fund is created under surface transportation
    authorization to fund freight projects, it should be fully spent on
    freight transportation and not used for deficit reduction. Appropriate
    projects that are freight-related should still be eligible to compete
    for other Federal funding sources. We support alternative financing
    mechanisms like national and state infrastructure banks, the
    Transportation Infrastructure Finance and Innovation Act (TIFIA)
    program, and government bond financing. However, these mechanisms
    should:

       Specifically include port authorities as eligible
            applicants.

       Specifically include port-related infrastructure as eligible
            for funding.

       Complement rather than supplant freight infrastructure grant
            funding mechanisms.

       Ensure most major port projects can qualify within funding
            floors contained in legislation and that funding floors are not
            too high.
                                     ______

      Response to Written Questions Submitted by Hon. Roger F. Wicker to
                                 Jeff J. Keever
        Question 1. Taking into account, anticipated increases in vessel
    traffic for all ports as a result of ``displaced'' and ``feeder''
    traffic, what specific shoreside infrastructure investments should our
    country prioritize in order to ensure that all ports can benefit from
    an expanded Panama Canal?
        Answer. The U.S. East Coast is dotted with multiple ports that
    handle a combination or any one of a number of cargoes: containers,
    bulk, breakbulk, petroleum/natural gas, automobiles, coal, etc. Some of
    these ports are served strictly by trucks, others by rail and many are
    served by both. These ports are further differentiated by whether they
    are shallow or deep-draft facilities--do they have deep or shallow
    water? It is probably safe to say that any of these facilities have
    sufficient water depth for the existing cargo they handle today, it is
    the potential future cargo volumes that will affect their existing
    channel depths.
        As the question of shore-side infrastructure investment is weighed,
    it is important to remember that not all of the East Coast ports need
    to be a major port, the cost of such an effort would be far too great.
    Any Federal money invested in transportation infrastructure to prepare
    for the opening of the Panama Canal will help, but it is my opinion
    that the money will have to be spent on projects that will provide the
    greatest return on investment and at those ports that serve the East's
    critical manufacturing and population centers.
        Investments in road and rail infrastructure are vital to the
    maritime cargo industry and the Nation's consumers. Moving freight off
    highways onto rail reduces congestion and pollution and saves fuel.
    Developing specific travel corridors for trucks helps the driving
    public and assures the on-time arrival of goods. Efficient,
    unobstructed road and rail access to markets ultimately saves money for
    the consumer.

        Question 2. How successful have Federal grant programs such as
    TIGER and the Rail Line Relocation grant programs been in helping ports
    prepare for post-Panamax ships and what changes need to be made in
    order to make them more effective?
        Answer. TIGER and RLR grants have been and continue to be
    significant sources of money when it comes to helping expand rail's
    capabilities. What is needed is more focus on funding for those ``last
    mile'' projects that link rail with critical port/truck/logistics hub
    infrastructure. Also falling in the last mile category is funding for
    and preservation of those projects that insure the health and
    development of short-line rail haulers that are often the critical link
    from a port to a larger collection point for cargo headed to multiple
    markets.
                                     ______

          Response to Written Question Submitted by Hon. Dan Coats to
                                 Jeff J. Keever
        Question. As you plan for the Panama Canal expansion, what efforts
    are you taking to work with agribusiness, like the soybean industry, to
    ensure the infrastructure is in place to meet increased demand for U.S.
    exports?
        Answer. The Port of Virginia has a long history of moving
    agricultural cargoes, from tobacco, to hardwoods harvested in the
    Blueridge Mountains, to grain and soybeans. Moreover in Virginia there
    are several private terminals that handle grain and other ag-related
    products and that business is growing. In fact, Perdue is showing
    significant interest in working with The Port of Virginia to develop a
    multimillion dollar import/export facility that would handle a
    significant amount of export grain.
        A trend The Port of Virginia continues to capitalize on is that of
    export grain moving in containers. For years Virginia, because of its
    competitive position and its rail connections to Midwest markets, has
    been a leader in the containerized grain exports. In short, we have the
    infrastructure in place and continue to look for ways--partners--to
    help expand this capability. A critical component of capturing this
    business is access to and expansion of our rail capabilities.
                                     ______

    Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
                              Edward R. Hamberger
        Question 1. The U.S. has no strategic national freight plan to
    guide Federal investments. However, the ``Moving Ahead for Progress in
    the 21st Century Act'' (MAP-21) requires the Department of
    Transportation to create a national plan. What key areas should the
    Department address to ensure that Federal freight investments are
    prioritized to more efficiently and effectively move goods across all
    freight modes?
        Answer. In order to ensure that Federal freight investments are
    prioritized to more efficiently and effectively move goods across all
    freight modes, it would be prudent for the Department of Transportation
    to focus on:

       Distinguishing between the country's needs of competitively
            moving freight within the U.S. and across the world, and
            population-based congestion. While there are points where
            population density that consumes goods and freight intersect,
            there are also many major commodity and manufacturing
            consumption and productions where the relationship to
            population is not direct.

       When discussing transportation infrastructure needs and the
            investments required, start to include the costs to the Nation
            in increased prices for goods (the ``hidden tax'') and cash
            that could be reinvested but is instead unnecessarily tied up
            in inventories because of inefficient supply chains.

        Question 2. Chairman Rockefeller and I have introduced the
    ``American Infrastructure Investment Fund Act,'' which would establish
    financing and grant programs at the Department of Transportation to
    leverage private dollars to advance large-scale, critical
    infrastructure projects. Will current Federal and state investments be
    able to cover the cost of building infrastructure to address freight
    needs in the U.S., especially in light of the Panama Canal expansion?
        Answer. We do not believe there is currently enough Federal and
    state investment to cover the cost of building infrastructure to
    address freight needs in the U.S. The current $60 billion to $80
    billion backlog of authorized but unfunded Army Corps Civil Works with
    just over $5 billion planned for FY13 distribution points directly to
    these funding shortcomings.

        Question 3. If not, how would incentivizing private investment help
    us meet these infrastructure needs?
        Answer. If incentivizing private investment generated sufficient
    enough funds to make the needed infrastructure investment the obvious
    answer, the problem could be solved. At issue is structuring incentive
    programs where the public and private entities receive fair value. Not
    every investment can incorporate a toll or a fee where a private entity
    can calculate return on investment, liquidity and risk.

        Question 4. Many of the East Coast port cities, including New York,
    Miami, and Baltimore, are among the most congested cities in the
    Nation. With freight traffic expected to increase substantially in
    these areas, how important is it for the U.S. to invest in multi-modal
    freight infrastructure?
        Answer. It is critical for the U.S. to invest in multi-modal
    freight infrastructure to keep up with increasing freight traffic in
    many congested East Coast port cities. Investing in freight
    transportation infrastructure will make freight movement more efficient
    and cost-effective, which will provide direct economic benefits to
    businesses across the country and to the citizens at large.

        Question 5. Of the Federal investments that are already being made,
    is the U.S. investing effectively to get the best return?
        Answer. Although likely the answer is no, we are unable to fully
    answer this question in a quantitative manner without all of the data
    on existing Federal investments and returns.
                                     ______

       Response to Written Questions Submitted by Hon. Maria Cantwell to
                              Edward R. Hamberger
        Question 1. As you know, the U.S. Department of Transportation
    (USDOT) announced the creation of a Freight Policy Council made up of
    senior Departmental leadership in August 2012. The Council is charged
    with developing a national multi-modal freight strategic plan and
    implementing other freight provisions included in Moving Ahead for
    Progress in the 21st Century (MAP-21). More recently, the application
    process closed for a new National Freight Advisory Committee (NFAC)
    that will bring key freight stakeholder input into the USDOT decision-
    making process. I've been proud to have worked with Secretary LaHood to
    bring these steps to fruition, but personally believe there is more to
    be done. Do you believe these steps will lead USDOT to have a more
    multi-modal perspective on freight mobility? What more needs to be done
    on a Federal policy level to recognize the importance of safe and
    efficient goods movement to America's economic success?
        Answer. The Association of American Railroads has applied to be
    among the freight stakeholders included in the National Freight
    Advisory Committee process. These steps have the potential to enhance
    what has already been a strong commitment by this Administration to
    multi-modalism, evident particularly in the evaluation and selection
    process for TIGER grants. To date, several dozen projects that have
    received TIGER grant funding are associated in one way or another with
    freight railroads, and many of those projects are aimed at improving
    transportation performance by more effectively integrating various
    transportation modes.
        The history of America's freight railroad industry bears important
    lessons for today's policy leaders at both the Federal and state level.
    Prior to the Staggers Act of 1980, the Nation's railroad network
    suffered from many years of insufficient investment. The resulting
    infrastructure became increasingly unreliable, unsafe and undesirable
    as a mode of transportation for customers and shippers. Over the past
    30 years, however, that condition has been dramatically reversed,
    resulting in a freight rail network that is the envy of the world.
    Today, most people don't understand well enough the linkage between
    infrastructure and global competitiveness, or the long-term costs of
    deferred maintenance and repairs to transportation systems. Few
    understand how vital the transportation system is to delivering their
    paper and coffee in the morning. As the opportunity approaches in 2014
    to reauthorize MAP-21, leadership is needed on a bipartisan and
    bicameral basis to coalesce around transportation funding solutions
    that will meet the long-term infrastructure needs of the country.

        Question 2. As you know, Moving Ahead for Progress in the 21st
    Century (MAP-21) expires at the end of Fiscal Year 2014. As Congress
    begins to turn its eye towards the next surface transportation
    reauthorization, what do you think are the top three Federal policy
    priorities/programs that we should include to assist the efficient and
    safe movement of intermodal freight?
        Answer. As Congress moves toward the reauthorization of MAP-21, we
    recommend the following four priorities to assist in the efficient and
    safe movement of intermodal freight:

       The TIGER program or the comparable Projects of National and
            Regional Significance (PNRS) program have been important
            mechanisms for states to access Federal dollars to advance
            major capital projects, especially those related to freight
            movement. Freight railroads have been able to partner with
            states awarded TIGER or PNRS grants, adding private capital and
            resources to these projects to accelerate their completion.

       Distortions to the transportation infrastructure market
            should be reduced or eliminated by more closely tying the costs
            of the highway and bridge network--particularly the national
            freight highway network--to its users. Currently, the market
            for freight transportation is distorted because heavy trucks
            pay for less than 80 percent of the damages they are causing to
            road infrastructure. Freight railroads, on the other hand, pay
            entirely for the construction and maintenance of its
            infrastructure. This market distortion is only exacerbated when
            General Funds are transferred to the Highway Trust Fund. To
            date, some $55 billion has already been transferred to the HTF
            to make up for the lack of user fees raised. Without a
            revamping of HTF revenue streams, projections currently
            estimate that at least $10-15 billion annually will be needed
            in General Funds to fill the gap between revenue and outlays.

       The current environmental permitting process remains a
            challenge to the timely completion of capital projects needed
            to enhance the safe and efficient movement of freight.
            Environmental streamlining should remain a key priority during
            MAP-21 reauthorization.

       Preserve the FHWA section 130 program which provides funding
            to the states for highway-rail grade crossing improvements and
            seek ways to incentivize local communities to close or separate
            grade crossings where appropriate.

        Question 3. I'm sure everyone would agree that mainline capacity--
    whether for waterways, highways, or rail--is important to the movement
    of goods. But many major freight bottlenecks occur in the ``last mile''
    as goods are arriving to, or leaving, a major transfer point. Do you
    believe that last mile and intermodal connections should be an integral
    part of Federal freight policy or should they be considered more of a
    state and local transportation policy issue?
        Answer. Intermodal connections and attention to ``last mile''
    connections are critical elements of both state and national freight
    planning and policy. Understanding the components of an effective
    logistics supply chain that moves freight efficiently from producers to
    customers must be part of both a national and state framework. At the
    local level, for example, land use planning has been inadequate in
    appropriately accommodating the needs of freight carriers in all modes.
    Freight movement--whether in yards, intermodal facilities, ports, and
    other locales--must be sufficiently taken into account when planning
    land uses such as residential developments, schools, and recreation.
    Encroachment on railroad right of way, for example, can pose serious
    safety hazards. Given that local governments most often control land
    use planning, there remains an important role at both the national,
    state and local level to ensure the fluid movement of freight.

        Question 4. Do you believe Federal freight policy accurately
    captures the importance of last mile and intermodal connections? If
    not, what additional steps should be taken?
        Answer. It is too early to tell whether the Federal freight policy
    and planning requirements included in MAP-21 will result in an enhanced
    appreciation for last mile and intermodal connections.

        Question 5. Do you believe there is a stronger Federal role needed
    in coordinating planning of or contributing funding to addressing major
    bottlenecks at last mile and intermodal connectors? If yes, what
    additional steps should be taken?
        Answer. It is too early to tell whether the Federal freight policy
    and planning requirements included in MAP-21 will result in an enhanced
    appreciation for last mile and intermodal connections.

        Question 6. Do you believe that states, local governments, and
    industry have the appropriate resources to address last mile and
    intermodal connection infrastructure needs over the next decade? If
    not, what would an appropriate Federal role look like?
        Answer. Some intermodal connection infrastructure projects that are
    of national and regional significance in terms of freight movement
    could be too costly for a local government or state to fund.
    Consequently Federal funding awarded through a competitive
    discretionary grant process, like the TIGER program, is an appropriate
    approach for these needs.

        Question 7. Several weeks ago at the annual conference of a
    nationwide trade and freight mobility advocacy group, Mark Szakonyi,
    Associate Editor of the Journal of Commerce, stated that, ``Our readers
    question how well DC understands our business. Many in Congress believe
    there will be a big surge in cargo volumes to the East Coast with the
    widening of the Panama Canal. Many of my readers, however, believe
    there will be zero to single digit growth at most.'' In light of those
    comments, do you think there is a disconnect between policymakers in
    Washington, D.C. and industry on the possible effect of the Panama
    Canal? Why or why not?
        Answer. Frankly, railroads don't know which ports will be the
    ``winners'' and which will be the ``losers'' of this competitive
    battle, but railroads are working hard to be prepared no matter what
    the outcome is. In a June 2012 interview, in response to a question
    about the Panama Canal expansion, the CEO of Norfolk Southern said,
    ``We are preparing and planning so that if the traffic comes in from
    the East and needs to move inland, we'll be there to handle it. If the
    traffic comes in from the West and comes to a western gateway with one
    of the western carriers, we'll be ready to handle it.'' He was speaking
    on behalf of his railroad, but his statement applies equally to the
    rail industry as a whole and their capabilities to transport containers
    via rail intermodal service.

        Question 8. Nationwide, ports, the transportation industry, and
    shippers are taking a variety of steps to prepare for the impact of the
    Panama Canal--whether to increase capital asset flexibility, port
    infrastructure, or addressing intermodal bottlenecks. Do you believe
    that those steps would have occurred even if the Panama Canal was not
    being widened--that is to say, could intermodal growth (recent and
    projected) be the major driver of those improvements instead?
        Answer. That's a difficult question to answer. Clearly,
    globalization has been occurring for many years for reasons that have
    little or nothing to do with the Panama Canal. One result is large and
    continuing increases in the volumes of international trade. Those
    increases would be occurring even without the canal expansion. That
    said, the expansion of the canal adds new complexities--and new
    challenges--that have to be addressed. At the end of the day, ports
    that offer shippers the best value for their money, all things
    considered, will see higher traffic volumes and market share growth,
    while ports that lag behind will see lower traffic volumes (or traffic
    volumes that increase less rapidly than they otherwise would) and lower
    market share.

        Question 9. Mr. Hamberger, as you mentioned in your testimony, the
    growth of intermodal cargo has spurred millions of dollars of private-
    sector investment nationwide to handle the movement and distribution of
    containerized cargo. Do you believe that public sector investment in
    multi-modal transportation assets--whether intermodal connectors, grade
    separations, access improvements, or last-mile connections--is adequate
    to serve existing, new, and planned intermodal facilities? Do you
    believe that a new funding stream should be established specifically to
    improve multi-modal freight infrastructure such as that which I've
    outlined above? If not, would you support a so-called ``set-aside'' of
    existing revenue collections?
        Answer. The Association of American Railroads has not taken a
    position on the issue of revenue streams for Federal public
    transportation spending. That said, railroads do not support freight
    fund proposals that would require freight railroads or rail shippers to
    pay into such funds. Unlike airlines, trucks, and barges, freight
    railroads already pay the vast majority of the costs of building and
    maintaining their infrastructure. It wouldn't make sense for railroads
    or their customers to pay into a ``freight fund,'' only to have the
    money--minus inevitable administrative costs--doled back out by the
    government. Railroads should not be required to assess or collect fees
    going into a freight fund, and no state and local government should
    impose such fees unless the parties involved agree otherwise.
                                     ______

         Response to Written Questions Submitted by Hon. John Thune to
                              Edward R. Hamberger
        Question 1. Do you expect a significant increase in the amount of
    agricultural products being shipped by rail as a result of the canal
    widening and what are your members doing to plan for such increases?
    Are there particular commodities that are likely to see an increase in
    traffic?
        Answer. As noted in my testimony, the interplay of a wide variety
    of factors, such as the time sensitivity of the freight being carried,
    inventory carrying costs, fuel costs, time in transit, canal toll fees,
    port fees, inland transportation costs, and more, will determine
    traffic patterns and port usage in the post-Panama Canal expansion
    world. Railroads do not know--we don't think anyone does, at this
    point--how these competitive battles will turn out, or how the canal
    expansion will affect the quantity of any particular commodity that
    will be exported. That said, our Nation's freight railroads are in a
    good position now and are working diligently to be in an even better
    position in the future, to offer the safe, efficient, cost-effective
    service that their customers need no matter where those customer are,
    no matter what the freight is, and no matter where the freight is
    going. America's freight railroads have reinvested $525 billion since
    1980--including $25.5 billion in 2012--to create a freight rail network
    that is second to none in the world.

        Question 2. The railroad industry has engaged in a number of
    public-private partnerships to improve freight railroad operations. A
    prime example of this is the Heartland Corridor from Norfolk to Chicago
    and Columbus (Ohio). What are the advantages of these partnerships?
        Answer. Public-private partnerships--arrangements under which
    private freight railroads and government entities both contribute
    resources to a project--offer a mutually beneficial way to solve
    critical transportation problems.
        Without a partnership, many projects that promise substantial
    public benefits (such as reduced highway congestion by taking trucks
    off highways, or increased rail capacity for use by passenger trains)
    in addition to private benefits (such as enabling faster freight
    trains) are likely to be delayed or never started at all because
    neither side can justify the full investment needed to complete them.
    Cooperation makes these projects feasible.
        With public-private partnerships, the public entity devotes public
    dollars to a project equivalent to the public benefits that will
    accrue. Private railroads contribute resources commensurate with the
    private gains expected to accrue. As a result, the universe of projects
    that can be undertaken to the benefit of all parties is significantly
    expanded. In some partnerships, public entities and private railroads
    both contribute to a project's initial investment, but the railroads
    alone fund future maintenance to keep the project productive and in
    good repair. It's a win-win for all involved.
                                     ______

       Response to Written Question Submitted by Hon. Roger F. Wicker to
                              Edward R. Hamberger
        Question. The majority of the testimony you provided has focused on
    infrastructure needs surrounding post-Panamax ready ports. As you well
    know, these post-Panamax ready or soon to be post-Panamax ready ports
    represent a small percentage of America's ports. Taking into account,
    anticipated increases in vessel traffic for all ports as a result of
    ``displaced'' and ``feeder'' traffic, what specific shoreside
    infrastructure investments should our country prioritize in order to
    ensure that all ports can benefit from an expanded Panama Canal?
        How successful have Federal grant programs such as TIGER and the
    Rail Line Relocation grant programs been in helping ports prepare for
    post-Panamax ships and what changes need to be made in order to make
    them more effective?
        Answer. America's freight railroads operate almost exclusively on
    infrastructure that they own, build, maintain, and pay for themselves.
    Freight railroads invest billions of dollars each year to meet the
    needs of diverse cargo shippers and receivers, including large and
    small U.S. ports. Even during the recent economic downturn, railroads
    have continued making record investments--well more than $20 billion in
    2012--to grow and modernize the national rail network. The Rail Line
    Relocation grant program and the TIGER grant program offer state and
    local public entities important funding sources to enter into public-
    private partnerships with freight railroads to enhance rail facilities,
    including rail facilities serving the Nation's ports. These public-
    private partnerships allow state and local governments to expand the
    use of rail while paying for only the public benefits associated with a
    particular project. Freight railroads in turn pay for the private
    benefits they receive. Thus, public-private partnerships represent a
    win-win for all parties.
                                     ______

          Response to Written Question Submitted by Hon. Dan Coats to
                              Edward R. Hamberger
        Question. As an important artery, the Panama Canal handles three
    out of every ten bushels of grain and soybean exports from the U.S.,
    more than half the exports through the Center Gulf, one tenth of the
    Texas Gulf exports and nearly thirty percent of the Atlantic Coast
    exports. For soybeans specifically, the Panama Canal handles 44 percent
    of total U.S. exports, 63 percent of the soybeans through the Center
    Gulf, 57 percent through the Texas Gulf, and more than half the volume
    through the Atlantic Coast. According to the U.S. Soybean Alliance the
    prospects of an expanded canal will offer enhanced economic and service
    opportunities for exports of U.S. grain and soybeans, and product
    exports. The opportunities will be varied, such as increased loadings
    per vessel, the potential for larger vessel sizes to be used, decreased
    canal transit time, and the potential for lower transport costs
    overall. The U.S. Soybean Alliance also says that the benefits, while
    important to U.S. exports, will not be limited to the U.S. alone but
    also competitors alike. The future of grain export capabilities of the
    United States to meet expanding demand opportunities and requirements
    is an increasing concern. With more sustained levels of export volumes,
    changing export capacity dynamics, and various export prospects being
    discussed, there is a very real concern that even if the world demands
    grains and soybeans, and associated products from the U.S., the U.S.
    may well not be in a position to meet supply with this demand at
    competitive prices without more discriminating resource prioritization
    and investment strategies. To this end, eleven grain elevators are
    expanding export capabilities.
        As you plan for the Panama Canal expansion, what efforts are you
    taking to work with agribusiness, like the soybean industry, to ensure
    the infrastructure is in place to meet increased demand for U.S.
    exports?
        Answer. With or without the expansion of the Panama Canal, in the
    years ahead, America's demand for safe, affordable, and environmentally
    responsible freight transportation will grow. Railroads are the best
    way to meet that demand.
        From 1980 to 2012, America's freight railroads reinvested $525
    billion--of their own funds, not government funds--on locomotives,
    freight cars, tracks, bridges, tunnels, and other infrastructure and
    equipment. That's more than 40 cents out of every revenue dollar. In
    recent years, railroads have been reinvesting more than ever before,
    including a record $25.5 billion in 2012, back into their systems. They
    know that if America's future transportation demand is to be met, rail
    capacity must be properly addressed.
        Railroad capacity investments are not made in a vacuum. In fact,
    unlike other network industries which transmit fungible products (e.g.,
    electricity is the same, no matter who generates it) or products that
    can readily be routed to particular customers using automated equipment
    (e.g., electronic signals for telecommunications), railroads must move
    specific railcars carrying specific commodities from specific origins
    to specific locations. Railroads can accomplish this only because they
    devote enormous resources to plan and operate their networks to meet
    their customers' needs safely and efficiently. For that reason,
    railroads work closely with their customers to ensure that the have the
    best possible information as they develop their network planning models
    and prioritize investment needs.
        For railroads, capacity is not just a function of the amount of
    ``iron in the ground.'' It is also a function of the number and skill
    level of railroad personnel; the development and implementation of new
    technologies; and collaborations and cooperative relationships with
    other railroads, rail customers, and suppliers. On all these fronts,
    railroads are working to make sure that they have the capacity and the
    capability to serve their customers' needs both today and in the post-
    Panama Canal expansion world.
                                     ______

    Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
                                 Philip L. Byrd
        Question 1. The U.S. has no strategic national freight plan to
    guide Federal investments. However, the ``Moving Ahead for Progress in
    the 21st Century Act'' (MAP-21) requires the Department of
    Transportation to create a national plan. What key areas should the
    Department address to ensure that Federal freight investments are
    prioritized to more efficiently and effectively move goods across all
    freight modes?
        Answer. Funding for freight projects should be provided based on
    the proportional contribution from each mode. Since trucking is the
    only freight mode currently contributing to the Highway Trust Fund,
    freight funding from the HTF should be directed only to highway
    projects. A portion of HTF revenue should be dedicated to addressing
    major highway freight bottlenecks on the National Freight Network, and
    other freight needs such as truck parking, a significant safety issue.
    If funding is provided from a mode-neutral source, such as the General
    Fund, or a new fee such as a sales tax or bill of lading tax, revenue
    should be allocated based on a benefit-cost analysis.

        Question 2. Chairman Rockefeller and I have introduced the
    ``American Infrastructure Investment Fund Act,'' which would establish
    financing and grant programs at the Department of Transportation to
    leverage private dollars to advance large-scale, critical
    infrastructure projects. Will current Federal and state investments be
    able to cover the cost of building infrastructure to address freight
    needs in the U.S., especially in light of the Panama Canal expansion?
        Answer. Most studies that have projected highway investment needs
    have determined that the available revenue from current federal, state,
    and local sources are likely to only provide about half the resources
    needed to address the Nation's highway maintenance and mobility
    requirements currently and in the foreseeable future.

        Question 3. If not, how would incentivizing private investment help
    us meet these infrastructure needs?
        Answer. While private investment can address some of these needs,
    they are a less efficient way to fund highway projects than traditional
    funding methods, specifically the fuel tax, due to the additional
    financing costs.

        Question 4. Your testimony states that expansion projects to
    increase freight capacity at ports can have unintended consequences.
    Specifically, you reference the Port Authority of New York and New
    Jersey raising tolls on their facilities to pay for the cost of raising
    the Bayonne Bridge, which will allow larger ships to access the port,
    but the toll increases will also hurt trucking companies that rely on
    the port. How do toll increases along roads that lead to ports impact
    the competitiveness of ports?
        Answer. Ports tend to be extremely competitive, and increases in
    landside transportation costs, which are largely passed on to customers
    calling on the port, can have a significant impact on a shipper's
    decision to continue to call on the port or to move their goods through
    a more competitive facility. Tolls, particularly when they are as high
    as those imposed on trucks by the PANYNJ, represent a specific and
    significant cost increase to the port which can potentially drive
    business away.

        Question 5. What role can Congress play with regard to toll-setting
    practices near ports?
        Answer. Ports tend to be extremely competitive, and increases in
    landside transportation costs, which are largely passed on to customers
    calling on the port, can have a significant impact on a shipper's
    decision to continue to call on the port or to move their goods through
    a more competitive facility. Tolls, particularly when they are as high
    as those imposed on trucks by the PANYNJ, represent a specific and
    significant cost increase to the port which can potentially drive
    business away.

        Question 6. What impact do tolls have on port costs and the market
    choices that shippers make?
        Answer. Shippers will choose which ports to call on based largely
    on cost and convenience. Tolls can significantly impact landside
    transportation costs, which can skew shippers' decisions and drive
    traffic to competing ports that may not be burdened by the additional
    costs imposed by tolls on trucks which service the ports.
                                     ______

       Response to Written Questions Submitted by Hon. Maria Cantwell to
                                 Philip L. Byrd
        Question 1. As you know, the U.S. Department of Transportation
    (USDOT) announced the creation of a Freight Policy Council made up of
    senior Departmental leadership in August 2012. The Council is charged
    with developing a national multi-modal freight strategic plan and
    implementing other freight provisions included in Moving Ahead for
    Progress in the 21st Century (MAP-21). More recently, the application
    process closed for a new National Freight Advisory Committee (NFAC)
    that will bring key freight stakeholder input into the USDOT decision-
    making process. I've been proud to have worked with Secretary LaHood to
    bring these steps to fruition, but personally believe there is more to
    be done. Do you believe these steps will lead USDOT to have a more
    multi-modal perspective on freight mobility?
        Answer. These steps are likely to produce a more multi-modal
    perspective, and looking at the freight system through a multi-modal
    lens is an important step toward fully understanding the logistics
    system and recognizing where it breaks down. However, it is also
    important to recognize that the vast majority of freight moves by a
    single mode on the highway system, and Congress' charge to USDOT in
    MAP-21 to focus primarily on improving the National Freight Network
    should not be lost.

        Question 2. What more needs to be done on a Federal policy level to
    recognize the importance of safe and efficient goods movement to
    America's economic success?
        Answer. Federal investment policy should be more closely aligned
    with the goal of moving interstate freight. An important step in this
    regard is to focus more resources on addressing bottlenecks on the
    National Freight Network. Furthermore, Federal regulatory policies,
    particularly those governing truck sizes and weights, should be
    reformed to better reflect current scientific knowledge.

        Question 3. As you know, Moving Ahead for Progress in the 21st
    Century (MAP-21) expires at the end of Fiscal Year 2014. As Congress
    begins to turn its eye towards the next surface transportation
    reauthorization, what do you think are the top three Federal policy
    priorities/programs that we should include to assist the efficient and
    safe movement of intermodal freight?
        Answer. Greater investment in the National Highway System, which
    carries 97 percent of truck freight, including last-mile intermodal
    connectors. A dedicated freight program for highways focused on
    addressing bottlenecks on the National Freight Network and other
    freight needs like truck parking and intermodal connectors. Easing of
    Federal restrictions on truck size and weight.

        Question 4. I'm sure everyone would agree that mainline capacity--
    whether for waterways, highways, or rail--is important to the movement
    of goods. But many major freight bottlenecks occur in the ``last mile''
    as goods are arriving to, or leaving, a major transfer point. Do you
    believe that last mile and intermodal connections should be an integral
    part of Federal freight policy or should they be considered more of a
    state and local transportation policy issue?
        Answer. While connectors should be a shared responsibility, it must
    be recognized that many of the benefits derived from the movement of
    freight at these locations extend beyond local or state borders, and
    therefore the Federal Government should bare a greater responsibility
    for the improvement of intermodal connector roads.

        Question 5. Do you believe Federal freight policy accurately
    captures the importance of last mile and intermodal connections? If
    not, what additional steps should be taken?
        Answer. No. Federal-aid highway funds should be set aside to
    improve intermodal connector roads.

        Question 6. Do you believe there is a stronger Federal role needed
    in coordinating planning of or contributing funding to addressing major
    bottlenecks at last mile and intermodal connectors? If yes, what
    additional steps should be taken?
        Answer. Yes, the Federal Government should identify the most
    critical and costly intermodal highway connectors and set aside funding
    to improve them.

        Question 7. Do you believe that states, local governments, and
    industry have the appropriate resources to address last mile and
    intermodal connection infrastructure needs over the next decade? If
    not, what would an appropriate Federal role look like?
        Answer. As trade grows, so will the pressure on intermodal
    connector highways. Clearly, available resources are inadequate today
    and the situation will likely become worse over the coming years. The
    Federal Government must identify the most critical needs and dedicate
    resources toward addressing them.

        Question 8. Several weeks ago at the annual conference of a
    nationwide trade and freight mobility advocacy group, Mark Szakonyi,
    Associate Editor of the Journal of Commerce, stated that, ``Our readers
    question how well DC understands our business. Many in Congress believe
    there will be a big surge in cargo volumes to the East Coast with the
    widening of the Panama Canal. Many of my readers, however, believe
    there will be zero to single digit growth at most.'' In light of those
    comments, do you think there is a disconnect between policymakers in
    Washington, D.C. and industry on the possible effect of the Panama
    Canal? Why or why not?
        Answer. Yes, I do believe there is a growing disconnect between
    policymakers and the industry on the possible effect of the Panama
    Canal expansion. That said, I believe that the disconnect partially
    reflects the fact that numerous studies have been completed on this
    issue showing a wide range of freight increases in varying geographic
    regions. And I am certain that the many interested parties and
    constituent groups these differing and sometimes conflicting studies
    when briefing their individual Members of Congress. Thus, almost any
    region can point to data identifying their port as gaining new freight
    volumes, which is then used to justify port related projects to widen
    harbors, deepen rivers, improve highway connectors, etc.

        Question 9. Nationwide, ports, the transportation industry, and
    shippers are taking a variety of steps to prepare for the impact of the
    Panama Canal--whether to increase capital asset flexibility, port
    infrastructure, or addressing intermodal bottlenecks. Do you believe
    that those steps would have occurred even if the Panama Canal was not
    being widened--that is to say, could intermodal growth (recent and
    projected) be the major driver of those improvements instead?
        Answer. It is without question that intermodal infrastructure
    investment--like interstate highway investment--has been underfunded
    and lagging for many years. And I certainly believe that a sizable
    portion of the capital investments that was discussed during the
    hearing should have occurred with or without the Panama Canal
    expansion. Up until the recent economic recession, intermodal freight
    volumes were consistently projected to show double digit increases.
    However, those projections have been moderated downward given the
    severity of the recession and the resulting uncertainties that have
    ensued. Nevertheless, greater investment was, and still is, required to
    accommodate increases in containerized freight flows that will occur
    with or without the canal expansion.

        Question 10. Mr. Byrd, you mentioned in your testimony the
    shortfall the United States faces in funding infrastructure,
    particularly around ports. You also discussed ATA's support for ``a
    new, dedicated funding stream to address freight-related highway
    bottlenecks that significantly undermine freight transportation
    efficiency.'' Can you please expand on what sort of dedicated funding
    stream you would support?
        Answer. The fuel tax is the most efficient and most fair way to
    fund highway projects and therefore ATA supports an increase and/or
    indexing of the Federal fuel tax.

        Question 11. Do you believe that a new funding stream should be
    established specifically to improve multimodal freight infrastructure?
    If not, would you support a so-called ``set-aside'' of existing revenue
    collections?
        Answer. The trucking industry is willing to support an increase in
    fuel taxes to support highway projects, particularly if all or a
    portion of the revenue is dedicated to addressing bottlenecks on the
    National Freight Network and other freight needs such as truck parking
    and intermodal connectors. Funding for infrastructure serving other
    modes should be made available if those modes pay a user fee that
    generates revenue proportional to the funding they receive. We oppose
    the subsidization of non-highway freight projects with highway user
    fees. If funding is provided from a mode-neutral source, such as the
    General Fund, or a new fee such as a sales tax or bill of lading tax,
    revenue should be allocated based on a benefit-cost analysis.
                                     ______

       Response to Written Questions Submitted by Hon. Amy Klobuchar to
                                 Philip L. Byrd
        Question 1. Mr. Byrd, I have long held the view that the
    competiveness of our economy is directly tied to the strength of our
    infrastructure. But, in order to have a 21st century economy, we need
    21st century ports, bridges, highways, and rail. Now, as a member of
    the President's Export Council, I am focused on improving the way
    businesses can efficiently get their goods to the 95 percent of the
    world market that lies outside our borders and investing in
    infrastructure is a critical element of this effort. Do you foresee the
    Panama Canal expansion adding significant stress to other elements of
    America's transportation network?
        Answer. While we do not yet know the nature or extent to which
    Canal expansion will impact freight flows, it is likely that certain
    ports will see a significant increase in traffic as shippers take
    advantage of the efficiencies gained from utilization of larger ships.
    Most of the ports which can accommodate these larger vessels are
    located in urban areas whose landside access is already strained. A
    significant influx of containers at these locations, most of which will
    likely be moved to and from the port by trucks, will put further stress
    on the highway systems in these areas, affecting the cost of moving
    goods, increasing congestion for commuters and adding maintenance
    costs.

        Question 2. I recently toured Minnesota companies that export their
    products to the world and so I'm curious to know your view on how a
    big-scale project like expanding the Panama Canal will benefit small
    businesses on Main Street?
        Answer. Canal expansion is likely to reduce the costs of moving
    goods to foreign markets, opening up new opportunities for both large
    and small U.S. businesses. Investments in transportation infrastructure
    projects, such as those which eliminate major highway bottlenecks,
    reduce the cost of moving U.S. products, allowing domestic industries
    to better compete with foreign competitors.
                                     ______

      Response to Written Questions Submitted by Hon. Roger F. Wicker to
                                 Philip L. Byrd
        Question 1. The majority of the testimony you provided has focused
    on infrastructure needs surrounding post-Panamax ready ports. As you
    well know, these post-Panamax ready or soon to be post-Panamax ready
    ports represent a small percentage of America's ports.
        Taking into account, anticipated increases in vessel traffic for
    all ports as a result of ``displaced'' and ``feeder'' traffic, what
    specific shoreside infrastructure investments should our country
    prioritize in order to ensure that all ports can benefit from an
    expanded Panama Canal?
        Answer. As I indicated in my testimony before the Committee, four
    of the five top highway freight bottlenecks in the Nation are near
    ports. Addressing these choke points should be a priority to ensure
    ports will be able to handle the additional traffic expected from an
    expanded Panama Canal.
        In the Charleston area, I-26 is highly congested. I-26 extends in a
    southeasterly direction from Kingsport, TN to Charleston, SC, linking
    the port with I-95, I-20, and I-85. The highway has just two lanes in
    each direction and needs to be expanded to meet both automobile and
    commercial truck traffic needs. I-85, also a significant commercial
    corridor, is also highly congested.

        Question 2. How successful have Federal grant programs such as
    TIGER and the Rail Line Relocation grant programs been in helping ports
    prepare for post-Panamax ships and what changes need to be made in
    order to make them more effective?
        Answer. Few grants have been awarded through the TIGER grant
    program for highway land access to ports. Although trucks provide the
    majority of landside port transportation, TIGER grants directed at
    improving port landside transportation have focused almost exclusively
    on improving private rail infrastructure instead of the more critical
    public highway infrastructure.
                                     ______

          Response to Written Question Submitted by Hon. Dan Coats to
                                 Philip L. Byrd
        Question. As an important artery, the Panama Canal handles three
    out of every ten bushels of grain and soybean exports from the U.S.,
    more than half the exports through the Center Gulf, one-tenth of the
    Texas Gulf exports and nearly thirty percent of the Atlantic Coast
    exports. For soybeans specifically, the Panama Canal handles 44 percent
    of total U.S. exports, 63 percent of the soybeans through the Center
    Gulf, 57 percent through the Texas Gulf, and more than half the volume
    through the Atlantic Coast. According to the U.S. Soybean Alliance the
    prospects of an expanded canal will offer enhanced economic and service
    opportunities for exports of U.S. grain and soybeans, and product
    exports. The opportunities will be varied, such as increased loadings
    per vessel, the potential for larger vessel sizes to be used, decreased
    canal transit time, and the potential for lower transport costs
    overall. The U.S. Soybean Alliance also says that the benefits, while
    important to U.S. exports, will not be limited to the U.S. alone but
    also competitors alike. The future of grain export capabilities of the
    United States to meet expanding demand opportunities and requirements
    is an increasing concern. With more sustained levels of export volumes,
    changing export capacity dynamics, and various export prospects being
    discussed, there is a very real concern that even if the world demands
    grains and soybeans, and associated products from the U.S., the U.S.
    may well not be in a position to meet supply with this demand at
    competitive prices without more discriminating resource prioritization
    and investment strategies. To this end, eleven grain elevators are
    expanding export capabilities.
        As you plan for the Panama Canal expansion, what efforts are you
    taking to work with agribusiness, like the soybean industry, to ensure
    the infrastructure is in place to meet increased demand for U.S.
    exports?
        Answer. For the trucking industry, the central issues is whether
    sufficient investments will be made in highway infrastructure to
    accommodate increases in freight, whether associated with an expanded
    Panama Canal and other economic activity. The needs of agribusiness are
    really no different in this regard than other commercial traffic, most
    of which moves by truck.