[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






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       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.




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



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



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    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.



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        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.



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    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.



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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:



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




   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.



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    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



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    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.

                                  
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