[Senate Hearing 116-563]
[From the U.S. Government Publishing Office]








                                                        S. Hrg. 116-563

                     CONNECTING AMERICA: EXAMINING
    INTERMODAL CONNECTIONS ACROSS OUR SURFACE TRANSPORTATION NETWORK

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

                                HEARING

                               before the

               SUBCOMMITTEE ON TRANSPORTATION AND SAFETY

                                 of the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 26, 2019

                               __________

    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 SIXTEENTH CONGRESS

                             FIRST SESSION

                  ROGER WICKER, Mississippi, Chairman
JOHN THUNE, South Dakota             MARIA CANTWELL, Washington, 
ROY BLUNT, Missouri                      Ranking
TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado               TOM UDALL, New Mexico
MARSHA BLACKBURN, Tennessee          GARY PETERS, Michigan
SHELLEY MOORE CAPITO, West Virginia  TAMMY BALDWIN, Wisconsin
MIKE LEE, Utah                       TAMMY DUCKWORTH, Illinois
RON JOHNSON, Wisconsin               JON TESTER, Montana
TODD YOUNG, Indiana                  KYRSTEN SINEMA, Arizona
RICK SCOTT, Florida                  JACKY ROSEN, Nevada
                       John Keast, Staff Director
                  Crystal Tully, Deputy Staff Director
                      Steven Wall, General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
                      Renae Black, Senior Counsel
                                 ------                                

               SUBCOMMITTEE ON TRANSPORTATION AND SAFETY

DEB FISCHER, Nebraska, Chairman      TAMMY DUCKWORTH, Illinois, Ranking
JOHN THUNE, South Dakota             AMY KLOBUCHAR, Minnesota
ROY BLUNT, Missouri                  RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado               TOM UDALL, New Mexico
SHELLEY MOORE CAPITO, West Virginia  GARY PETERS, Michigan
TODD YOUNG, Indiana                  TAMMY BALDWIN, Wisconsin
RICK SCOTT, Florida























                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 26, 2019................................     1
Statement of Senator Fischer.....................................     1
Statement of Senator Duckworth...................................     2
Statement of Senator Klobuchar...................................    33
Statement of Senator Blumenthal..................................    34

                               Witnesses

Chuck Baker, President, American Short Line and Regional Railroad 
  Association (ASLRRA)...........................................     4
    Prepared statement...........................................     5
Dr. Noel Hacegaba, Deputy Executive Director, Port of Long Beach, 
  on Behalf of the Intermodal Association of North America.......    11
    Prepared statement...........................................    13
Donna Lemm, Advisory Board Member, Agriculture Transportation 
  Coalition; and Executive Vice President, IMC Companies, Inc....    16
    Prepared statement...........................................    18
Joseph Szabo, Executive Director, Chicago Metropolitan Agency for 
  Planning; and Board Member, Coalition for America's Gateways 
  and Trade Corridors............................................    22
    Prepared statement...........................................    24

                                Appendix

Response to written questions submitted to Chuck Baker by:
    Hon. John Thune..............................................    41
    Hon. Maria Cantwell..........................................    43
Response to written questions submitted to Dr. Noel Hacegaba by:
    Hon. Maria Cantwell..........................................    43
Response to written question submitted to Donna Lemm by:
    Hon. John Thune..............................................    45
    Hon. Maria Cantwell..........................................    46
Response to written questions submitted to Joseph Szabo by:
    Hon. Maria Cantwell..........................................    49

 
                     CONNECTING AMERICA: EXAMINING 
    INTERMODAL CONNECTIONS ACROSS OUR SURFACE TRANSPORTATION NETWORK 

                              ----------                              


                       TUESDAY, FEBRUARY 26, 2019

                               U.S. Senate,
         Subcommittee on Transportation and Safety,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:33 p.m. in 
room SD-562, Dirksen Senate Office Building, Hon. Deb Fischer, 
Chairwoman of the Subcommittee, presiding.
    Present: Senators Fischer [presiding], Duckworth, 
Klobuchar, and Blumenthal.

            OPENING STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Fischer. I call this hearing to order. I am pleased 
this afternoon to convene the Senate Subcommittee on 
Transportation and Safety.
    Our hearing today, titled Connecting America: Examining 
Intermodal Connections across our Surface Transportation 
Network, is an opportunity to better understand the state of 
our surface transportation infrastructure.
    First, I would like to welcome the new Ranking Member of 
the Transportation and Safety Subcommittee, Senator Tammy 
Duckworth. I look forward to working with her closely on 
finding bipartisan solutions to the pressing challenges of our 
transportation system.
    This hearing today will focus on the state of intermodal 
transportation. As the world becomes more interconnected, we 
rely more on intermodal transportation to import and export 
goods as well as to move freight domestically.
    The United States Department of Transportation estimates 
that freight tonnage will increase by 40 percent by the year 
2045. In 2015, DOT forecasted the shipments of freight across 
multiple modes will double by 2045. We've seen this trend play 
out over the last several years.
    The Association of American Railroads reported that 
shipments of intermodal containers and trailers by rail 
increased 5.5 percent last year. This is the fifth time in the 
last 6 years that the intermodal sector has set a new record, 
according to John Gray of AAR.
    Considering the impact of intermodal transportation is an 
important part of addressing the future needs of our Nation's 
surface transportation system. This includes intermodal 
infrastructure, such as inland ports and intermodal facilities 
and new freight-related technologies, such as GEs, and Port 
Optimizers. Support for intermodal should not come at the 
expense of maintaining traditional infrastructures, such as 
roads and bridges, but in conjunction with it.
    Many of us hear from our constituents about the poor state 
of infrastructure in the United States. Their concerns have 
been confirmed by numerous studies, including the off-cited 
Infrastructure Report Card from the American Society of Civil 
Engineers, which gave the United States infrastructure a D+ in 
2017.
    Solutions for maintaining and improving our infrastructure 
are vital to discussion on the reauthorization of the FAST Act 
and in this Congress, I plan to reintroduce my bill, the Build 
USA Infrastructure Act, which aims to address the funding 
shortfall and modernize our infrastructure system.
    My bill would dedicate an additional $21.4 billion to the 
Highway Trust Fund each year for the next 5 years following the 
expiration of the FAST Act. Under my solution, states would 
have more flexibility to approve the design, construction, and 
permitting of infrastructure projects by voluntarily entering 
into remittance agreements with the Federal Highway 
Administration.
    I look forward to working with my colleagues on this 
proposal.
    In addition to discussing infrastructure, this hearing will 
also allow members to consider important issues affecting 
intermodal transportation, such as the effects of increased 
intermodal transportation, congestion problems, and recent 
challenges with access to chassis.
    We have several witnesses before the Committee today that I 
believe are going to speak directly to the needs of intermodal 
transportation and I am especially grateful to Dr. Hacegaba and 
Ms. Lemm, Mr. Szabo, for their willingness to travel to 
participate in this hearing. I look forward to their testimony.
    I also am pleased the other witnesses are here, as well. I 
look forward to all of your testimony and right now, I would 
invite my colleague, Senator Duckworth, for her opening 
remarks.

              STATEMENT OF HON. TAMMY DUCKWORTH, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Duckworth. Thank you, Chairwoman Fischer. Thank you 
so much for holding today's hearing on freight and intermodal 
transportation infrastructure.
    I am so excited to be Ranking Member on the Surface 
Transportation and Safety Subcommittee and I'm looking forward 
to working with you on issues important to both our states and 
the Nation.
    As you know, one of the most critical issues facing our 
Nation is the growing need to reinvest in our Nation's 
infrastructure. Our economic competitiveness depends on the 
efficient movement of freight, whether it's carried on 
highways, railways, or waterways.
    Every day, our freight system moves 55 million tons of 
goods worth $50 billion, supporting 44 million jobs. Most 
freight enters our country by ships through ports. It's then 
moved to businesses across the Nation by a combination of truck 
and rail car.
    Intermodal connections become extremely important to ease 
the transfer of freight from one mode to another, and 
unfortunately, this transition is not always smooth, as we all 
know too well in Chicago, in my home state of Illinois.
    We often call Northeastern Illinois the crossroads of 
America. The Chicago Land Region is the busiest rail hub in the 
Nation. For decades, it has been the main transportation hub 
for goods moving throughout the United States. Six of seven 
major freight rail companies traverse the region daily but the 
region's rail infrastructure, built more than a century ago, 
has not kept pace with demand.
    Fortunately, a diverse group of stakeholders is changing 
that. The CREATE Program, the first of its kind public-private 
partnership under a project of national significance, will 
provide the important investments needed to modernize the 
region's rail infrastructure to improve reliability and safety.
    I'm very proud that CREATE has received significant Federal 
funds, including a $132 million grant in 2018, to be used not 
only in the Chicago region but the entire state of Illinois and 
the Nation. Federal funding for freight and intermodal projects 
is critical to address state, local, and private infrastructure 
investment.
    This is why I'm a big supporter of Federal funding for 
programs, like INFRA and BUILD. The Federal Government must be 
a strong partner to spearhead freight projects from which we 
all benefit.
    Highways and bridges also suffer from underinvestment. 
Traffic bottlenecks cost the trucking industry more than $60 
billion a year in lost productivity and fuel. This increases 
the cost of everything we make, buy, or export.
    Too many bridges are in need of repair. According to the 
American Road and Transportation Builders Association, more 
than 54,000 bridges across the Nation are structurally 
deficient, 54,000. In Illinois, 2,300 bridges or essentially 8 
percent of all the bridges in our state are structurally 
deficient, and Cook County has some of the most traveled 
structurally deficient bridges in the state and in the country.
    I want to thank all of our witnesses for joining us today. 
In particular, I wanted to recognize Joe Szabo, who is here 
today. Joe, you've been a real leader on transportation issues 
from your time in the rail industry, to village trustee and 
mayor, to the FRA Administrator, to CMAP Executive Director. 
Few others have the knowledge and experience that you bring to 
the table on these issues. Thank you for being here.
    I look forward to hearing from the rest of the panel about 
how we can improve our freight transportation system. I thank 
you each, and I yield back.
    Senator Fischer. Thank you.
    At this time, I would like to introduce Mr. Chuck Baker. I 
am just thrilled he is here today, didn't mean to leave you out 
of my opening comments.
    Mr. Baker is President of the American Short Line and 
Regional Railroad Association.
    Would you like to give your opening statement, please, and 
we'll have 5 minutes for an opening statement. Your entire 
statement, of course, will be included in the record.

              STATEMENT OF CHUCK BAKER, PRESIDENT,

 AMERICAN SHORT LINE AND REGIONAL RAILROAD ASSOCIATION (ASLRRA)

    Mr. Baker. Thank you, Chairwoman Fischer. Thank you, Member 
Duckworth, and Members of the Subcommittee.
    My name is Chuck Baker, and I'm President of the Short Line 
Railroad Association.
    We represent the Nation's 603 Class II and III Railroads, 
which together operate nearly 50,000 miles of track or 
approximately 30 percent of the national rail network.
    They operate in every state but Hawaii. In the states 
represented by this subcommittee's members, there are 207 short 
lines operating 20,000 miles of track.
    Short lines are the first mile and last mile of the 
Nation's railroad network and they handle one out of every five 
rail cars moving on the national system. Although most often 
associated with small town and rural America, short lines also 
serve large urban areas and many of the Nation's ports.
    In fact, short lines provide rail service into four of the 
Nation's busiest ports: Miami, Houston, Los Angeles, and Long 
Beach. Likewise, various short line railroads operate as 
switching carriers for multiple Class I railroads in Chicago, 
New Orleans, and St. Louis.
    The nation's short lines are much more than a quaint name 
on the Monopoly board. The name ``short line'' can create the 
mistaken impression that all these railroads are short. In 
fact, they come in all sizes.
    The Peru Industrial Railroad in Senator Duckworth's state 
is three miles long while the Nebraska Central Railroad in 
Senator Fischer's state is 340 miles long. Pan Am Railways, 
headquartered in Senator Markey's state, is the Nation's 
longest short line, operating approximately 1,700 route miles.
    Three characteristics define short lines. One, short lines 
are small businesses. Their combined annual revenues are less 
than the annual revenues of any single one of the Nation's four 
largest railroads. The average short line employs fewer than 30 
people.
    Two, because their task was to bring back to life 
previously under-maintained branch lines that were otherwise 
headed for abandonment, they invest 25 to 33 percent of their 
annual revenues back into their infrastructure, making short 
line railroading one of the most capital-intensive industries 
in the entire country.
    Three, in large areas of the country, and particularly in 
rural and small town America, short lines are the only 
connection to the National Rail Network for thousands of 
agricultural, energy, and manufacturing shippers.
    To help short lines meet their investment needs, Congress 
enacted the Short Line Rehabilitation Tax Credit in 2004 and 
has renewed it six times since through 2017. The credit has 
been an important factor in maximizing infrastructure 
investment and making the credit permanent is the single most 
important thing Congress can do to help short line railroads.
    In the last session of Congress, legislation making the 
credit permanent was co-sponsored by large bipartisan 
majorities in both the Senate and the House but, unfortunately, 
action was never taken on the larger tax extenders package.
    I know the tax legislation is not the direct jurisdiction 
of this committee, but as the Committee most knowledgeable on 
rail infrastructure matters, I urge you to take the short line 
tax credit message to your Senate colleagues whenever the 
subject of transportation or tax is addressed.
    Within your direct jurisdiction, I would like to address 
the importance of several programs.
    We strongly support the CRISI Grant Program as it 
specifically provides for short line eligibility and puts a 
focus on benefit-cost analysis. With that level playing field, 
short line projects will fare well, including PTC 
implementation projects.
    We support the Federal INFRA Program and the related State 
Formula Program, but for both, we would suggest the removal of 
the counterproductive limit on how much of the program can be 
spent on non-highway projects, especially in the scenario where 
the program is not being a hundred percent funded by highway 
user fees.
    We also support the BUILD Grant Program. Many of you are 
likely familiar with the RRIF Loan Program and the many 
unsuccessful efforts over the years to improve the program. 
RRIF loans, unfortunately, will not be the solution for any 
meaningful number of short line railroad projects and we hope 
that Congress will not use the RRIF Program to check the short 
line box as it puts together an infrastructure package.
    On the question of truck size and weight, I will simply 
note that short lines and the larger railroads are part of a 
broad coalition, including safety advocates, law enforcement 
officials, rail labor, truck labor, independent truckers, and 
even truck load carriers, who all oppose heavier and longer 
trucks.
    Finally, we encourage you to continue to examine and, where 
appropriate, eliminate unnecessary Federal regulations. 
Unnecessary regulations divert precious financial resources 
from track rehabilitation and that rehabilitation is the best 
way to improve railroad safety.
    I appreciate the opportunity to testify today and pleased 
to answer any questions.
    Thank you.
    [The prepared statement of Mr. Baker follows:]

 Prepared Statement of Chuck Baker, President, American Short Line and 
                 Regional Railroad Association (ASLRRA)
    Thank you Chairwoman Fischer, Ranking Member Duckworth and Members 
of the Subcommittee. My name is Chuck Baker and I am President of the 
American Short Line and Regional Railroad Association (ASLRRA), the 
national trade association representing the Nation's 603 Class II and 
Class III railroads (referred to here collectively as ``short lines''). 
I appreciate the opportunity to talk about the role short line 
railroads play in the national transportation network.
    Together, short line railroads operate nearly 50,000 miles of 
track, or approximately 30 percent of the national railroad network. 
They operate in 49 states and in 36 of those states they operate at 
least one quarter of the state's total rail network. In five states, 
short lines operate 100 percent of the state's rail network. In the 
states represented by this Subcommittee's Members, there are 207 short 
lines operating over 20,000 track miles. Short lines are often called 
the first mile/last mile of the Nation's railroad system and handle in 
origination or destination one out of every five rail cars moving on 
the national system.
    Although short lines are most often associated with small town and 
rural America, they also serve large urban areas and many of the 
Nation's ports. Indeed, short line railroads provide rail service into 
three of the Nation's busiest ports--Miami, Los Angeles and Long Beach. 
Likewise various short line railroads operate as neutral switch 
carriers for multiple Class I railroads in Chicago, New Orleans and St. 
Louis. The nation's short lines are much more than a quaint name on the 
Monopoly Board.
    The name ``short line'' can create the mistaken impression that all 
of these railroads are very short rail lines. The fact is we come in 
all sizes. The Peru Industrial Railroad in Senator Duckworth's state of 
Illinois is 3 miles long. The Nebraska Central Railroad in Senator 
Fischer's state is 340 miles long. Pan Am Railways, headquartered in 
Senator Markey's state of Massachusetts, is the Nation's longest short 
line, operating approximately 1,700 route miles, and provides crucial 
rail service in much of New England. Our common denominator is that we 
operate track that would not be viable under the structure of the 
larger national Class 1 railroads.
    Short lines have four defining characteristics.

  1.  Short lines are small businesses. Our combined annual revenues 
        are less than the annual revenues of any single one of the 
        Nation's four largest Class I railroads. The average short line 
        employs 30 people or less, and a significant number are run 
        with less than a dozen employees. Like all small businesses, we 
        are forced to do more with less.

  2.  Our importance is not our size or our total market share, but in 
        who and where we serve. For large areas of the country and 
        particularly for small town and rural America, short line 
        railroad service is the only connection to the national 
        railroad network. For the businesses and farmers in those 
        areas, our ability to take a 25-car train 75 miles to the 
        nearest Class I interchange is just as important as the Class 
        I's ability to attach that block of traffic to a 100-car train 
        and move it across the country. While Midwestern grain shippers 
        could not complete the journey to poultry farm markets in the 
        southeastern United States without Class I railroad service, 
        they could not start or end the journey without short line 
        service.

     Short lines serve over 10,000 shippers nationwide and we find 
        those shippers quite willing to testify to the importance of 
        this first mile/last mile service. I have included at the end 
        of my testimony a list of quotes from short line customers. We 
        have selected a wide variety from across the country to give 
        you a sense of the important relationship between shippers and 
        their short lines. In general, they sound like this: ``Our 
        serving short line railroad is truly a partner for our paper 
        mill. The services provided, including freight haul in and out, 
        daily switches, and rail car maintenance help us keep our mill 
        running successfully day in and day out. It is critical to the 
        400 plus people employed here that our short line railroad be 
        able to continue to operate successfully.''

  3.  The majority of short lines operate track that was headed for 
        abandonment under previous Class I owners. These were light 
        density branch lines that could not generate enough profit 
        under the cost structure of the big national carriers. Because 
        these were marginal or money losing lines they received little 
        investment prior to their sale, resulting in significant 
        deferred maintenance. To be successful, short line owners must 
        not only eliminate that deferred maintenance but upgrade their 
        tracks to handle the heavier, longer trains that are becoming 
        the national standard. To do that, short lines invest on 
        average from 25 to 33 percent of their annual revenues in 
        rehabilitating their infrastructure and this makes short line 
        railroading one of the most capital intensive industries in the 
        country. To provide some dollar perspective, to rehabilitate 
        one mile of typical 90-pound track up to the 115-pound rail 
        needed to handle today's modern railcars costs between $400,000 
        and $500,000, and we need to do that across much of a 50,000 
        mile network.

     Likewise a single bridge replacement is a multi-million dollar 
        project. We estimate the total short line cost for what needs 
        to be done just for track and bridges is $10.8 billion.

  4.  Without upgrades to short line tracks and bridges, customers 
        served by short lines face potential competitive disadvantages. 
        If a short line is not able to handle an industry-standard, 
        heavier-weight freight car, they must ship or receive rail 
        shipments in smaller rail cars. This will become a more 
        pronounced problem with time, as the older, smaller freight 
        cars used in the national railroad fleets reach their mandatory 
        retirement age and become unavailable. At that point shippers 
        will either have to use the newer, more expensive freight cars 
        and light load them, or divert their shipments to trucks.

    Before I discuss the various infrastructure and safety programs 
under the jurisdiction of the Commerce Committee, let me emphasize that 
the most important and effective infrastructure program for the short 
line industry is the Short Line Railroad Rehabilitation Tax Credit, 
sometimes known by its U.S. Code section number 45G. Congress enacted 
the credit in 2004 and has renewed it six times through 2017. In the 
115th Congress a bi-partisan majority in both the House and Senate co-
sponsored legislation to make the credit permanent. In the Senate it 
was the most heavily co-sponsored bill of all the tax bills introduced 
in that Session of Congress. Unfortunately that legislation, along with 
the other tax extenders, didn't pass Congress in 2018 or as of yet in 
2019. However, new House and Senate bills, H.R. 510 and S.203, have 
been introduced in this session of Congress and have already attracted 
21 cosponsors in the Senate and 116 in the House.
    While I know there are deep partisan divisions on tax issues I 
believe the short line rehabilitation tax credit has characteristics 
that are widely supported by both political parties and by most 
economists, and that is evidenced by the bipartisan support of both 
bills.
    The credit maximizes private investment in important transportation 
infrastructure. The railroad must spend two dollars for every dollar in 
credit up to a credit cap equivalent to $3,500 per mile of track. The 
government is not giving these small businesses a dollar, but rather 
letting them invest more of their own money in capital improvements. 
Since 2005 the credit has leveraged over $4 billion in capital 
projects. This additional spending power allows short lines to speed up 
projects that are in the works and take on new projects that would 
otherwise be unaffordable.
    Investing in better track leverages significant additional 
investment by railroad customers. For example, in South Dakota the 
improvements made by the 670 mile Rapid City, Pierre & Eastern Railroad 
since it began operations in 2015 has already attracted over $311 
million in new facility investments by 6 South Dakota companies. Those 
facilities employ 260 workers. This result is being duplicated in the 
49 states that are served by short line railroads.
    Railroads are an all-American proposition. They can't take their 
operations or their jobs overseas. Virtually everything they buy for 
infrastructure improvement--the ties, the steel rail, the ballast, the 
locomotives and the freight cars--are made in America. The Railway Tie 
Association reports that the 45G credit has resulted in short line tie 
purchases of between 500,000 and one million over and above their 
normalized annual purchases.
    Railroad rehabilitation is a labor intensive effort. As small 
businesses most short lines do not have the necessary in-house labor 
force or specialized equipment to complete major rehabilitation 
projects so they must hire contractors and lease heavy machinery for 
the majority of the work. The Federal Railroad Administration estimates 
that half of every dollar spent on short line track rehabilitation goes 
to pay workers.
    We know and appreciate that many of you agree. The majority of this 
Subcommittee serving in the last Congress were co-sponsors of the 
legislation extending the credit. Likewise full Committee Chairman 
Wicker and Ranking Member Cantwell were co-sponsors. We look forward to 
newly elected Senator Scott of Florida joining as a co-sponsor in 2019.
    I know that tax legislation is not the purview of this Committee 
but as the Committee that is the most knowledgeable when it comes to 
railroad infrastructure matters, I urge you to take our tax credit 
message to your Senate colleagues whenever and however the subject of 
transportation infrastructure is addressed in this Congress, and to 
address tax extenders expeditiously.
    With regard to that which is directly in this Committee's 
jurisdiction, let me comment on a number of specific programs and 
conclude with some thoughts on infrastructure programs in general.
    We strongly support the CRISI program as it specifically provides 
for short line eligibility and puts a focus on benefit-cost analysis. 
We think with that level playing field, short line projects will fare 
well. Further it includes a special category for Railroad Safety 
Technology Grants which can potentially be very helpful as we work to 
implement and pay for the Positive Train Control mandate. We are 
pleased that Congress has provided a robust $255 million for CRISI in 
FY 2019 and we hope that at least that level continues in the future. 
We believe CRISI can be an important and effective program that you 
should incorporate into whatever transportation infrastructure 
legislation you are able to advance.
    We strongly support the BUILD grant program and are likewise 
pleased with the $900m in FY19 funding provided for this program. While 
the benefit-cost analysis hurdles are steep for short lines operating 
in rural areas and serving relatively small shippers, short lines have 
succeeded in securing numerous grants over the life of the program. The 
application process is extraordinarily time consuming and the 
competition is fierce for these grants, but year after year many short 
lines are willing to go through the process and in general we have 
found that short line projects stack up pretty well against projects 
from other modes when measured on any sort of apples-to-apples basis.
    We are also supportive of the INFRA grant program. There is value 
in a merit-based discretionary grant program open to multiple modes of 
transportation, especially one that is focused on freight and goods 
movement. While the main category of INFRA is targeted at mega projects 
that exceed the size of most short line work, the small project portion 
of the program is of value to us. We would be supportive of a 
significant expansion of INFRA in a new infrastructure package, but 
would suggest an expanded small project component and also a removal of 
the arbitrary and counterproductive limit on how much of the program 
can be spent on non-highway projects, especially in a scenario where 
the program is not being 100 percent funded by a highway use fee. As 
the committee knows, as evidenced by this very hearing, the national 
transportation system is multi-modal and intermodal in nature, so 
stove-piping of major programs for one transportation mode should be 
avoided if at all possible, especially if the funding is not entirely 
provided by users of one mode.
    Similarly, we are supportive of the state freight program included 
in the FAST Act, and similarly we would support an expansion of this 
program in the next surface transportation reauthorization bill with a 
removal of counterproductive limits on how much of the program can be 
spent on rail, port, and other non-highway projects.
    Many of you are likely familiar with the RRIF loan program and the 
many efforts by Congress and both Republican and Democratic 
Administrations over the years to improve the program--efforts that 
have met with limited success. I will not repeat all that history here, 
but I do want to caution the Committee with regard to RRIF's potential 
to address short line infrastructure issues. The RRIF program is just 
an authorization for $35 billion in loan authority. It is not contract 
authority or authority for an appropriation, it is just a loan that 
needs to be paid back. In the 20 year history of the program only $5.3 
billion in loans have been approved and the vast majority of that has 
gone to Amtrak and public transit agencies. It typically takes over two 
years to get a single loan approved and the cost of processing is 
extraordinarily high.
    RRIF loans are not going to be the solution for any meaningful 
number of short line rail rehabilitation projects and we hope that 
Congress will not use the large loan authority number to ``check the 
short line box'' as it puts together an infrastructure or surface 
transportation reauthorization package.
    While there appears to be general agreement that Congress should 
enact a significant infrastructure funding package, the specifics are 
still to be determined. As you consider how to proceed we believe there 
are six general provisions that will be important for short line 
participation in any major grant program:

  1)  Short lines should be directly eligible applicants for project 
        grants, similar to CRISI. Too often in the past, Federal 
        programs have been only open for application to local units of 
        government, which in turn requires short lines to create 
        unnecessarily complex and burdensome applicant structures and 
        which sometimes favors politically popular projects over 
        economically beneficial projects.

  2)  The application process needs to be as simple and transparent as 
        possible. Short lines are small businesses and generally the 
        individuals writing and engaging with the government on our 
        applications are employees with other duties on the railroad. 
        We don't have full time grant writers or the resources to hire 
        expensive consulting firms.

  3)  The analysis used to judge a project should not be a rigid one-
        size-fits-all process. For example, the process to apply, the 
        public planning and the engineering required, and the 
        appropriate benefit-cost analysis format for incrementally 
        upgrading a ten-mile segment of existing track serving five 
        small grain elevators should not be the same as building a new 
        subway line or adding lanes to an interstate highway.

  4)  If there is to be an associated environmental approval process, 
        it has to be completed in a reasonable period of time. Approval 
        processes that last for years are a deal-killer to those 
        running a business.

  5)  Giving preference to grant requests with ``over-matching'' may 
        appear logical, but can lead to discounting otherwise important 
        short line projects that from a financial standpoint cannot 
        provide an overmatch of non-federal funding.

  6)  Imposing limits on a state DOT's number of grant submissions 
        allowed in a round of a program forces pre-application 
        competition between smaller short line projects and other 
        larger projects, often putting the smaller short line project 
        at a disadvantage.

    Whether it be in the form of a free-standing infrastructure package 
or the reauthorization of the FAST Act, infrastructure legislation that 
this committee advances will be a target vehicle for those who want to 
increase truck size and weight. Short lines are part of a broad 
coalition of interests, including safety advocates, law enforcement 
officials, rail labor, truck labor, independent truckers, Class I 
railroads, and even some truckload carriers, who oppose bigger and 
heavier trucks. Bigger trucks mean diversion from rail to truck and 
thus more expensive damage to our highways and bridges, more highway 
congestion, more environmental damage, and more danger for the motoring 
public . The biggest hurdle to enacting new infrastructure funding 
legislation is finding the funding. Including a provision that 
guarantees higher infrastructure repair costs makes the hurdle all the 
more difficult to overcome and that just doesn't make sense.
    On many occasions, those who support bigger trucks have attempted 
to make that change through the appropriations process. We hope that 
any consideration of bigger trucks will be tied to a full vetting by 
the appropriate authorizing committee and include a full understanding 
of the diversion from rail to highway, the true infrastructure cost of 
accommodating larger trucks, and the safety implications of such a 
change.
    As you know the Surface Transportation Board (STB) now has three 
Board Members and may have a full complement of five sooner rather than 
later and as such will likely be taking up many substantive issues. The 
Board's decisions have a significant impact on the short line industry, 
particularly on regulatory matters related to the Staggers Act. In many 
respects the short line industry is the child of the economic freedoms 
and regulatory flexibility embodied in the Staggers Act of 1980, 
allowing railroads to save light density branch lines rather than 
abandoning them. The results are quite remarkable. Short lines have 
grown from 8,000 miles of track in 1980 to nearly 50,000 today, 
insuring that huge areas of rural and small town America stay connected 
to the national railroad network. The STB has played an important role 
in that outcome and we urge the Committee to pay careful attention to 
their deliberations and decisions.
    Finally, let me briefly address the subject of government 
regulation which has a direct impact on our ability to maximize capital 
investment. The short line railroad industry is awash in unnecessary 
and expensive regulations that divert precious investment dollars from 
infrastructure improvements that are the best way to improve safety. 
Most damaging for short lines are the kind of one-size-fits-all 
regulations that provide no basis for the presumed benefits and that 
don't take into consideration our unique operating characteristics. Two 
stand out in particular:

  1)  The Part 243 minimum training standards rules pursuant to the 
        Rail Safety Improvement Act of 2008 impose a huge paperwork 
        requirement on top of what are already substantial training and 
        qualification requirements. The rules add a Federal requirement 
        about how to train our employees to meet other already existing 
        Federal requirements, and are attempting to fix a nonexistent 
        problem. Congress should repeal this rule or at the very least 
        require the Federal Railroad Administration (FRA) to retract 
        this rule and revise it in a much simpler fashion.

  2)  Mandatory two-person crews are also an attempt to impose a 
        solution on a non-existent problem. There is absolutely no 
        evidence of a safety benefit generated by a second crew member. 
        It is particularly ironic that as the government is spending 
        billions of dollars to facilitate the move to driverless 
        vehicles on the complex open architecture of the highway 
        system, it is considering making the railroads do just the 
        opposite on the simpler closed architecture of the railroad 
        system.

    We believe that every dollar spent on these kind of excessive 
regulatory requirements is a dollar that could be better spent on 
improving track, rebuilding bridges or adopting new technologies. Those 
are the dollars that do the most to improve safety and make 
transportation costs as competitive as possible for the Nation's 
shippers.
    I know this Committee does not write these rules but you have 
jurisdiction over the FRA which does and I urge you be continually 
vigilant in your oversight of their work. Chairwoman Fischer introduced 
an FRA regulatory reform bill in the last session of Congress and we 
would be eager to work with this Committee on an updated version of 
such legislation for inclusion in an infrastructure or surface 
transportation reauthorization bill.
    Over the years this Committee has been diligent in exploring and 
understanding what makes for an efficient, seamless multi-modal 
transportation network that better connects communities and businesses 
across the country. Connecting communities, particularly rural, 
industrial, and agricultural communities, to the national rail network 
and domestic and international markets is exactly what short lines do 
every day, and we very much appreciate the Committee's willingness to 
consider our suggestions regarding how to improve our ability to do 
that important work.
    I'll be more than happy to answer any questions. Thank you.
                                 ______
                                 
      Short Line Railroad Customers Talk about Short Line Service
Dana Shellberg, of Allweather Wood LLC, in Loveland, CO
A customer of the Great Western Railway of Colorado
``Without the Great Western Railway of Colorado we would have to truck 
all our lumber in from Oregon, Washington, Alabama, and Arkansas. This 
would not allow us to stay competitive in the lumber market.''
Robert Glezen, of Mont Eagle Mills, Inc., in Oblong and Palestine, IL
A customer of the Indiana Rail Road
``Short line railroads are an increasingly important piece of our 
Nation's infrastructure. Our business depends upon the Indiana Rail 
Road to serve the agricultural base of southeastern Illinois.''
David Doti, of Jadcore, LLC, in Terra Haute, IN
A customer of the Indiana Rail Road
``The Indiana Rail Road is our only connection to the main line. All of 
the other carriers have either merged or are out of business. The 
plastics industry relies on the railroad for its delivery of finished 
products all over the country.''
Daniel Semsak, of Pacific Woodtech Corporation, in Saginaw, MI
A customer of the Lake State Railway
``We depend on short lines to get into our customers' facilities. Rail 
access is essential for our company and our customers to be able to 
grow. As the Class 1 railroads have focused more and more on unit 
trains for inefficiencies, small business has relied on short lines for 
survival. We need the short lines for the ``last mile''.''
Brian Arnhalt, of Minn-Kota Ag Products, in Breckenridge, MN
A customer of the Red River Valley & Western Railroad
``Our rail service from the Red River Valley & Western Railroad is 
outstanding. The personalized attention to our customer needs is a big 
help in the success of our business.''
Curt Warfel, of Akzo Nobel, Inc., in Columbus, MS
A customer of the Alabama and Gulf Coast Railway
``Akzo Nobel has long been supportive of the short line railroad tax 
credit. We see this as an excellent way in which short line railroads 
may ``stretch'' a dollar to upgrade their railroads and improve service 
to rail shippers.''
Chuck Hunter, of PSC Metals, Inc., in St. Louis, MO
A customer of the Terminal Railroad Association of St. Louis
``The six short lines that serve our facilities have and will play a 
vital role in the growth of our company. They have worked with us to 
add rail service to several of our facilities, issued rates to incent 
rail service -vs-truck. Their local presence and willingness to 
partnership in problem solving has been a blessing. These service 
providers are an essential part of our continued success in the North 
American marketplace.''
Levi Ross, of Dead River Company, in North Walpole, NH
A customer of the Green Mountain Railroad
``Our retail petroleum business is dependent on the service of short 
lines for a dependable regional supply chain.''
Jason Tininenko, of Freeport McMoRan, in Hurley, NM
A customer of the Southwestern Railway
``There are several short line railroads that are integral to our 
business. They provide a consistent, cost effective option for us to 
move large volumes of freight both to and from our mining locations.''
Mike Sawyer, of Western Producers Cooperative, in Dill City, Rocky, and 
        Sentinel, OK
A customer of Farmrail
``Our livelihood depends on railroads shipping our grain. Farmrail does 
a great job in taking care of our needs. We need their services!''
Steve Stivala, of MacMillan-Piper, in Tacoma, WA
A customer of Tacoma Rail
``Tacoma Rail is an integral part of our business and overall operation 
in Tacoma. The short line railroad provides us with consistent and 
reliable service on a daily basis. By meeting our needs and 
requirements, we are better able to service our customers. This would 
not be possible without the assist from Tacoma Rail.''
Maurice Bohrer, of Michels Materials, in Janesville and Waterloo, WI
A customer of the Wisconsin & Southern Railroad
``Our short line and regional railroad, the Wisconsin & Southern 
Railroad, is the only railroad that provides service to our black 
granite quarry and without them we would not be able to sell our 
granite to many of our customers and the other railroads that use our 
ballast!''

    Senator Fischer. Thank you, Mr. Baker.
    Next, we have Dr. Noel Hacegaba, who is the Deputy 
Executive Director of the Port of Long Beach (appearing on 
behalf of the Intermodal Association of North America/IANA).
    Welcome.

        STATEMENT OF DR. NOEL HACEGABA, DEPUTY EXECUTIVE

   DIRECTOR, PORT OF LONG BEACH, ON BEHALF OF THE INTERMODAL 
                  ASSOCIATION OF NORTH AMERICA

    Dr. Hacegaba. Thank you, Chairwoman Fischer, Ranking Member 
Duckworth, and Members of the Subcommittee.
    Thank you for the opportunity to comment on the intermodal 
freight transportation system.
    My name is Dr. Noel Hacegaba. I serve as Deputy Executive 
Director, responsible for Administration and Operations at the 
Port of Long Beach, but today I'm here on behalf of IANA, the 
Intermodal Association of North America, where I serve as a 
member of its Board of Directors and also chair its Policy 
Committee.
    IANA is the only organization in the country that 
represents the combined interests of the intermodal freight 
transportation industry, the backbone of the American economy.
    We appreciate your ongoing dedication and efforts to 
prioritize freight infrastructure investment.
    I have the privilege of working at the Nation's second 
busiest seaport, which is a major gateway for U.S.-Asia trade. 
To be successful, ports, like Long Beach, collaborate with five 
Class I railroads, 46 shipping lines, 7,000 trucking companies, 
and over 10,000 third party logistics providers.
    The intermodal freight industry is a good example of what 
we call coopetition, where we have competing companies coming 
together to provide cargo transportation services.
    In 2018, intermodal volumes increased 5.6 percent over 
2017, boosted by Chinese imports pulled forward to avoid tariff 
increases. As cargo volumes continue to grow, investments in 
intermodal connectors have to be a part of the solution to 
improve cargo efficiency and freight infrastructure.
    The use of on-dock rail will also help us to reduce 
congestion and maintain freight velocity in the intermodal 
network. That's why the Port of Long Beach is investing over a 
billion dollars to improve its on-dock rail capacity, and 
Federal funding helps to support these kinds of projects that 
benefit America's intermodal network.
    For example, the Port, back in 2011, received $17 million 
in TIGER grant funds for a green port rail gateway project, and 
ports like Long Beach will continue to apply for INFRA and 
BUILD grants that support improvements in intermodal rail 
efficiency.
    Significant Federal investments are needed to improve the 
flow of freight through intermodal connectors. U.S. businesses 
spend an additional $27 billion each year in extra 
transportation costs due to congestion and outdated facilities, 
and the total cost to meet freight infrastructure needs in 
America is estimated at $3.7 trillion.
    New capital investment in freight transportation 
infrastructure will lead to improved velocity, enhanced global 
competitiveness, and a higher standard of living for Americans.
    Integrated planning and funding that addresses the IANA 
needs of freight movements will be critical to improving the 
Nation's infrastructure system. The FAST Act's discretionary 
grant programs, like BUILD, CRISI, and INFRA, have provided 
much-needed opportunities to fund freight-related projects, and 
innovative financing options, like TFIA, were instrumental in 
helping to finance the $1.4 billion replacement of the Gerald 
Desmond Bridge in Long Beach, which we call the ``bridge to 
everywhere'' because it carries 15 percent of the Nation's 
cargo each day.
    IANA recommends that the Committee continue to support the 
development of a comprehensive freight policy that addresses 
funding for and improvements to the Nation's bridge, roadways, 
and rail infrastructure. This should include removal of the $50 
million cap on freight funding.
    IANA and the Port of Long Beach also support fully funding 
freight provisions and opportunities for U.S. seaports to apply 
for formula and comparative multimodal freight grants. In 
particular, IANA strongly recommends that the Committee develop 
dedicated funding for intermodal freight connectors, fund 
additional freight rail infrastructure, such as on-dock 
facilities, allow for enhanced public-private partnerships that 
can improve funding opportunities for America's freight 
infrastructure, support fuel tax increases to fund freight 
infrastructure projects, and form a multimodal freight office 
within the Department of Transportation that would report to 
the Secretary of Transportation.
    IANA further supports permitting reform to reduce timelines 
for intermodal infrastructure projects.
    IANA and its members are strong supporters of leveraging 
technology investments and innovation to enable and enhance 
information-sharing across the intermodal supply chain. 
Improving information-sharing throughout the supply chain will 
also help to improve system efficiencies.
    As an example, the Port of Long Beach recently collaborated 
with the Port of Los Angeles and General Electric 
Transportation to conduct a pilot demonstration of a port 
information portal, known as the Port Optimizer, which has the 
potential to enhance supply chain performance and 
predictability by delivering real-time data-driven insights 
through a single portal.
    This advanced visibility could benefit the entire 
intermodal supply chain and it comes at a critical time as we 
face increased competition from ports in Canada and Mexico 
where the respective governments have developed national 
strategies and the freight stakeholders there are aggressively 
working to attract more cargo moving to and from U.S. markets.
    I wish to conclude by thanking you again for the 
opportunity to discuss critical industry trends, freight 
project funding opportunities, and recommendations regarding 
the U.S. intermodal freight system.
    We stand ready to work with you, members of the Committee 
and its staff, to develop innovative legislative, policy, 
funding, and infrastructure development solutions to improve 
the Nation's intermodal system.
    Thank you.
    [The prepared statement of Dr. Hacegaba follows:]

  Prepared Statement of Dr. Noel Hacegaba, Deputy Executive Director, 
 Port of Long Beach, on behalf of the Intermodal Association of North 
                                America
Introduction
    Thank you, Chairman Fischer and members of the Subcommittee on 
Transportation and Safety for the opportunity to speak on the subject 
of intermodal stakeholders across the transportation system. My name is 
Dr. Noel Hacegaba and I am the Deputy Executive Director responsible 
for administration and operations at the Port of Long Beach. Since 
joining the Port in 2010, I have also served as Managing Director of 
Commercial Operations and Chief Commercial Officer and successfully 
managed the Port's commercial activities during a period of significant 
industry realignment and collaborated with customers and industry 
partners to optimize the supply chain. I also led the swift recovery of 
our largest container terminal operation when it was impacted by the 
biggest bankruptcy in shipping line industry history.
    I am here today on behalf of the Intermodal Association of North 
America (IANA), where I serve as a member of its Board of Directors and 
chair of its Policy Committee. IANA consists of more than 1,000 
corporate members including railroads, ocean carriers, ports, 
intermodal trucking companies, over-the-road highway carriers, 
thirdparty logistics companies and suppliers to the industry.
    As a significant player in the effort to improve the efficiency of 
goods movement, IANA is the only organization that represents the 
combined interests of the intermodal freight transportation industry. 
IANA's mission has been to promote the growth of efficient intermodal 
freight transportation through innovation, education and dialogue.
Background
    I have the distinct privilege of working at the second busiest 
seaport in the United States, which serves as a major gateway for U.S.-
Asia trade. The Port of Long Beach is an innovative provider of state-
of-the-art seaport facilities and services that enhance economic 
vitality, supports jobs and improves the quality of life and the 
environment. As a major national economic force, the Port supports more 
than 51,000 jobs in Long Beach, 576,000 jobs throughout Southern 
California and 2.6 million jobs across the United States. In 2018, the 
Port of Long Beach moved more than 8.1 million twenty-foot equivalent 
units (TEUs) of cargo, also known as containers. Cargo moving through 
the Port of Long Beach accounts for nearly 33 percent of the containers 
moving through U.S. West Coast ports, and nearly 1 in 5 moving through 
all U.S. seaports.
    Combined with our neighbor, the Port of Los Angeles, both ports 
comprise the San Pedro Bay, the busiest Port complex in the Nation and 
the ninth-busiest in the world. Together, the two ports moved $400 
billion in containerized trade, representing more than 17 million TEUs 
in 2018. This includes almost 40 percent of the Nation's imported 
cargo. A 2011 report commissioned by both ports and the Alameda 
Corridor Transportation Authority found that cargo moving through the 
San Pedro Bay Port Complex made its way to every Congressional district 
in the continental United States. As a result of the cargo volume moved 
through this complex and transportation-related activities, it is 
critical to invest in intermodal connectors that move cargo more 
efficiently.
    The Port cannot do this work alone. For us to be successful, it 
requires working collaboratively with shippers, steamship lines, 
railroads, trucking companies and logistics providers. Intermodal by 
its nature is complex, and it requires all stakeholders to work 
together to move freight in an efficient and timely manner.
Intermodal Transportation Overview
    Currently, the intermodal industry in the U.S. includes five Class 
1 railroads, 46 shipping lines, more than 7,000 trucking companies and 
over 10,000 third-party logistics companies. In 2018, intermodal 
volumes increased 5.6 percent over 2017--the strongest growth in five 
years. By segment, import container traffic increased 5.4 percent while 
domestic container traffic increased 4.9 percent. This growth is 
attributed, in part, to the decision by shippers to advance the 
movement of imports from China in an effort to avoid tariff increases.
    There are 1,274 intermodal facilities and 185 seaports in the 
United States that handle import and export cargo. Of note, a Port 
complex like the San Pedro Bay has multiple marine terminals in 
operation that work directly with the shipping lines, Class 1 
railroads, trucking companies and distribution centers. The advent of 
``mega-ships,'' some that carry as many as 18,000 TEUs, has put more 
stress on intermodal terminals, roadways, bridges and rail 
infrastructure. Increased cargo volumes off-loaded at marine terminals 
in many port complexes have created backlogs of containers, which has 
led many ports to look at ways to improve cargo efficiency and freight 
infrastructure. Similar circumstances arose in 2018 at inland 
intermodal facilities.
    Increasing the reliability of delivery and developing smooth 
pathways for the movement of freight is important to the continued 
growth of the U.S. economy. Investment in intermodal connectors--the 
links that facilitate the transfer of freight between modes--is a major 
part of the solution to congestion. The use of on-dock and near-dock 
rail is also an important transportation option used to alleviate port 
congestion and to help maintain freight velocity on the intermodal 
network. On-dock rail is the ability of terminal operators to place 
containers onto rail at the terminal site, while near-dock rail allows 
for cargo to be moved to adjacent locations and placed on rail for 
transportation to inland ports. Both on-dock and near-dock rail have 
helped to significantly reduce terminal congestion and also to 
alleviate emissions from trucks.
    Currently, the Port of Long Beach is investing over $1 billion to 
improve on-dock rail capacity, making it a top priority as we pursue a 
goal of moving 35 percent of all cargo by rail. Planning and designs 
are underway for the Pier B On-Dock Rail Support Facility, which aims 
to reconfigure, expand and enhance an existing rail yard. Specifically, 
this project will remove rail bottlenecks in the Port and create a rail 
hub between the Port of Long Beach and the Alameda Corridor, which 
serves rail access to the region and across the Nation. The project 
will allow trains up to 10,000 feet long to be loaded and unloaded at 
on-dock rail yards at marine terminals to streamline rail operations, 
ease roadway traffic congestion and improve air quality as cargo volume 
grows.
    In 2011, the Port of Long Beach received a $17 million grant from 
the Transportation Investment Generating Economic Recovery (TIGER) fund 
for the Green Port Rail Gateway rail enhancement project. This project 
enabled us to add a third rail line, helping to remove bottlenecks on 
the existing mainline track to allow Port terminals to shift cargo from 
trucks to trains, which decreased local traffic congestion and air 
pollution. It also included the demolition and removal of existing 
tracks, laying of 29,000 feet of new tracks and building of 6,000 feet 
of retaining walls. These improvements help to minimize derailments and 
optimize rail traffic flow. This nationally significant project created 
340 construction jobs and will allow the Port of Long Beach to better 
achieve its goal of increasing on-dock rail use. The ability of U.S. 
seaports, like Long Beach, and other stakeholders in the intermodal 
supply chain, to improve the flow of freight through intermodal 
connectors and to handle current and future trade volumes, will depend 
on significant Federal infrastructure investments.
Transportation Funding Needs
    Freight transportation is the backbone of the American economy. The 
increasing volume of goods moving through U.S. ports and throughout the 
intermodal freight network each year creates additional strains on the 
supply chain. It is estimated that U.S. businesses pay $27 billion each 
year in extra freight costs due to congestion and outdated facilities. 
It is also estimated that it will cost $3.7 trillion in order to meet 
all of the infrastructure needs of the freight supply chain. New 
capital investment in freight transportation infrastructure will lead 
to significant benefits including higher productivity, improved freight 
velocity, enhanced global competitiveness and a higher standard of 
living for the citizens of our Nation.
    The Port of Long Beach is in the midst of a 10-year, $4 billion 
capital improvement plan (CIP), the most comprehensive modernization 
program of any port in the Nation. In Fiscal Year 2019, nearly $700 
million has been budgeted for capital projects, which comprises 71 
percent of the total $982 million budget. The road improvements, rail 
enhancements, terminal redevelopments and bridge replacements in the 
CIP underscore the Port's commitment to moving cargo efficiently and 
remaining competitive. Integrated planning and funding that addresses 
the end-to-end needs of freight movement will be critical to developing 
comprehensive regional and statewide plans to improve the Nation's 
infrastructure system. The Fixing America's Surface Transportation 
(FAST) Act authorized surface transportation programs through Fiscal 
Year 2020. The FAST Act was critical for the intermodal system because 
it looked to: expand funding; streamline the environmental review and 
permitting process to accelerate project approvals; promote the 
deployment of transportation technologies and congestion management 
tools; and expand port eligibility in the Congestion Mitigation and Air 
Quality Improvement Program.
    In addition, discretionary grant programs like Better Utilizing 
Investments to Leverage Development (BUILD), Consolidated Rail 
Infrastructure and Safety Improvements (CRISI) and Infrastructure for 
Rebuilding America (INFRA) have provided much-needed opportunities to 
fund freight-related projects. Furthermore, innovative financing 
options like the Transportation Infrastructure Finance and Innovation 
Act were instrumental in helping to fund the Port of Long Beach's $1.4 
billion Gerald Desmond Bridge Replacement Project.
    It is recommended that the Committee continue to support the 
development of a comprehensive freight policy that not only addresses 
funding for and improvements to the Nation's roadway, rail and bridge 
infrastructure system, but also allows for significant investment in 
projects not directly related to highways. A major aspect of the 
comprehensive plan should include removal of the $500 million cap on 
intermodal freight funding in the next Federal transportation 
reauthorization legislation. Such a cap limits the ability to fund 
significant intermodal projects at the levels that are needed. In 
addition, IANA, as well as the Port of Long Beach, support fully 
funding freight provisions and opportunities for U.S. seaports to apply 
for formula and competitive multimodal freight grants.
    In particular, IANA strongly recommends the following items to 
improve the intermodal freight transportation system: developing 
dedicated funding for intermodal freight connectors; building 
additional freight rail infrastructure; fuel tax increases to fund 
freight projects; enhancing public/private partnerships that improve 
and expand infrastructure; and the formation of a multimodal freight 
office that would report to the Secretary of Transportation.
    IANA also believes intermodal project permitting reform is needed. 
Existing permitting regulations can cause significant delays in the 
construction of transportation projects, more than double their cost 
and prevent their timely completion, the results of which hinder 
improvements that increase system fluidity. Reforms are needed to 
reduce timelines for infrastructure projects, as they can help to 
address bottlenecks on the Nation's freight network while also reducing 
total project costs, which would result in the ability to fund more 
projects. Reviews should be streamlined and Federal agencies should 
coordinate more effectively, particularly for large, intermodal 
projects that traditionally require the approval of multiple modal 
administrations.
    We believe that if Congress takes action on the above items, it 
will help demonstrate to the freight industry that our government 
understands and supports the important role freight plays in our 
economy and our global competitiveness. We also believe it will send an 
important message to the private sector to enable additional capital 
investment to seed further enhancements to the intermodal network.
Information Sharing
    In addition to Federal investments in the national intermodal 
transportation system, improving information sharing throughout the 
supply chain will help to improve system productivity and efficiencies. 
IANA and its members have been a strong supporter of leveraging 
technology investments and innovation to enable and enhance information 
sharing among all stakeholders in the intermodal supply chain.
    As an example of this, the Port of Long Beach recently collaborated 
with GE Transportation to conduct a pilot demonstration of its port 
information portal. This portal is a cloud-based software program that 
has the potential to enhance supply chain performance and 
predictability by delivering real-time data-driven insights through a 
single portal to stakeholders across the supply chain. Integrating data 
from across the port, combining machine learning and deep domain 
expertise, Port OptimizerTM is a tool that could help the 
supply chain monitor and respond to dynamic conditions, align people 
and resources and proactively communicate across functions--enabling 
maximum port cargo flow and delivery performance.
    Another example of how intermodal stakeholders are leveraging 
technology to improve information sharing and, ultimately, port 
operations is the pairing of predictive analytics with terminal truck 
appointment systems. Such systems allow trucking companies to schedule 
appointments for container pick-up up to five days before a ship 
arrives at the terminal. This advanced visibility enables terminals and 
trucking companies to optimize their operations. The goal of these 
programs is to increase supply chain performance.
Trade and Tariffs
    The intermodal supply chain delivers vital goods and services to 
consumers, creates millions of jobs and supports national economic 
growth. By volume, 99 percent of U.S.-overseas cargo travels via 
seaports. The Trans-Pacific Trade route, of which Long Beach is a vital 
part of, is the most significant trade route in the United States.
    U.S. seaports are facing increased competition from Canada and 
Mexico, which have each developed effective national strategies to 
serve America's heartland. Freight stakeholders in Canada and Mexico 
are aggressively working with their governments to attract more cargo 
moving to and from U.S. markets. Additionally, Canada has a 
multijurisdictional freight partnership with significant Federal 
funding committed to addressing the competitiveness of two ports on 
each coast. Significant investments must be made in ports and across 
the intermodal network to rehabilitate constrained and dilapidated 
infrastructure and also implement environmental improvements. We need 
to have a national freight strategy and also work more collaboratively 
with our neighbors to the north and south to ensure we have a seamless 
freight system that effectively services the needs of the citizens of 
all three countries.
    Investing in the Nation's freight transportation infrastructure is 
critical to increasing trade through America's major gateways. 
Multimodal freight investments must be a key priority to improve 
landside connections to seaports and enhance global competitiveness.
    Increased funding for infrastructure projects, including intermodal 
facilities, will provide intermodal stakeholders and their customers 
with the speed, reliability and reduced costs they need to succeed and 
keep U.S. jobs. Trade and tariff policies that maintain U.S. 
competitiveness in the global economy, as well as legislation and 
regulatory efforts that will increase exports and promote trade, will 
be key to improving the Nation's intermodal system.
    With respect to tariffs, while affecting a relatively small share 
of trade, they have the potential to disrupt supply chains, investment 
and employment, particularly in Southern California and other ports 
where the goods movement industry is a vital part of the local and 
regional economy.
Conclusion
    IANA thanks the Committee for the opportunity to share information 
about critical industry trends, Federal funding opportunities, 
information sharing technologies and recommendations regarding the U.S. 
intermodal freight industry. A highly functioning freight system 
requires modes to work together seamlessly. IANA and its members, like 
the Port of Long Beach, stand ready to work with members of the 
Committee and its staff to develop innovative legislative, policy, 
funding, and infrastructure development solutions to improve the 
Nation's intermodal system.

    Senator Fischer. Thank you, Doctor.
    Our next panelist is Ms. Donna Lemm, who's the Executive 
Vice President of IMC Companies, representing the Agriculture 
Transportation Coalition.
    Welcome.

        STATEMENT OF DONNA LEMM, ADVISORY BOARD MEMBER,

           AGRICULTURE TRANSPORTATION COALITION; AND

         EXECUTIVE VICE PRESIDENT, IMC COMPANIES, INC.

    Ms. Lemm. Chairman Fischer, Ranking Member Duckworth, and 
Members of the Subcommittee, thank you for holding this very 
important hearing.
    I'm honored to speak on behalf of the members of 
Agriculture Transportation Coalition, our Nation's farmers, 
processors, manufacturers of agriculture and forest products.
    I come before you today representing our very hard-working 
members. I'm humbled to speak because no one understands better 
the importance of this vital economic engine more than you do 
as a cattle rancher living and breathing a sector that is so 
vital to feeding America and the world.
    As you well know, Ag and forest products constitute the 
largest segment of our country's exports. It's essential at the 
onset of this testimony to just reiterate the daily threat of 
global competitive sourcing that confronts all your agriculture 
and forest product constituents.
    There's nothing that we produce here in agriculture and 
forest product shipments that cannot be sourced elsewhere in 
the world. If we cannot deliver affordably and dependably to 
our customers in Asia and Europe and around the world, someone 
else will, and getting those customers back is nearly 
impossible.
    All over the country, we're faced with bottlenecks, delays, 
and handcuffs in our ability to execute within the supply 
chain. Surging imports, as you referenced, have clogged our 
ports and in turn the trains and the tidal wave has moved 
inland.
    Motor carriers, already short on drivers, sit idle waiting 
for those containers to become available. In sum, our entire 
international and domestic transportation supply chain fails. 
Our producers have to store or even destroy their production 
and obviously lose the sales that they're so dependent on.
    U.S. Ag and forest products are produced all over the 
country and often the sourcing of the containers is far from 
where these products are produced. The very first challenge is 
to have adequate supply containers to move our goods. Our 
refrigerated shippers, our beef and our poultry shippers suffer 
from adequate supply of refrigerated equipment. In turn, our 
non-refrigerated Ag shippers often move in rail cars directly 
to the ports or to inland hubs where they have access to 
equipment.
    Today, in our peak season, where we live in Memphis, 
Tennessee, shipping cotton, we're already seeing tightening of 
equipment, Memphis, Dallas, and here, there are shortages of 
equipment in Chicago, as well.
    To compound the challenge of marine container equipment 
supply, we have another piece of equipment vital to moving ag 
exports that's critically short not only in supply but in 
quality, in safety, fair access, and accountability, and that 
is the chassis.
    The chassis, that metal frame and wheels upon which the 
container is mounted for movement over the road. The problem 
was so critical in Memphis that we came together to form a 
Memphis Innovation Supply Chain Team.
    We asked Commissioner Dye of the Federal Maritime 
Commission because of her success with her national team to 
please lead our team and in turn we're happy to share that we 
have great collaboration with all segments, our railroads, our 
ocean carriers, and our shippers, and we're seeking and 
appealing to these chassis providers to please understand our 
need for a single grade pool.
    We also suffer from rail congestion and scheduling issues. 
We have rail cutoffs and schedules that are missing and in turn 
as our exports enter our rail terminals, we're being rejected 
because of the congestion. We're being turned around.
    We've asked to appeal to you for appointment system to look 
at it because often there are not enough appointments to meet 
the surges of exports that we have and we're not meeting our 
vessel cutoff if we cannot meet our rail cutoff.
    The agriculture sector certainly has felt the driver 
shortage and AgTC members are very grateful for the FMC 
support, flexibility, for sensitive Ag shippers and hours of 
service exceptions within a 150-mile air radius.
    We're currently faced with new ocean carrier street turns, 
not all ocean carriers but some, charging fees as we try to 
street turn and what that means is we take an import container 
that's been emptied and try to utilize the equipment right away 
on the street.
    These fees are counterproductive and we appeal to you to 
help us in our opposition.
    Port congestion, as we stated at the onset, very 
challenging for our exports to enter the terminals. We have 
very narrow windows. We're asked now to bring in those 
containers when those vessels are working. We don't know when 
they're working. In turn, we're missing windows and missing 
sales.
    Thank you for allowing me just to share with you a glimpse 
of what we face every day. We seek your assistance in creating 
more opportunities to collaborate in this multimodal network 
that we navigate through to export our products that feed the 
world.
    Thank you.
    [The prepared statement of Ms. Lemm follows:]

 Prepared Statement of Donna Lemm, Advisory Board Member, Agriculture 
    Transportation Coalition; and Executive VP, IMC Companies, Inc.
    Chairman Fischer, Ranking Member Duckworth, and members of this 
Subcommittee, thank you for holding this important hearing.
    I am honored to speak on behalf of the members of the Agriculture 
Transportation Coalition: our Nation's farmers, processors, 
manufacturers of agriculture and forest products. I come before you 
today representing our hard working members. I am humbled to speak 
because no one understands better the importance of this vital economic 
engine more than you do, as a cattle rancher, living and breathing a 
sector that feeds America and the world.
    As you well know, agriculture and forest products constitute the 
largest segment of our country's exports. The Agriculture 
Transportation Coalition (AgTC) has, for 31 years, pursued an 
efficient, dependable and affordable transportation supply chain 
required to keep our exports competitive in the global marketplace. 
Today, I will discuss some of the most pressing transportation 
challenges facing agriculture and forest products exporters today.
    It is essential to emphasize the daily threat of global competitive 
sourcing confronting all your agriculture and forest products 
constituents:

   There is nothing that we produce in agriculture and forest 
        products in this country, that cannot be sourced somewhere else 
        in the world. What is produced in Nebraska and Illinois, for 
        examples, Brazil, Australia, Argentina, Canada and Mexico are 
        more than eager to supply.

   When we cannot deliver, affordably and dependably, to our 
        customers in Asia, Europe and around the world, those customers 
        will find alternative sources.

   When our foreign customers go elsewhere, and establish new 
        sources and new supply chains, it is incredibly difficult to 
        get those customers back.

    Today's hearing is timely, and appropriate, because the 
transportation challenges we have today are indeed threatening our 
ability to get our Agriculture and forest products to market.
    At the outset, I would like to clarify--most of the agriculture and 
forest products exported from this country are moving in intermodal 
containers. Our overseas customers of U.S. agriculture and forest 
products demand that we deliver agriculture in containers, and that our 
exports arrive frequently, in manageable volumes, and in good 
condition--necessitating containerized shipping. This includes all 
refrigerated goods, such as beef, pork, poultry, fresh fruit and 
vegetables, eggs, dairy, etc. moving in refrigerated containers; 
meanwhile, virtually all of the cotton, lumber, almonds, paper, 
specialty grains and top grade soybeans, hay, rice, etc. are 
transported in 'dry'' containers. Traditional 'bulk' cargoes have 
increasingly migrated to containerized shipping. The Class 1 railroads 
are moving hundreds of thousands of these intermodal containers of our 
agriculture exports, from inland points, to our seaports on the East, 
Gulf and West Coasts. AgTC members are loading hundreds of containers 
each week at rail ramps throughout the country, including in Nebraska 
and Illinois
    All over the country we are faced with bottlenecks, delays and 
handcuffs in our ability to execute within the supply chain. Surging 
imports have clogged our ports and in turn the trains moving inland 
have containers stockpiled. Motor carriers, already short on driver's 
sit idle waiting and waiting for availability of containers. In sum, 
our entire international and domestic transportation supply chain 
fails. Our producers have to store or even destroy their production, 
and obviously lose the sales they depend upon.
    This hearing is timely, please allow me to highlight as we move 
across the supply chain from start to finish. Our system has gaps that 
are causing huge challenges that may be visible as we peel this back 
looking at the movement of agriculture and forest product exports in 
containers from origin to our rails and then to our marine terminal 
gateways. There is a real need for a solution that will protect U.S. 
agriculture and forest product shipments from falling deep into 6 
challenging areas in the system which are currently hindering export 
execution.
1. Container shortages
    U.S. agriculture and forest products are produced all over the 
country and often the sourcing of containers is far from where our 
products are produced. The first challenge is to have adequate supply 
of containers to move our goods. Our refrigerated agriculture exporters 
of beef and poultry often suffer from adequate supply and availability 
of refrigerated containers. For our non-refrigerated agriculture 
products many of our members will move by rail to transload facilities 
that can accommodate large access to containers. Where are the 
containers? We depend on availability at ports and our inland hubs like 
Chicago, Memphis, Dallas and Kansas City. We send agriculture and 
forest products in rail cars to transloading centers near our Nation's 
major ports. From the mid part of the country moving often east to 
Charleston, Savannah, Norfolk. For our fruit and nuts shippers 
depending on our ports for supply of empty containers in Los Angeles 
and Long Beach, Oakland, Seattle. Our cotton and forest product exports 
looking for sourcing of containers in the interior in Dallas and 
Memphis where supply is already short. Looking to the Gulf ports like 
Houston, New Orleans and Mobile for sourcing of containers that have to 
compete with resin shipments for supply of standard marine containers. 
Containers is already tight in our inland locations like Chicago, 
Memphis and Dallas where we are moving from fall harvesting into peak 
shipping season which is right now.
2. Chassis shortages and the need for quality/roadworthy equipment, 
        accountability and fair access to chassis
    To compound the challenge of marine container equipment supply, we 
have another piece of equipment vital to moving ag exports and that is 
critically short not only in supply, but in quality and safety, fair 
access and accountability and that is the chassis. (The chassis is the 
metal frame and wheels upon which the container is mounted for movement 
over the road). The challenge of chassis supply and fair access to 
chassis on merchant haulage moves have reached headlines across the US. 
It is important to note that there currently is no consistent way for 
chassis providers to forecast for United States Agricultural exports; 
most forecasting for chassis provisioning is done for imports only. 
Until a decade or so ago, chassis in the United States were directly 
provided by the containership operators, with a clear accountability. 
For a number of complicated reasons, including regulatory changes, the 
emergence of operator alliances and space-sharing agreements, plus the 
financial stresses of the Great Recession combined with emergence of 
private equity capital seeking infrastructure-related opportunities, 
the operators sold off most of their chassis assets to three outside 
firms that now own the vast majority of the Nation's chassis fleet. As 
a result, chassis are now controlled and managed by these outside 
entities where there is no overall accountability for provision of 
adequate quality and quantity of chassis, and short-term commercial 
pressures might outweigh the necessity of ensuring supply chain 
fluidity.
    Please allow me to give you an example of the impact of lack of 
chassis to the cotton market in Memphis. In the first quarter of 2018 
agriculture exports in Memphis came to a screeching halt. In early 
February of 2018 there were 3 chassis available and in good working 
order, according to chassis providers' reports, to serve a market 
moving over thousands of agriculture exports a week. At the same time 
our importers were grounded and piled high at our rails due to this 
chassis shortage and compounded by weather. We had had enough and our 
team of agriculture and forest product shippers, reached out to other 
stakeholders to try and peel back what really was at the center of our 
standstill. The Memphis Supply Chain Innovation team was formed, this 
is the first regional team of stakeholders that came together to bring 
stakeholders together to find actionable resolve. The Federal Maritime 
Commission was hosting its Fact Finding 28 meeting in Memphis on 
detention and demurrage May 15, 2018 and the next day the team 
assembled to step out of their silos to look at the supply chain 
process in Memphis and what might be done to assist fluid commerce. The 
team comprised of Agricultural exporters, railroads, ocean carriers, 
importers and motor carriers agreed unanimously that the single most 
actionable solution was a single gray pool in Memphis for chassis. The 
team championed action for a single gray pool the following:

  1.  Interoperability which would immediately increase supply

  2.  Quality of chassis given the concern for safety, age of chassis 
        and condition of chassis with so many in maintenance and repair 
        status

  3.  Pool manager for accountability of chassis availability, supply 
        and condition

  4.  Shipper Board that would assist in a continued voice for an 
        operating chassis model that would offer resolve to the current 
        broken chassis model.

    This appeal was supported by 4 Major class I railroads, all OCEMA 
members, the Memphis Supply Chain Team, AgTC, ATA, Memphis Chamber of 
Commerce and today we will hear from Intermodal Equipment providers if 
they will indeed embrace the current solution proposed.
    The experience in Memphis also gives us insight into how connected 
all stakeholders are and how important shared discussion, review, and 
accountability to foster commerce really is. The gap between railroads 
that count on ocean carriers to supply chassis, who in turn contract 
with chassis providers find shippers and motor carrier with no voice. 
We also see challenges with rail making decisions regarding capacity 
and frequency that should absolutely engage other stakeholders, 
including exporters.
3. Rail congestion and scheduling issues
    Rail congestion impacts every agriculture and forest product 
exporter trying to in-gate loaded exports into the rail terminal. 
Severe congestion is reported by our members in Chicago and Memphis at 
this time. There is often no room at the terminal and containers are 
being rejected at the gate. Motor carriers are forced to turn around. 
This congestion is the result of surging imports, lack of chassis 
availability which has been compounded by weather. Container grounding 
continues to occur in these major inland rail hubs and the result is 
rising costs of demurrage and detention paid by the shipper due to no 
fault of their own.
    It is very important to AgTC members to have reliable rail cut-
offs. Members are reporting that the situations at inland rail hubs are 
challenging with specific mention of the NS Memphis ramp. Rail cut-offs 
to tender export loads have been unreliable and impacting final missed 
delivery of cargo loading in Charleston and Savannah. Truckers have 
waited in line between 2-6 hours for various reasons--volume, 
congestion and ramp equipment breakdowns. Exporters cannot face these 
kind of delays per load and expect to meet inland cutoffs and overseas 
customer commitments.
    Our agriculture and forest product members do struggle with 
appointment systems that often do not accommodate the volume of cargo 
that has been booked with ocean carriers. Several of our largest 
exporters have shared that the CSX and CN have no volume correlation to 
ocean carrier designated ``Earliest Return Date ``(ERD) and Intermodal 
Cutoff for specific bookings. There are ``X ``number of appointment 
times given out per day by the rail and when they are gone, truckers 
need to wait until the following day. As noted, the availability to day 
does not appear to be tied to actual bookings with specific shippers 
who have been provided specific ERD's and cutoffs. This lack of 
alignment also threatens when loads can be picked up.
    The net effect is exporters and the truckers they are working with 
are getting less loads per driver per day--reducing supply chain 
velocity and U.S. surety to meet export customer commitments complete 
and as committed = more shipments splits which has downline system 
impacts for the marine terminals, ocean carriers and vessels.
    The western Class I's--BNSF Railway and UP Marion have made 
significant infrastructure investments in Memphis; we need all rail 
providers to keep pace with the growth of intermodal volumes.
4. Motor Carrier: Driver Shortages, Hours of Service
    The agriculture sector certainly has felt the driver shortage and 
AgTC members are grateful for the FMCSA's support of flexibility for 
agriculture shippers and Hours of Service exceptions within a 150 mile 
radius. 2018 was particularly painful with shippers scrambling to find 
drivers to move goods from sourcing locations all over the United 
States. It is said that over 50,000 new drivers are needed to serve the 
international and domestic markets. The AgTC membership has worked hard 
to find ways to accommodate the driver at warehouses, respecting the 
drivers time with loading and looking for ways to make the process more 
efficient. In the midst of the driver shortage, agriculture exporters 
struggle to compete with foreign sourcing, finding equipment, finding 
drivers. While there are various causes of the congestion and delay at 
our Nation's gateways and rail ramps, much could be gained by 
harmonizing our allowable truck weights with the rest of the world, 
significantly reducing the number of trucks on the road, or waiting at 
rail ramps and marine terminals.
5. New Ocean Carrier ``Street Turn'' Fees challenge efficiency, cost 
        and emission 
        reduction for all stakeholders
    A particularly counterproductive approach is several ocean 
carriers' filings with the UIIA to impose fees for containers that are 
interchanged once import devanning has taken place. In other words 
these empty containers do not go back to their depots or to terminals, 
instead they are interchanged to move on to secure U.S. exports. This 
practice is known as street turns. Street turns enhance efficiencies, 
save trucking costs, reduce congestion and save emissions. This 
practice that helps all stakeholders save time and money now has ocean 
carriers imposing fees from $40 to $75 on ``street turns''. We ask this 
Committee to assist in gaining ocean carrier rescission of this 
appalling action by these 4 ocean carriers
    The fees imposed on street turns injures all, including the 
carriers themselves, by adding to congestion and delay which already 
makes marine terminals at some of our largest ports, the greatest 
challenge to the U.S. export/import supply chain. Penalizing street 
turns threatens one of the only measures available to shippers, 
carriers, terminals, truckers to address the unending congestion. All 
parties should be concerned about the detrimental impact on the 
environment, particularly in and around the vicinity of port complexes. 
At a time when ports are mandating green trucks and reduced emissions, 
this street turn fee is already increasing the number of trucks and 
emissions.
    The Agriculture Transportation Coalition has offered to meet with 
these and other carriers to help them understand how the street turn 
penalty will impede cargo flow and increase costs and fuel emissions.
6. Port Congestion
    Most marine terminals were designed and built to accommodate 
container ships that were a quarter the size of the largest container 
ships now carrying our Nation's exports and imports. Today ships of 
12,000-14,000 TEUs are calling our ports. Ocean carriers have 
consolidated their services to for alliances sharing space together on 
these mammoth ships. The ships aren't the only requirements that are 
getting larger, more berthing space, larger cranes and the immediate 
issue of scalability is front and center. The entire supply chain is 
scrambling to catch up and in many cases failing to catch up. It begs 
to ask the question who is responsible for cramming this huge tonnage 
into the supply chain without fair planning or coordination by all 
stakeholders? For U.S. exporters this means less frequency of vessel 
calls, shorter scheduling windows to ship larger volumes and less 
choice of carrier options because of consolidation and alliances. 
Container volumes often get cut in half when loading because of 
capacity constraints and tonnage maximums on vessels. We have one 
member that is the second largest exporter in the country, who shared 
that his containers are being shut out and only allowed to load if a 
vessel is working.
    The congestion at major maritime gateways is such that trucks are 
often idling for hours outside the marine terminal gates. Turn times 
once on the terminals are unacceptably long, caused frequently by an 
overload of containers discharged all at once from the massive ocean 
ships whose volumes far outstrip the capacity of terminals built for 
the previous generations of container ships. The congestion, combined 
with a shortage of available chassis, frequently results in the 
exporter or importer being unable to return an ocean carrier container 
to the terminal within the set amount of ``free time'' days set forth 
in the ocean shipping contract. Typically for exporters this is five 
days. Sometimes even shorter. Rarely longer. The penalty for missing 
the ``free time'' limit can be $125-$175 per day. The marine terminal 
portion of this ranges from $9-$20, with the remainder being remitted 
to the ocean carrier. Most U.S. exporters have been subjected to these 
fees, with some exporters and their truckers, suffering literally 
millions of dollars of such fees. This is obviously a huge drain on the 
profitability of our exports which already, due to global competition, 
labor under razor-sharp margins.
    We appreciate the Federal Maritime Commissioner Rebecca Dye's 
initiatives to develop supply chain teams, including all stakeholders, 
to address fundamental causes and find solutions to the marine terminal 
congestion. Specific questions are being addressed, such as when, under 
an ocean shipping contract, a container is considered to be 
``tendered'', so that is actually available for the trucker to pick up 
from the terminal. These Supply Chain teams are determining how to 
address the congestion which exists nationwide, at inland points such 
as Memphis and Chicago, to the seaports at all coasts. Several members 
of the AgTC are active participants.
7. Preventing imposition of ``Verified Gross Mass''--Thank you to this 
        Committee, the U.S. Coast Guard and the FMC.
    I would like to thank this Committee for your assistance in 
supporting the U.S. exporter. Three years ago the ocean carriers 
collectively announced an entirely new process by which the exporter 
would have to guarantee the accurate weight not only of our cargo 
(which we of course always have done), but also the weight of the ocean 
carrier's own container! Called ``Verified Gross Mass'', this would 
have imposed liability on exporters for information we don't have, and 
cannot obtain. It would have required significant changes to the 
electronic interface for export documentation, leading to delays in 
some shipments, and missed sailings. Fortunately, the U.S. Coast Guard 
stepped forward, noting that since the 1990s all loaded containers have 
had to be weighed at the marine terminal before loading on the ships, 
that our marine terminals were in compliance, and that there does not 
exist a need for this additional ``VGM'' requirement. This Committee 
conducted a hearing on this subject, conveyed its concerns about the 
counterproductive VGM proposal. We thank you, the FMC and the Coast 
Guard for taking the initiative to protect the interests of the U.S. 
exporter. Since then ocean carriers have largely refrained from 
imposing it on U.S. exports, but from time to time, a carrier will 
attempt to require it. The AgTC continues to monitor and educate those 
carriers that VGM is not to be imposed. We will continue to bring to 
this Committee's attention, the FMC, and the Coast Guard when a carrier 
attempts to impose a VGM requirement.
Summary
    The Agriculture Transportation Coalition has shared with you the 
challenges at origin with equipment and chassis shortages, driver 
shortages and the heightened challenges given the systemic problems 
with rail and terminal congestion. We have given you a glimpse of what 
we face every day and we ask for your continued support in creating 
programs that support continuity throughout the intermodal network 
connecting marine, rail, motor carrier, intermodal equipment providers 
and shippers. We seek your assistance in creating more opportunities to 
collaborate in this multimodal network that we navigate through to 
export our products that feed the world. Our agriculture shippers 
supply chain interests must be protected and commerce must seek an 
integrated supply chain with visibility, accountability and 
productivity for all sectors that embraces the U.S. agriculture 
exporter.

    Senator Fischer. Thank you, Ms. Lemm.
    Next, we have Mr. Joseph Szabo, the Executive Director of 
the Chicago Metropolitan Agency for Planning.
    Welcome, sir.

         STATEMENT OF JOSEPH SZABO, EXECUTIVE DIRECTOR,

         CHICAGO METROPOLITAN AGENCY FOR PLANNING; AND

         BOARD MEMBER, COALITION FOR AMERICA'S GATEWAYS

                      AND TRADE CORRIDORS

    Mr. Szabo. Well, thank you, Chairman Fischer, Ranking 
Member Duckworth, Members of the Subcommittee.
    It's an honor to be here to testify today. I'm here today 
on behalf of both the Chicago Metropolitan Agency for Planning, 
as we say CMAP, and also the Coalition for America's Gateways 
and Trade Corridors or CAGTC.
    CMAP represents some 284 municipalities with eight and a 
half million residents located in the heart of North America's 
freight hub, and CAGTC is a diverse coalition of more than 60 
public and private organizations that are dedicated to 
increasing Federal investment in America's multimodal freight 
infrastructure.
    Investment in freight infrastructure is critical to the 
economy of our country. It's fundamental that no economy that 
can ever grow any faster than its transportation network is 
going to carry it and so with FAST Act reauthorization around 
the corner, I urge you to include a robust freight program.
    I applaud the Committee for prioritizing freight investment 
in the FAST Act and, you know, this was landmark legislation 
that really provided a down payment on our Nation's 
infrastructure needs but so much more needs to be done.
    We urgently need a strategic freight mobility program that 
prioritizes the current economic needs of our country while 
also planning for generations to come and without action, U.S. 
productivity and global competitiveness is going to suffer.
    Years of underinvestment in our national transportation 
system have driven up the costs of doing business. As Dr. 
Hacegaba mentioned, U.S. companies are spending approximately 
$27 billion each year in extra freight transportation expenses 
due to congestion and ultimately it's the public that pays the 
price.
    And so the Federal role is key.
    Many of the most complex freight improvements cross local 
and state boundaries and occur where multiple modes are coming 
together. And so these often require a partnership at the 
Federal level to untangle the chokepoints that burden our 
communities and slow commerce.
    The BUILD and INFRA Programs remain essential. While BUILD 
is available to address a multitude of mobility issues of 
various sizes, INFRA is aimed at investing in those large-scale 
freight- and highway-specific infrastructure improvements.
    So both of them fill very important niches, and they've 
leveraged a significant amount of non-Federal dollars. Sources 
other than BUILD and INFRA have provided 72 percent and 80 
percent of funds for projects, respectively.
    In my region, U.S. DOT awarded CREATE's 75th Street 
Corridor Improvement Project $132 million through INFRA's most 
recent round. And these funds will be matched with $342 million 
from the CREATE partners to pay for the first portion of the 
75th Street Project to separate several freight and passenger 
rail lines, untangling one of the most significant bottlenecks 
in the country.
    It's key to the congestion issues, you know, that you were 
just speaking about that stem from Chicago and affect the 
entire national network.
    And so to address the urgent freight needs and build on 
successes, CAGTC respectfully submits four recommendations.
    First, we need a national strategy that guides long-term 
planning, a focus on multimodal freight should be established 
within U.S. DOT's Office of the Secretary to guide policy and 
programming, emphasizing nationally significant projects.
    Second, we need dedicated, sustainable, and flexible 
funding, and that flexibility is key, ensuring that it's 
multimodal. The INFRA Program is over-subscribed. In the most 
recent round, INFRA saw $12 in requests for every $1 that was 
available, and given this level of over-subscription, we 
believe that $12 billion annually in multimodal freight 
investments through a competitive program is needed.
    Congress should also eliminate the caps on non-highway 
spending under INFRA and the Freight Formula Program. Freight 
doesn't move on highways alone and so we have to invest in the 
very best projects, bring the greatest results to the public, 
regardless of mode. Simply, where public benefit is derived, 
public investment should be made.
    Third point, we need merit-based criteria that prioritizes 
projects with a demonstrable contribution to national freight 
efficiency. And oversight and transparency in the 
decisionmaking process is critical to the program's integrity.
    And finally, it's key that we have a partnership with the 
private sector. Funding should leverage private participation 
and provide the largest possible toolbox of financing options.
    And with that, I thank the Committee for the time and look 
forward to any questions.
    [The prepared statement of Mr. Szabo follows:]

    Prepared Statement of Joseph Szabo, Executive Director, Chicago 
   Metropolitan Agency for Planning; and Board Member, Coalition for 
                 America's Gateways and Trade Corridors
    Thank you for the opportunity to testify before the Senate 
Committee on Commerce, Science and Transportation's Subcommittee on 
Transportation and Safety. As Congress considers the possibility of an 
infrastructure investment package and approaches the surface 
transportation bill's reauthorization in 2020, I appreciate the 
Committee's ongoing dedication to freight system investment.
    Today I am representing both the Chicago Metropolitan Agency for 
Planning (CMAP) as well as the Coalition for America's Gateways and 
Trade Corridors (``the Coalition''), a diverse coalition of more than 
60 public and private organizations dedicated to increasing Federal 
investment in America's multimodal freight infrastructure. I thank 
Chairman Fischer, Ranking Member Duckworth and Members of this 
Subcommittee for the opportunity to share my views.
    CMAP is the regional planning organization for the northeastern 
Illinois counties of Cook, DuPage, Kane, Kendall, Lake, McHenry, and 
Will. We work to help communities prosper by addressing transportation, 
housing, economic development, open space, environment, and quality of 
life issues for our region through long-range planning. Our most recent 
plan, ON TO 2050, calls for bold steps toward a wellintegrated, 
multimodal transportation system that seamlessly moves people and goods 
within and through metropolitan Chicago. To balance improving our 
economic advantage with improving quality of life, freight 
recommendations in the plan emphasize strategic investment in the 
freight network, improving local and regional truck travel, and 
mitigating the negative impacts of freight on adjacent communities.
    The CMAP region plays a vital role in intermodal connectivity for 
the Nation. Approximately 16.4 million twenty-foot equivalent units 
(TEUs) of cargo moved through the region's twenty rail-truck intermodal 
facilities in 2016, an increase of nearly 38 percent since 2009.\1\ 
This represents more TEU lifts than the busiest seaports in the 
country. Chicago is also home to the regionally and nationally 
significant CREATE program, which includes 70 projects that aim to 
invest billions in critically needed capital improvements in our area's 
rail infrastructure. Due to our critical location at the nexus of the 
North American railroad network, Chicago has been a national rail hub 
for almost 150 years, seeing nearly 500 freight trains pass through the 
region every day. One-fourth of the Nation's freight rail traffic and 
nearly half of all intermodal trains pass through Chicago. But the rail 
lines, built over a century ago, were not built for the volumes nor the 
types of freight being carried--meaning Chicago is now the Nation's 
largest freight rail chokepoint.
---------------------------------------------------------------------------
    \1\ Chicago Metropolitan Agency for Planning, Intermodal Lifts. 

---------------------------------------------------------------------------
    Rail congestion, resulting in delays and unreliable transit times, 
can be exacerbated by market conditions and severe weather. Congestion 
in Chicago during 2014 caused lingering service disruptions for farmers 
across the Upper Midwest. Revenues decreased due to increased 
transportation and storage costs and losses caused by spoilage.\2\ 
Comprised of a partnership between the U.S. Department of 
Transportation, the State of Illinois, Cook County, the City of 
Chicago, Metra, Amtrak, and U.S. freight railroads, CREATE aims to 
address this bottleneck to increase the reliability and efficiency of 
the region's rail infrastructure. More than $1.6 billion has been spent 
or committed, with an estimated $2.8 billion needed to complete the 
full program. To date, Federal sources have provided 39 percent of 
spent and committed funds.
---------------------------------------------------------------------------
    \2\ U.S. Department of Agriculture, Rail Service Challenges in the 
Upper Midwest: Implications for Agricultural Sectors--Preliminary 
Analysis of the 2013-2014 Situation, January 2015. 
---------------------------------------------------------------------------
    Freight transportation is America's economic engine and the ability 
to move goods safely, reliably and expeditiously keeps U.S. businesses 
competitive in the global marketplace and supports a higher standard of 
living for our population. I applaud Members of this Committee for 
prioritizing freight infrastructure investment under the Fixing 
America's Surface Transportation (FAST) Act. This landmark legislation 
made significant improvements to our freight policy and programming. It 
is a down payment on our Nation's infrastructure needs, but as you 
know, much more is needed to make up for years of underinvestment and 
prepare for growing demands. With lawmakers preparing for the FAST 
Act's reauthorization in 2020 as well as the potential of a large-scale 
infrastructure investment bill, I ask you to include a robust freight 
program as the hallmark of both approaches.
    According to the Bureau of Transportation Statistics, 
``productivity growth in freight transportation has long been a driving 
force for the growth of U.S. overall productivity and contributed 
directly to the growth of U.S. GDP.'' \3\ The economic importance of 
freight infrastructure cannot be overstated. The United States' 
multimodal freight network directly supports 44 million jobs and 
impacts every American's quality of life.\4\ The system moves 55 
million tons of goods daily, worth more than $49 billion.\5\ That's 
roughly 63 tons per person annually; meanwhile, the U.S. population is 
expected to increase by 70 million by 2045.\6\ Such population growth 
presents both challenges and opportunities: the U.S. Department of 
Transportation estimates that freight tonnage will increase by an 
average of 1.4 percent annually through 2045.\7\ To capitalize on a 
growing 21st century consumer base and workforce, our infrastructure 
network must be up for the task.
---------------------------------------------------------------------------
    \3\ U.S. Department of Transportation Bureau of Transportation 
Statistics, Growth in the Nation's Freight Shipments, May 2017, 

    \4\ U.S. Department of Transportation, National Freight Strategic 
Plan, October 2015. 
---------------------------------------------------------------------------
    Unfortunately, years of underinvestment in our national 
transportation system have driven up the cost of doing business. U.S. 
companies spend around $27 billion annually in extra freight 
transportation expenses due to congestion,\8\ and the total cost of 
congestion is estimated at $1 trillion annually--roughly seven percent 
of U.S. economic output.\9\ Businesses are taking note. According to a 
study by the National Association of Manufacturers, 65 percent of their 
members surveyed do not believe that infrastructure, especially in 
their region, will be able to respond to the competitive demands of a 
growing economy over the next 10 to 15 years.\10\
---------------------------------------------------------------------------
    \8\ U.S. Department of Transportation, National Freight Strategic 
Plan, October 2015. 
    \9\ Ibid.
    \10\ Horst, Ronald and Jeffrey Werling, National Association of 
Manufacturers, Catching Up: Greater Focus Needed to Achieve a More 
Competitive Infrastructure, September 2014. 
---------------------------------------------------------------------------
    Infrastructure deficiency carries a cost, and it is not just 
businesses paying the price. According to TRIP, the average U.S. 
motorist is losing $599 in additional vehicle operating costs as a 
result of driving on infrastructure in need of repair.\11\ INRIX 
estimates that congestion costs the average U.S. driver $1,348 
annually.\12\ By contrast, an often-cited solution is significantly 
less burdensome: an immediate 25-cent increase in the motor fuel tax 
would cost the average household $285 annually.\13\
---------------------------------------------------------------------------
    \11\ TRIP, Bumpy Road Ahead: America's Roughest Rides and 
Strategies to Make Our Roads Smoother,'' October 2018. 
    \12\  INRIX, Congestion Costs Each American 97 Hours, $1,348 a 
Year, February 2019. 
    \13\ U.S. Chamber of Commerce, Here's What You Need to Know About 
the Gas Tax, April 2018 
---------------------------------------------------------------------------
    Public investment in our Nation's multimodal freight infrastructure 
is chronically inadequate to meet the system's demands. States and 
localities have made attempts to increase their infrastructure 
funding--since 1993, 39 states have raised their own gas taxes.\14\ 
However, states and localities cannot, and should not, shoulder the 
burden of nationally-significant freight movement alone. Embedded in 
the framework of our country, the Commerce Clause of the Constitution 
tasks the Federal government with making investments to support 
interstate commerce. 77 percent of U.S. freight crosses state lines, 
illustrating the need for a Federal role in freight planning and 
investment.\15\ At its peak, the Federal government provided 38 percent 
of public infrastructure funding but that number has fallen to just 25 
percent in recent years.\16\ This places a strain on communities and 
local governments, many of whom have already raised their user fees and 
are therefore struggling to determine where to dig up additional funds.
---------------------------------------------------------------------------
    \14\ U.S. Chamber of Commerce, Modernizing America's Infrastructure 
Requires Adjusting the Federal Motor Vehicle User Fee, January 2018 < 
https://www.uschamber.com/issue-brief/modernizing-america-s-
infrastructure-requires-adjusting-thefederal-motor-vehicle-user>
    \15\ Tomer, Adie and Joseph Kane, Brookings and JP Morgan Chase 
Global Cities Initiative, Mapping Freight: The Highly Concentrated 
Nature of Goods Trade in the United States, November 2014. 
    \16\ Council on Foreign Relations, The State of U.S. 
Infrastructure, October 2017. 
---------------------------------------------------------------------------
    While a variety of Federal funding solutions for transportation 
infrastructure have been contemplated by Congress and infrastructure 
advocates, our group has coalesced around a waybill fee dedicated to 
freight infrastructure improvements. A waybill fee assessed on the cost 
of surface transportation movements would not skew the market for 
services and would grow along with the demand for freight 
transportation. Freight infrastructure needs are significant and 
continue to grow; CAGTC remains committed to exploring solutions that 
will provide robust and dependable funding.
    Many of freight infrastructure's largest, most complex, and most 
desperately needed improvements cross local and state boundaries and 
occur where multiple modes come together. These instances often require 
a partnership at the Federal level to untangle chokepoints that burden 
our communities and slow commerce.
    The annually-appropriated BUILD, formerly TIGER, competitive grant 
program is designed to fund capital investments in infrastructure 
projects across all modes, including both freight and mixed use 
infrastructure. The FAST Act created a much-needed competitive grant 
program designed to target investments in large freight and highway 
projects. The Nationally Significant Freight and Highway Projects 
Program, or INFRA program, contains criteria written into law that 
focus on goods movement infrastructure, and its goals include: 
increasing global economic competitiveness, improving connectivity 
between freight modes, reducing congestion and bottlenecks, and 
improving the safety, efficiency and reliability of the movement of 
freight and people. Both programs are essential: while BUILD is 
available to address a multitude of mobility issues of various sizes, 
INFRA is aimed at investing in large-scale, freight and highway-
specific infrastructure improvements, both filling important niches.
    According to a 2019 study by the Congressional Research Service, 
``discretionary grants may be more effective in providing large amounts 
of Federal funding for very costly freight-related projects, 
particularly those requiring interstate cooperation.'' \17\ Competitive 
grant programs, such as INFRA and BUILD, assist in funding large-scale 
infrastructure projects, which often span modes and jurisdictional 
borders and are difficult, if not impossible, to fund through 
traditional distribution methods such as formula programs.
---------------------------------------------------------------------------
    \17\ Congressional Research Service, Freight Issues in Surface 
Transportation Reauthorization, January 2019. 
---------------------------------------------------------------------------
    While formula programs invest through a standard 80 percent Federal 
to 20 percent non-federal match, competitive grant programs encourage 
states and localities to bring their best possible deal to the table, 
driving innovative and creative funding and financing arrangements. 
Over the 10 rounds of the TIGER/BUILD programs, $3,577,140,879 has been 
awarded to projects with a freight component, yielding a total 
investment of $12,685,024,323, meaning sources other than the BUILD 
program provided 72 percent of funds.
    Similarly, in the INFRA grant program's three rounds, USDOT awarded 
$2,057,899,933 to projects with a strong freight component. Those 
monies combined with funds from various other sources to result in 
$10,072,983,957 in total project investments--meaning 79.6 percent of 
funds came from sources other than the INFRA grant program.
    In my region, USDOT awarded CREATE's 75th Street Corridor 
Improvement Project $132 million through the INFRA program's most 
recent funding round. The funds will combine with $342 million from 
other CREATE partners to pay for the first portion of this project to 
separate several freight and passenger rail lines in the 75th Street 
Corridor--improving reliability and travel time for more than 200 
freight trains, 30 Metra commuter trains, and 10 Amtrak trains daily. 
While benefits will begin to accrue upon completion of the first 
portion, $474 million represents less than half the funds needed to 
complete both portions of the project. Completion of the full project 
will reduce rail and roadway congestion resulting in an anticipated 
$3.8 billion of economic benefits.
    The INFRA program's ability to leverage the Federal dollar is 
impressive, but a small Federal ask, or likewise, a significant private 
contribution should not be the primary considerations when deciding to 
fund a project. Perhaps more important are project outcomes--we must 
consider the regional and national benefits of a project, not just the 
source of the matching funds. Projects should first be evaluated on 
their ability to meet the program's goals, based on measureable and 
objective criteria defined by Congress. Just because a project requires 
less Federal investment, it does not mean it is the most valuable 
investment for the Nation.
    Complementary to the INFRA competitive grant program is the FAST 
Act's freight formula program, which allows state departments of 
transportation to target freight system improvements, like first and 
last mile connectors. Some states, such as California and Illinois, 
have distributed the Federal freight dollars through a state-level 
competitive program. In Illinois, the program is funding 23 important 
projects statewide, including $50 million for a CREATE grade separation 
in Chicago that will improve safety and alleviate motorist delay at a 
``911 Crossing'' deemed critical for emergency services to access 
communities in the area. In order to increase the flexibility afforded 
to state departments of transportation, we encourage Congress to 
eliminate the cap on non-highway projects, currently set at 10 percent 
of total funds, so each state can invest in its most pressing supply 
chain needs, regardless of mode. It should be noted, that even 
administered as a state-level competitive grant program, the formula 
program is not a replacement for INFRA or BUILD, which fund nationally 
and regionally significant projects that frequently span multiple 
states and jurisdictions. As stated previously, such freight projects 
require a federally-administered competitive approach.
Recommendations
    We need a strategic freight mobility program that prioritizes the 
current economic needs of our country while planning for generations to 
come. This campaign of strategic investment should expand capacity and 
increase efficiency, regardless of mode or political jurisdiction. 
Without such a campaign, U.S. productivity and global competitiveness 
will suffer.
    To address these needs, we respectfully recommend that Congress:

    Develop a national strategy that guides long-term planning: We need 
a national ``vision'' and strategy to shape and guide our freight 
infrastructure needs. Such a strategy should have active coordination 
among states, regions, and localities and should endeavor to anticipate 
freight needs extending over multiple decades to allow for a smooth 
path for free-flowing freight both today and into the future.
    An office of multimodal freight should be established within the 
U.S. Department of Transportation's Office of the Secretary to guide 
freight mobility policy and programming with a particular focus on 
projects of national significance that aid in the movement of commerce. 
Because the movement of goods spans different modes of infrastructure, 
specialized knowledge at the Federal level is essential. An office of 
multimodal freight will allow experts in the unique operational and 
economic needs of each mode to work together to make the best 
investments in our system. Additionally, this investment strategy 
should include innovative and flexible approaches to structuring 
Federal financial assistance in a manner that encourages private sector 
investment.
    Provide sufficient levels of funding that are dedicated, 
sustainable, and flexible: An investment program dedicated to 
multimodal freight infrastructure is necessary to ensure that public 
agencies can invest in their most critical goods movement needs--
regardless of mode. Federal funding should incentivize and reward state 
and local investment and leverage the widest array of public and 
private financing. Funding should be based on revenue sources that are 
predictable, dedicated and sustained. Because they are the primary 
beneficiaries of any system improvements, owners of goods should be 
part of the revenue user-base.
    Existing programs available to freight infrastructure, like the 
INFRA competitive grant program, are oversubscribed: in its most recent 
FY17/18 round, the INFRA grant program saw $12 in unique requests for 
every $1 available. Currently funded at an average of $900 million 
annually, given this level of oversubscription, we estimate the need to 
be closer to $12 billion in multimodal freight investment annually 
through a competitive grant program.
    As we approach the FAST Act's reauthorization next year, we 
encourage Congress to not only increase the funding levels of both the 
freight formula program and the INFRA grant program, but to also 
eliminate the caps on non-highway spending under both programs. Freight 
does not move on highways alone--where public benefit is derived, 
public investment must be made. Intermodal freight is one of the 
fastestgrowing sectors of the freight market.\18\ And, it is often in 
the places where various modes come together that public assistance is 
needed to close the funding and infrastructure gaps, which result in 
capacity inefficiencies and bottlenecks. Examples include highway-rail 
grade crossings, rail spurs to access cargo, logistics or transfer 
facilities, tunnels and bridges for port access, border crossing 
capacity enhancements, and air-freight connectors.
---------------------------------------------------------------------------
    \18\ U.S. Department of Transportation, Beyond Traffic, February 
2015. 
---------------------------------------------------------------------------
    Implement a set of merit-based criteria for funding allocation: 
Projects should be selected through the use of merit-based criteria 
that identify and prioritize projects with a demonstrable contribution 
to national freight efficiency. Long-term funding must be made 
available to ensure that, once a project is approved, funds will flow 
through to project completion. Funds should be available to support 
multi-jurisdictional and multi-state projects, regardless of mode, 
selected on the basis of objective measures designed to maximize and 
enhance system performance, while advancing related policy objectives. 
The U.S. Department of Transportation's decision-making process should 
be made transparent to ensure the integrity of the evaluation process.
    A partnership with the private sector: Private participation in the 
Nation's freight infrastructure is vital to system expansion. Federal 
funding should leverage private participation and provide 
transportation planners with the largest toolbox of financing options 
possible to move freight projects forward quickly and efficiently. We 
recommend that Congress consider establishing an advisory council made 
up of freight industry members and system users who could assist and 
partner with the U.S. Department of Transportation in order to optimize 
results from planning, coordination and evaluation processes.
    Oversight of existing freight programs: We recommend Congress 
oversee execution of the INFRA program to ensure projects are evaluated 
against criteria codified in law. We commend Congress' foresight in 
mandating that the Government Accountability Office (GAO) publish a 
report on the decision making process for the first round of the INFRA 
grant program and encourage Congress to continue such oversight to aid 
decision-making transparency and adherence to Congressional intent.
    I would like to thank the committee for their time and attention to 
this critically important topic.

    Senator Fischer. Thank you, sir.
    We will begin first round of questioning and I will start.
    For the entire panel, I would like to ask you a yes or no 
question. We've seen the FAST Act be recognized, the importance 
of freight transportation by creating that Formula Funding 
Program, and the Discretionary Grant Program specifically for 
freight that you just referred to, Mr. Szabo.
    These programs are authorized between $1 billion and $1.5 
billion annually apiece. Each of you touched on that in your 
testimony, but I want to follow up on this point, so hopefully 
yes or no.
    Do you believe it is important for reauthorization of our 
Federal surface transportation programs to include those 
programs that are focused on freight transportation 
infrastructure, such as the Freight Formula Funding Program and 
a Discretionary Grant Program, known as INFRA, that was 
established in the FAST Act?
    Mr. Baker.
    Mr. Baker. Yes and yes.
    Dr. Hacegaba. Yes and yes, with exclamation marks.
    Ms. Lemm. It's a yes.
    Senator Fischer. Great.
    Mr. Szabo. Yes, definitely, and lift the modal cap.
    Senator Fischer. Thank you.
    Ms. Lemm, last year, I worked very closely with the 
leadership at FMCSA on hours of service flexibility and I was 
glad to see that the FMCSA guidance provided flexibility for 
the ag haulers, especially for that first 150 air miles of 
their haul. You touched on that in your opening statement.
    I plan to continue working with the Administrator on the 
hours of service flexibility for our ag haulers and the 
trucking industry more broadly.
    Could you talk to us a little bit about how important it is 
for Ag haulers to have those flexible hours? I think a lot of 
people don't understand the difference here.
    Ms. Lemm. I really appreciate that and our membership 
appreciates your support.
    I mean, the sensitivity to some of these agricultural 
products are so severe that even 30 minutes, can you imagine a 
driver who's 30 minutes coming from that farm to that 
destination and they're going to have to shut down.
    We absolutely need to understand as a nation that there are 
some segments that need some understanding and flexibility. We 
have livestock, for example, live cattle, and live animals. We 
absolutely need to give them that extra waiver, that extra 
exemption. So we very much appreciate your support in this 
area.
    Senator Fischer. We are looking at really the welfare of 
livestock when Ag haulers were doing this, correct?
    Ms. Lemm. Absolutely, yes.
    Senator Fischer. Thank you.
    Ms. Lemm. Thank you.
    Senator Fischer. Doctor, as you noted in your testimony 
last year the Port of Long Beach piloted the GE Port Optimizer 
Program.
    What results have you seen from that pilot program that you 
can share with us?
    Dr. Hacegaba. Thank you for the question, Chairman Fischer.
    First of all, IANA and the Port of Long Beach both believe 
that leveraging emerging technologies could provide a series of 
solutions for some of the congestion issues that have been 
addressed so far here.
    What we learned when we partnered with General Electric on 
their Port Optimizer Program is that providing visibility and 
transparency across modes within the supply chain could result 
in better decisionmaking, better planning, and better 
optimization of operations.
    Although it was done on a pilot basis in a very limited 
sphere with a very limited timeframe, we believe that this 
technology and others like it demonstrate a lot of potential 
for what we can see across the intermodal supply chain.
    So we're very excited about what it presents and looking 
forward to continuing partnering to test out these innovative 
technologies.
    Senator Fischer. Are there a lot of new technologies out 
there? Are you seeing a lot available now and in the pipeline 
for us?
    Dr. Hacegaba. We are. We are seeing many technologies in 
other spaces and other industries. What we're trying to do is 
look for those technologies that possibly provide solutions in 
our space and the fact that we are an interconnected supply 
chain with a lot of connection points, that's where we believe 
technology can play a critical role by connecting the modes, 
making sure that data transfer is seamless, making sure there's 
transparency, predictability.
    Advanced predictability, just to give you one example, 
Chairman, can save the entire supply chain hundreds of millions 
of dollars a year just in giving the stakeholders the 
opportunity to predict with a high degree of certainty when a 
container might be available for pick up, when a container 
might be coming to the terminal for drop off.
    We definitely see a role for technology. We believe that 
technology is a tremendous enabler to provide solutions to the 
supply chain.
    Senator Fischer. And I would ask if any other panel members 
would like to make comments on that and specifically how should 
we, here in Congress, address the role of technology when we're 
looking at the reauthorization of the FAST Act?
    Mr. Szabo, would you like to respond?
    Mr. Szabo. Well, I think the key from our work at CMAP is 
recognizing the investment that is going to need to be made in 
existing infrastructure to have it ready for things like 
autonomous vehicles and so to really embrace and capture the 
technology is going to take significant capital investment and 
so this really does come back to the urgent call for additional 
capital investment in freight as well as our broader 
transportation system.
    Senator Fischer. Thank you.
    Any other members? Mr. Baker?
    Mr. Baker. For the rail industry, technology is crucial, 
whether it's on the operational side. We believe there are a 
lot of advancements out there for us to make on being more 
transparent for shippers about, frankly, where their freight is 
and when it's going to be delivered and that's a huge area for 
improvement.
    On maintaining our own infrastructure side and running the 
railroad, there have been really remarkable advancements in 
technology over the years with railroads, whether it's 
ultrasonic rail inspection or hot wheel detectors or 
continuously welded rail or positive train control.
    We like to say it's not your father or your grandfather's 
railroad anymore. The railroad looks similar to how it used to 
but it really operates at a much higher tech level than it used 
to.
    As far as what the Senate can do to support that, I would 
point back to the same issues we've mentioned. Because the 
railroads are largely privately funded and privately operated, 
we need a regulatory system that allows us to earn enough money 
to invest back into the infrastructure.
    On the short line side, we also appreciate the short line 
tax credit which allows us to do a little bit more and leverage 
our own money even a little bit farther.
    Senator Fischer. OK. Thank you very much.
    Ms. Lemm, did you have a comment?
    Ms. Lemm. If I could comment from a shipper perspective, 
the biggest thing that you hear out there is, you know, where's 
my freight?
    There's just such a big black hole and a lack of visibility 
to where that container is. Is that container available? Am I 
able to end gate? I've been standing in line for 4 hours. Am I 
going to be able to get in?
    So we absolutely support an initiative that looks at 
integration for all sectors.
    Senator Fischer. Thank you.
    Senator Duckworth.
    Senator Duckworth. Thank you, Chairwoman.
    Mr. Szabo, the benefits of increasing investment in freight 
and intermodal infrastructure are well known and we've already 
been in discussion a little bit today. These projects require 
large amounts of money and involve many public and private 
players.
    Federal funding for these projects is often necessary to 
get the projects off the ground. This is why I was a strong 
advocate for FAST Act Freight Funding Programs and I've seen 
firsthand the project impacts of freight and rail grants in 
Illinois.
    In your role at CMAP, how important is Federal funding to 
getting these projects developed, and would these projects have 
moved forward without Federal funding?
    Mr. Szabo. Having a reliable Federal partner to participate 
in these projects is crucial. It's somewhat fundamental, 
particularly understanding that it's about interstate commerce 
and so many of the major projects, as I mentioned in my 
testimony, transcend states or local jurisdictions. They cross 
multiple modes and so having a Federal partner that is able to 
provide the leadership, provide funding is critical.
    You know, we were incredibly pleased with the FAST Act 
provisions and how that allowed several of our projects to move 
forward, but I would again come back to the concerns about the 
cap on non-highway projects.
    We believe in performance-based program management at CMAP 
and this means ensuring that funding is completely flexible to 
allow us to invest in the very best projects possible that have 
the greatest benefits to the public. And when we put our plan 
together for the region, it looks out 30 years, and one of the 
points I make is that it doesn't make much sense today to focus 
on funding in modal silos when modes are changing and we don't 
even know what the modes are going to be 30 years from now. So 
whatever we do should be completely flexible.
    Senator Duckworth. Thank you.
    The Federal Highway Administration has reported that the 
largest increase in truck traffic will be where interstates 
intersect. Two of the 25 most congested segments in the Nation 
are in Chicago. Anybody who has driven the Old Circle 
Interchange where Dan Ryan and Kennedy meets the Eisenhower 
Expressway can tell you what that means. I've spent too many 
hours of my life there.
    To each of the panelists, what more should we do to focus 
attention on the worst, most congested areas in our nation, and 
how can we direct Federal funds to focus on alleviating 
congestion at these particular freight bottlenecks?
    Let me start over with Mr. Baker.
    Mr. Baker. We believe that the merit-based competitive 
Federal programs that you've instituted in the FAST Act, 
including CRISI and INFRA and then also BUILD, are well set up 
to address those problems well.
    We would support increases in funding for those and 
certainly increases in flexibility for, in particular, INFRA 
and the state freight formula program, but essentially a 
Federal merit-based competitive program ought to be able to be 
leveraged to address the biggest bottlenecks and chokepoints of 
those projects should rise to the top in a competitive benefit-
cost analysis.
    Senator Duckworth. Thank you.
    Dr. Hacegaba.
    Dr. Hacegaba. Senator, the illustration that you used to 
illustrate the state of our highway system, I think, is endemic 
of what we're seeing nationwide.
    As I noted a moment ago, the total cost in the freight 
infrastructure is estimated at approximately $3.7 trillion and 
as much as we like to focus on the first mile and the last 
mile, I think the focus of this panel here is to understand the 
entire intermodal freight network and how it fits together and 
so from IANA's perspective, we believe that investing in 
freight infrastructure is critical not just to our industry, 
our collective industries, but in order to move America 
forward, and the downstream impacts on the economy with regard 
to jobs, the multiplier effect that we see.
    So from our standpoint, we believe in fully funding freight 
provisions and opportunities for ports to apply for formula and 
competitive multimodal freight grants.
    Senator Duckworth. Thank you.
    Ms. Lemm.
    Ms. Lemm. We absolutely agree. I mean, when we talked 
earlier in the testimony about how our ag shipments have to go 
to where the containers are and so we'll bring in rail cars and 
we'll transload in these huge areas that you're talking about. 
They rise to the top. Chicago, Dallas, Atlanta, Memphis. All of 
these key inland hub areas are where this traffic is moving 
into and so absolutely prioritizing these areas of congestion 
is very, very important.
    Senator Duckworth. You have the last 20 seconds, Mr. Szabo.
    Mr. Szabo. Yes. I think it's already been said. Continue a 
merit-based approach. You know, the provisions in the FAST Act 
are an excellent place to start. Just lift that non-highway cap 
and make it completely mode-neutral and ensure predictable 
funding.
    Senator Duckworth. Thank you.
    Yield back.
    Senator Fischer. Thank you, Senator.
    Senator Klobuchar.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much. Thank you to all of 
you.
    A little over a week ago, 40 rail cars derailed in Carlton 
County, Minnesota, up north, resulting in a spill. Thankfully 
no one was hurt but that's not always the case.
    We hear a lot of concerns about derailments and hazardous 
material spills. We've had a number of them in our states and, 
Mr. Baker, can you explain why investment in railway safety and 
infrastructure is critical to prevent these types of accidents?
    Mr. Baker. Thank you, Senator, for the question.
    We believe and we believe that the data shows that rail is 
the safest mode of surface transportation, but I would agree 
with you very much that any rail accident is unacceptable and 
one accident is too many, and we do acknowledge and it's 
obviously a fact that we haul many dangerous materials. We haul 
hazardous materials all the time. We are common carriers. We 
are obligated to haul what the customer would like to move.
    Senator Klobuchar. I understand.
    Mr. Baker. We very much appreciate any Federal support that 
allows us to invest in infrastructure. We think basic 
investment in track infrastructure is the single most important 
thing that railroads can do to improve safety.
    So some of the programs that I've already mentioned, such 
as the short line tax credit and the CRISI Grant Program, are 
extremely helpful with improving railroad safety.
    Thank you.
    Senator Klobuchar. Thank you.
    Mr. Hacegaba, last year, our state was awarded a $20 
million BUILD grant for the Twin Ports Interchange 
Reconstruction and that includes replacing 35 bridges, 
reconstructing a high-rise in the Duluth Superior area.
    Why are these competitive grants better suited for 
addressing multimodal or multi-jurisdictional projects?
    Dr. Hacegaba. Thank you for the question, Senator.
    I think if you look at the entire national system, the 
infrastructure system, you'll see that the need far outpaces 
the resources available and to the extent that freight, 
investments in freight infrastructure can be prioritized, it 
would help us tackle the ongoing challenge of meeting America's 
infrastructure needs.
    To answer your question very succinctly, investment in 
national freight infrastructure is an investment in our overall 
economy because economic benefits of investments in 
infrastructure will be seen in strong American jobs, higher 
standard of living, global competitiveness.
    Senator Klobuchar. And it's about getting goods to 
market,----
    Dr. Hacegaba. Exactly.
    Senator Klobuchar.--especially when we look at the fact 
that something like 95 percent of the world's customers are 
outside of our borders and we're going to have to get them.
    All right. But that is an exciting port that we have in 
Duluth. It's, I think, the biggest on Lake Superior. So we're 
pretty excited about the growth we've seen there.
    One last thing, Promoting Rural Exports Act, Senator Hoeven 
and I have introduced this and our bill would establish a rural 
exports center at the U.S. Commercial Service to provide 
support to rural businesses looking to export their products, 
something I was just referring to, to international markets.
    Ms. Lemm, can you explain how these kinds of programs that 
support continuity throughout the intermodal networks would be 
helpful to export things from rural areas, whether it's ag, 
whether it is timber, you name it?
    Ms. Lemm. It's like I was trying to share for our rural ag 
shippers literally they could be miles, hundreds of miles from 
where they have access to reliable and consistent 
transportation modes to get their goods to port and so things 
like you're talking about right now would be welcomed.
    There are so many of our shippers that struggle every day. 
They're looking for innovative ways. They're begging for 
equipment and they would be very pleased to hear that there may 
be an avenue for support.
    Senator Klobuchar. OK. Very good. And then last, Mr. Szabo, 
can you talk about how government shutdowns can interfere and 
create vulnerabilities in our transportation network? That 
would be called like a leading question.
    Mr. Szabo. Well, I think anything that creates uncertainty 
is not healthy for the system. You know, anything that makes 
the processing of environmental reviews, slows down 
construction, and increases cost, you know, anything that slows 
down the payment of contractors certainly is not healthy and 
increases cost and so comes back to a point I made earlier that 
the public and private sector need a reliable Federal partner 
and so----
    Senator Klobuchar. Very good. And I'd also mention, I'm not 
going to ask about this, but the Bridge Act that Senators Blunt 
and Warner and I and others introduced last year, that public-
private partnership, and we'd really like to see that, if we 
can get an infrastructure bill moving.
    For me, it's very important. It also includes rural areas, 
of course, and that it's done in a way that doesn't gift the 
direct Federal investment that has to happen but also sees it 
as an element of the solution.
    So thank you.
    Senator Fischer. Thank you, Senator Klobuchar.
    Senator Blumenthal.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thank you, Madam Chairwoman.
    Thank you all for being here today.
    Senator Klobuchar. You broke the glass ceiling by including 
you in this hearing.
    [Laughter.]
    Senator Blumenthal. And as we say in the courtroom, I rest 
my case.
    Thank you all for being here today, really appreciate this 
excellent panel.
    I want to follow up on a question that Senator Fischer 
asked about positive train control. I'm assuming that nobody on 
this panel has any doubts that positive train control is a good 
thing to do. All of you agree. If you don't raise your hand or 
say no----
    Mr. Szabo. Definitely a good thing.
    Senator Blumenthal. OK. Thank you.
    Mr. Baker. It's a good thing, yes, Senator.
    Senator Blumenthal. Anybody on this panel think that the 
deadline should be further delayed? As you know, there have 
been two delays and I'm eager that we meet this deadline. As 
you know, I've been one of the leading proponents of positive 
train control.
    So let me ask all of you whether you have any reservations 
about the present deadline. Mr. Baker?
    Mr. Baker. No, sir. We are expecting to meet the current 
deadline.
    Dr. Hacegaba. IANA has the same position, Senator.
    Senator Blumenthal. Ms. Lemm?
    Ms. Lemm. No reservation.
    Mr. Szabo. The public deserves the highest level of 
accountability.
    Senator Blumenthal. Thank you.
    I want to follow up on a question that Senator Klobuchar 
was asking about. Some of the calamities that have occurred, 
particularly on the kind of combustible materials that have 
been involved in major derailments, fire, explosions of trains 
carrying crude oil in Philadelphia in 2014, North Dakota in 
2015, Oregon in 2016, Mississippi in 2017, most recently in 
Iowa 2018, which leaked 230,000 gallons of crude oil. Those are 
just a few and some at least are due to older, more dangerous 
tank cars that continue to carry flammable liquids.
    I know this issue may have been raised in some of the 
testimony and some of the questions, but I'm wondering what the 
Federal Government can do to, Number 1, help the industry or 
incentivize it to adopt safer tank cars, and I think Canada is 
ahead of us in this respect, unless I'm misinformed, but also 
prepare communities that may be at risk, including some, by the 
way, in the Northeast.
    People are unaware of them but they go through very 
populated areas and let me pose those two questions to you.
    Mr. Baker. On the tank cars themselves, I believe that our 
current stance is that we believe that the current transition 
plan to the newer tank cars, which the Federal Government 
played a very active role in setting those rules, is an 
appropriate transition and the industry will be challenged and 
stretched to meet it, but we are committed to meeting the law 
as it is and transitioning to those safer tank cars over time.
    On the preparing communities, we're very proud of the work 
that the Transportation Technology Center out in Pueblo, 
Colorado, does. The railroad industry has a program where first 
responders from throughout the country go out to Pueblo to 
learn about responding to those types of hazardous material 
releases. They are extraordinarily rare but they do happen.
    And as I said to Senator Klobuchar, we would agree with you 
that one accident is too many. We are convinced that rail is 
the safest mode of surface transportation and for the society, 
we are better off with any dangerous shipment on rail than we 
are on any competing mode, but nonetheless our goal is zero 
accidents and so some of the programs that we talked about, 
whether it's the short line tax credit or the CRISI Grant 
Program or INFRA, that would help the short lines and larger 
railroads improve their infrastructure is the most important 
thing we can do to improve railroad safety.
    Senator Blumenthal. Thank you.
    Dr. Hacegaba. Senator, IANA, which represents the combined 
interests of the intermodal supply chain, while we do not have 
a position on this specific issue, I can assure you that we 
view the issue of safety as paramount to intermodal operations.
    The only other comment I would make, as well, is it 
furthers the argument why we need to continue to invest in our 
infrastructure. While our partners on the rail side, who make 
every effort to make their operations safe, will continue to do 
that, it's the infrastructure that has to be adequate in order 
to support safe operations.
    Senator Blumenthal. Thank you.
    Ms. Lemm. Senator, I come here today representing ag 
shippers mostly in containers and, fortunately, the list of 
challenges wasn't hazardous, so I don't have a position on that 
today.
    Thank you.
    Senator Blumenthal. Thank you.
    Mr. Szabo. Senator, I mentioned at the opening that I 
represent 284 communities and so obviously the emergency prep 
piece of this is critical to them. But taking it to the next 
step, obviously ensuring continuation of good track safety 
standards, maintenance procedures, sound operating practices, 
you know, taking a system safety approach and allowing good 
root causation analysis when incidents happen to come up with 
the best long-term fixes. You know, fundamental, sound 
fundamental railroading is the best way to ensure that you 
don't have an incident.
    Senator Blumenthal. Thank you. Thank you.
    Senator Fischer. Thank you, Senator.
    We will begin a second round of questions and if any of our 
colleagues on the subcommittee would like to join us, they need 
to get down to the hearing room so that they can ask questions, 
as well.
    I will begin now with Ms. Lemm. Regarding your comments on 
chassis, how widespread is that shortage for intermodal 
freight, and do you think that the Supply Chain Innovation Team 
model that was used in Memphis that you alluded to could work 
to address the chassis shortage in other parts of the country?
    Ms. Lemm. First, the chassis shortage is critical 
throughout the United States. You may be reading about it in 
L.A.-Long Beach, reading about it in Chicago, and certainly in 
Memphis. So to answer the first question, the chassis supply 
issue is widespread shortage of supply.
    The Memphis Innovation Team was just a group of 
stakeholders that came together. We really didn't understand 
what the root of the problem may be, if it was actionable, and 
it was interesting that the team was made up of rail providers, 
ocean carriers, shippers, and motor carriers.
    Within a very short period of time, the most actionable 
item was this chassis. It's often just taken for granted. When 
we started in the industry in containerization, everything was 
a unit on wheels and mounted. Many of our rail facilities are 
still mounted facilities and therefore requiring a chassis. As 
soon as those trains come in, chassis are required.
    So the team felt like the most common sense thing was to 
have a grade pull, which was the initiative by ocean carriers 
where, when they got out of the business 10 years ago, that was 
the plan. We're going to have the single grade pull that's 
interoperable.
    Today, what we find are three captive pulls, three of the 
largest chassis providers in lease arrangements, long-term 
lease arrangements, and to, I guess, be able to share it with 
you--let's just say it's color-coded.
    An ocean carrier will take a red chassis, one will take a 
purple, one will pick a yellow chassis. Can you imagine that 
train coming in and there are no red chassis but there are 
hundreds of yellows? Everything goes to the ground. It doesn't 
make sense.
    What we're asking for is interoperability, gray. If there 
are chasses there, let's use them. We're asking for fair access 
to them. Today, that's handcuffed. Having to pick red, purple, 
or yellow doesn't make sense, not fair, if we're paying the 
price. Also not fair in those mounted facilities when those 
trains come in. If that proper chassis that was designated by 
the carrier, ocean carrier to use isn't there, those containers 
go to the ground and therein lies the discussion of detention 
and demurrage.
    And so the chassis model that we're suggesting in Memphis, 
we're very hopeful, is a model for other inland hubs, just like 
Memphis, Chicago, Dallas, they have five Class I railroads, 
vast geography from one railroad to the next. We as shippers 
are using all rails and so we think the model is a basis for 
the rest of the Nation. We're hopeful we'll be the first.
    Senator Fischer. Thank you.
    Dr. Hacegaba and Mr. Szabo, you both recommended the 
creation of a multimodal freight office within the Department 
of Transportation.
    Can you elaborate on what this office would address that is 
not currently being addressed by the Department of 
Transportation? Doctor, why don't you go first?
    Dr. Hacegaba. Sure, Chairwoman Fischer.
    I think the key here is to have an office at the 
appropriate level that has a broad and holistic view of the 
intermodal supply chain.
    Right now, what we've seen in the past is the need for 
infrastructure investments have been duly noted over the years 
but when it comes to the intermodal freight network, we need to 
ensure that the last mile, the first mile, and every mile in 
between is adequately funded so that that supply chain is 
seamless, and we believe that having that office at that level 
will bring attention to the needs, the funding needs, and the 
infrastructure development needs.
    Senator Fischer. Mr. Szabo?
    Mr. Szabo. Yes. I would absolutely concur. You know, it is 
about that holistic approach to the entire supply chain and 
making sure that it's entirely fluid.
    Certainly having been a U.S. DOT insider, you know, I was 
proud on the work that we were able to do to collaborate on a 
multimodal basis. But still, each one of us went in there, you 
know, even though we were cooperating with the other modes, we 
still were thinking about our own. And so having that one 
person that really is responsible for the big picture and 
ensuring that this entire network remains fluid I think is 
critically important.
    Senator Fischer. Thank you.
    Senator Duckworth.
    Senator Duckworth. Thank you, Madam Chair.
    Ms. Lemm, can you speak to the importance of our maritime 
highways to the freight network?
    Ms. Lemm. Well, again, most of our Ag members are 
containerized shippers and not moving or navigating through our 
rivers.
    So today, I'm really just prepared to talk, if I may, about 
containerized exports moving by motor carrier or by rail, as I 
mentioned box cars, into those hub centers where they're 
transloaded into containers.
    Senator Duckworth. Thank you.
    You know, in the last couple of years in Illinois and also 
our nearby neighbor Iowa, we've had to stockpile corn and 
soybeans and our silos are overflowing and, in fact, our 
neighbors in the southeastern United States have been 
purchasing corn and soybeans from Brazil because it is faster 
to move these agricultural products from Brazil to Georgia than 
it is--to Atlanta than it is to get it down to Mississippi and 
part of this is because of the problems we have with our lock 
and dam system, the congestion with our inland waterways, and 
certainly it is an important part of the network, and I know 
that the rail, for example, have been very supportive of some 
of the bridge projects that we have been working on in order to 
have railroads come to support bridge projects over the 
Mississippi because that's what the barge folks need in order 
to get freight.
    It truly speaks to the true intermodal nature of freight 
traffic in this country and several of you have mentioned the 
need to lift the multimodal cap, Mr. Szabo more than once, in 
the Freight Program.
    Can you provide specific examples of why this is important, 
why it's important, and then I'll open it up to the group, but 
you want to start?
    Mr. Szabo. I think, you know, the easy answer is because 
freight doesn't just use the highway system and so again we're 
talking about a holistic approach. We're talking about an 
entire supply chain, you know, in this fluid system. And so 
there needs to be the flexibility to invest in the very best 
projects and there shouldn't be any type of mode restriction.
    Where's the best return for the public and wherever that 
best return is, that highest return, this is where the 
investments need to go.
    Senator Duckworth. Do you have a specific example of where 
this has been a problem?
    Mr. Szabo. Well, obviously, I mean, the big one for me is 
coming back to the CREATE Program in Chicago, you know, where 
we're talking about rail infrastructure that impacts, you know, 
the national flow of goods through the Chicago hub, Amtrak, 
Metro commuter trains, emergency grade crossings, truck routes, 
you know. And all of these are constrained with the antiquated 
design that we face today, and so when the FAST Act provisions 
were being put together, we were trying to make sure that we 
would have a tool that would allow us to untangle this entire 
mess and we were able to make it work with the cap, but it was 
very concerning and a little bit tenuous. And so for me that's 
one great example.
    Certainly there are port issues. I think there are wiser 
minds at this table than me that can speak to that, but it's 
got to be about this system.
    Senator Duckworth. Thank you.
    Mr. Hacegaba--Dr. Hacegaba? Sorry.
    Dr. Hacegaba. Yes, Senator, I would agree a hundred percent 
with Mr. Szabo.
    The Port of Long Beach, for instance, we're on a $4 billion 
capital investment program. We believe that that's what we must 
do to maintain our competitiveness going forward and the 
narrow, bigger ships, ships bringing more cargo, creating peaks 
and surges and creating imbalances on the equipment side, it's 
critical that we continue to build out our infrastructure.
    One billion out of that $4 billion capital program is all 
devoted on-dock rail. The advantage of on-dock rail is that it 
allows us to put a container on a train at the port, 
eliminating that short haul to an inland destination. It's 
safer, it's more reliable, it's cleaner, it's more cost-
effective, and these are some of the projects, for instance, 
that would benefit if that cap was lifted.
    Senator Duckworth. Mr. Baker.
    Mr. Baker. Right. I would simply say that with the point of 
the INFRA Program being to solve our Nation's freight 
challenges, which are numerous and many, and in a world of 
finite resources, to us, it doesn't make sense to limit the 
program unnecessarily to one mode and as I said in the 
testimony, I would say that's especially true in an era where 
these programs are no longer being funded a hundred percent by 
the highway user fees.
    I believe we're at a $140 billion and counting since 2008 
out of General Fund money that has gone to support the Highway 
Trust Fund. So we believe that is no longer appropriate.
    We would say artificially limit the program to a single 
mode or primarily to a single mode.
    Senator Duckworth. Thank you.
    Senator Fischer. Thank you, Senator Duckworth.
    I look forward to working with you on many of these 
important issues. It's a pleasure to have you as a Ranking 
Member and I thank the witnesses today for your good testimony.
    The hearing record will remain open for two weeks. During 
this time, Senators are asked to submit any questions for the 
record. Upon receipt, the witnesses are requested to submit 
their written answers to the Committee as soon as possible.
    And with that, the hearing is adjourned.
    [Whereupon, at 3:40 p.m., the hearing was adjourned.]

                            A P P E N D I X

     Response to Written Questions Submitted by Hon. John Thune to 
                              Chuck Baker
    Question 1. Mr. Baker, according to recent data from the Federal 
Railroad Administration, all 41 railroads either met the December 2018 
statutory deadline for PTC implementation or have met criteria for the 
alternative schedule. However, only 16 percent of host-tenant 
relationships--many of which are between shortlines and larger Class I 
hosts--have achieved interoperability.
    Could you provide an update on the status of PTC implementation 
among shortline railroads and describe any challenges short lines may 
be facing in achieving interoperability with host railroads?
    Answer. The statutory requirements for PTC installation fall on 
very few short line railroads. The remainder are being required to 
equip by contract with a Class 1 carrier. The statutory deadline for 
short line railroads is 2023, so by law they have additional time to 
equip. Currently, all short lines that are required by contract have 
been working towards the deadlines that their Class I hosts require. 
However that has not been without substantial challenges.
    One of the early challenges for these short lines involved the 
process of determination by the Class I railroads determining which 
short lines were going to require to be equipped. During that phase, 
there were many changes and iterations regarding which short lines 
could find another way to work with their Class I partner. While that 
challenge has been resolved, it did cause some delay in determining 
which short lines by contract needed to install PTC.
    A more recent challenge short lines are facing regarding 
interoperability involves situations where a short line is involved 
with train movements involving three or more railroads and the short 
line is using the power of one of the Class I railroads involved in a 
move. For example, if the train originates with a one Class 1 PTC 
equipped locomotive and is interchanged with a second Class I and then 
with the short line whose crews step on the locomotive to complete the 
move, the back office servers have challenges recognizing the territory 
in the various PTC systems, thus preventing interoperability until the 
downloads for that territory are complete. This process is time 
consuming and could occur thousands of times over the course of a year. 
The PTC software and hardware suppliers have been attempting to resolve 
this issue but it continues to take time.
    Another current challenge is that if a short line is using one 
supplier's back office server and another server's software, there have 
been intellectual property issues causing delays.
    Finally, negotiations by short lines with the sole provider of the 
software license have proven difficult and have also taken months to 
complete.
    Overall, short lines are committed to PTC implementation and the 
good news is that in the vast majority of cases the short lines are 
working collaboratively with their Class 1 partners, vendors, and the 
FRA to get this done on time. Challenges do remain though as technical 
expertise on these new and ever-developing systems remains limited and 
resources are finite.

    Question 2. Mr. Baker, you mentioned in your testimony that the 
RRIF program in its current form is not a useful tool for shortline 
rail infrastructure investment.
    a. Could you describe some of the challenges posed by the RRIF 
program that deter use by applicants such as shortline railroads?
    Answer.

  1.  The process of applying for RRIF funds is very costly for the 
        borrower while the outcome of the application--the cost of the 
        financing--is not known until the end of the process when the 
        final term sheet is presented to the borrower. USDOT charges 
        applicants an upfront fee for their external advisors that 
        starts at $250,000, a charge that the applicant cannot recover.

  2.  The uncertainty around the final cost of the credit is also a 
        deterrent. A major component of the cost of the loan is the 
        credit risk premium, which is a charge that in a private loan 
        would be built into the interest rate. The government breaks 
        this out as a fee that is charged upon drawing down loan funds 
        and is kept by the government to protect against the 
        probability adjusted loss of a default scenario. While typical 
        credit risk premiums of loans successfully made have been 
        around 6-7 percent for short lines, some RRIF loans have had 
        premiums in the low 20 percent range, and a premium could 
        theoretically be up to 100 percent. The challenge is that DOT 
        traditionally has only provided the CRP at the tail end of the 
        process and not been able to provide an estimate or estimated 
        range at any point in the process prior to term sheet. Short 
        line railroads fear that they could spend a large amount of 
        time and money on an application only to receive a CRP that 
        makes the loan prohibitive.

  3.  The entire process is also very time consuming, with the time 
        from approaching the program to executing a loan agreement 
        generally exceeding a year, which makes the process unrealistic 
        for many railroads that are operating in constantly changing 
        business environments.

  4.  There is a mismatch between the term of RRIF loans and the 
        economic lifespan of certain common assets that short line and 
        regional railroads will seek to finance through the program. 
        Major railroad civil works and structures, like bridges, yards 
        and tunnels, can have lifespans of a century or more, while 
        RRIF is limited to financing up to 35 years. Many short lines 
        were spun off from large railroads because their traffic levels 
        were not economic for the large railroad. However, these 
        smaller railroads are left managing large capital assets that 
        were originally constructed and maintained by much larger 
        companies. Beyond this fleet of legacy assets, economically we 
        expect short line and regional railroads to keep up with the 
        technical levels of the large railroads to facilitate 
        interchange with these large railroads. This means investment 
        in Class I levels of capacity such as the means to handle 
        286,000 or 315,000-lb railcars, generous clearances, siding 
        lengths that can handle lengthy unit trains and track geometry 
        and condition quality that can support modern large 
        locomotives. These are very expensive investments to make for 
        small firms; the longer the term of financing they can obtain 
        the less prohibitive it would be for short lines to keep up 
        with the ever advancing national network standard.

    b. As a follow-up, do you have any suggestions for how the RRIF 
program could be improved to make it a more viable option for shortline 
infrastructure investment?
    Answer.

  1.  Congress can subsidize RRIF application charges levied by DOT, 
        either through the annual THUD appropriations process or 
        through a stable multi-year funding mechanism that could be 
        included in a surface transportation reauthorization or 
        infrastructure bill.

  2.  Congress can subsidize the costs of RRIF credit risk premiums, 
        also through the annual THUD appropriations process or a multi-
        year funding mechanism. This is an approach that has been taken 
        successfully with the TIFIA loan program.

  3.  Congress can mandate that USDOT offer more formal and structured 
        feedback to borrowers on the key credit factors identified in 
        their application at regular intervals, such as monthly. This 
        feedback would give applicants a sense of what USDOT sees as 
        the level of risk for each factor associated with the 
        borrowing. Such feedback, not dissimilar from a private debt 
        rating document, would provide an estimated range of the CRP 
        for that loan, or explain clearly why one can't be provided at 
        that time and what specific data is required by USDOT to 
        generate such an estimate.

  4.  For borrowers and projects that meet certain publicly stated 
        criteria, the USDOT should initiate a ``RRIF Express Program.'' 
        This program, which has been in development at USDOT for over 
        two years, would strive to reduce the time period from entry to 
        receiving a term sheet to a few months.

  5.  Congress can extend RRIF terms to at least 50 years from a 
        project's substantial completion, so that very long-lived 
        capital assets can be more affordably financed, enabling 
        smaller railroads to maximize cash flow while maintaining their 
        large legacy assets in a state of good repair. The largest 
        Class I railroads issue bonds for terms of up to 100 years with 
        some frequency; such long-dated debt is not unprecedented in 
        this sector. If a Class III railroad has a legacy Class I scale 
        asset, or we expect it to have a capital plant capable of 
        interoperating with Class I's at Class I scale--which we do--it 
        is in the public interest that the assets can be financed on 
        Class I terms.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                              Chuck Baker
    Freight Investment. I have long been a champion of Federal funds 
for freight projects, which for the first time received dedicated 
funding in the FAST Act with the implementation of the FASTLANE (now 
INFRA) program, which I championed. Trade and the movement of goods is 
the backbone of our economy. In Washington state, we know this all too 
well as forty percent of our jobs are tied to trade.
    Questions 1. Where do you see the main chokepoints that require 
multi-modal investments to keep freight moving?
    Answer. Safe and efficient movement of freight is critical to the 
health of our national economy. Short line railroads provide first and 
last mile service for one in five freight rail cars moving each year. 
Our small railroads play a vital role in moving goods in and out of 
both urban and rural areas, particularly small towns, without further 
stressing our nations congested highways, and we do so in an efficient 
and environmentally sustainable way. The freight rail network 
successfully connects communities and small businesses to bigger 
markets and is the best solution for many of our Nation's freight 
challenges. Investing in our rail infrastructure must continue to be a 
national priority, as rail is an available solution to reduce freight 
chokepoints.

    Question 2. How can increased investments in the freight program 
better address these challenges?
    Answer. ASLRRA is very supportive of the INFRA grant program and 
the state freight program. We believe that there is value in 
discretionary grant programs open to multiple modes of transportation, 
especially those focused on freight and movement of goods. When 
developing surface transportation reauthorization legislation, Congress 
should look to expand the overall size these programs and also remove 
the counterproductive limits on rail, port, and other non-highway 
projects. ASLRRA believes that the national transportation system is 
multi-modal and intermodal in nature, so stove-piping major programs, 
particularly those for freight, should be avoided whenever possible. 
Allowing more rail projects to successfully compete in these programs 
will go a long way to helping relieve congestion on our Nation's 
highway system and create a more seamless, safe, and environmentally 
sustainable freight network.

    Paying for Freight. I think we all know and see the value of 
investing freight, but we struggle to find agreement on how to pay for 
these investments. Congress has heard support for any number of 
proposals--including continuing the existing practice of using highway 
trust fund and general fund revenues or dedicating new revenue, such as 
the proposed waybill fee.
    Question 3. What are your views on how we pay for critical freight 
investments?
    Answer. ASLRRA advocates for a highway trust fund (HTF) that is 
funded by those who benefit from and cause the wear and tear of the 
interstate highway system, and we support either an increase in the 
diesel tax, a weight-distance tax, or a move to a vehicle miles 
traveled (VMT) user fee on commercial trucks. Commercial trucking puts 
immense stress on the highway infrastructure they depend on, but under 
our current system, they do not adequately contribute to costs of 
maintaining our roads and bridges. It is estimated that heavier trucks 
are only paying 80 percent of the damage they inflict, sticking all 
American taxpayers with the rest of the bill. Investing in our 
infrastructure is important, but subsidizing commercial trucking so 
heavily is not only bad for the rail industry (it's tough to compete 
when your biggest competition is subsidized by more than $10b every 
year!), but it is ultimately bad for our Nation's economy and 
facilitates undue stress on our Nation's highway system.
    Short lines believe that investing in our own infrastructure is 
critical and spend around 30 percent of revenues on maintaining and 
improving our infrastructure. Critical tools like the 45G short line 
tax credit allow that money to go even further and allows for an even 
safer, more efficient rail network that benefits both the movement of 
freight and sometimes passengers as well.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                           Dr. Noel Hacegaba
    The Intermodal Association of North America consists of more than 
1,000 corporate members including railroads, ocean carriers, ports, 
intermodal trucking companies, over-the-road highway carriers, third-
party logistics companies and suppliers to the industry. As a 
significant player in the effort to improve the efficiency of goods 
movement, IANA is the only organization that represents the combined 
interests of the intermodal freight transportation industry. IANA's 
mission is to promote the growth of efficient intermodal freight 
transportation through innovation, education and dialogue.
    Freight Investment. I have long been a champion of Federal funds 
for freight projects, which for the first time received dedicated 
funding in the FAST Act with the implementation of the FASTLANE (now 
INFRA) program, which I championed. Trade and the movement of goods is 
the backbone of our economy. In Washington state, we know this all too 
well as forty percent of our jobs are tied to trade.
    Question 1. Where do you see the main chokepoints that require 
multi-modal investments to keep freight moving?
    Answer. The main chokepoints exist at the ports, depots, inland 
intermodal facilities and on the highways that access these facilities. 
Increasing the reliability of delivery and developing seamless pathways 
for the movement of freight is important to the continued growth of the 
U.S. economy. Dedicated investment in intermodal connectors--the 
highway links that facilitate the transfer of freight between modes--is 
a major part of the solution to congestion. While these road segments 
make up less than one percent of the total National Highway System 
(NHS) mileage, intermodal connectors are critical to the ingress and 
egress between intermodal facilities and the NHS. Having dedicated 
funds to support investments in alleviating these chokepoints would 
greatly reduce congestion and improve freight fluidity and velocity 
across the supply chain. In addition, the use of on-dock and near-dock 
rail is an important transportation option used to alleviate port 
congestion and to improve freight velocity throughout the intermodal 
network; these investments also help to alleviate emissions by removing 
more trucks from the roads.

    Question 2. How can increased investments in the freight program 
better address these challenges?
    Answer. Freight transportation is the backbone of the American 
economy. The increasing volume of goods moving through U.S. ports and 
throughout the intermodal freight network each year creates additional 
strains on the supply chain. It is estimated that U.S. businesses pay 
$27 billion each year in extra freight costs due to congestion and 
outdated facilities. It is also estimated that it would cost $3.7 
trillion in order to meet all of the infrastructure needs of the 
freight supply chain. New capital investment in freight transportation 
infrastructure will lead to significant benefits including higher 
productivity, improved freight velocity and enhanced global 
competitiveness.
    Increased funding for freight infrastructure projects, including 
marine and rail intermodal facilities and intermodal connectors, will 
provide freight stakeholders and their customers with the speed, 
reliability and reduced costs they need to succeed and to grow the U.S. 
economy.
    We also believe increased funding, along with the establishment of 
a Multimodal Freight Office in the U.S. Department of Transportation, 
would send an important message to the private sector about our 
Nation's commitment to freight and enable additional capital investment 
to seed further enhancements to the intermodal network.

    Intermodal Port Projects. Ports and port terminals are a critical 
part of our freight network, but frequently get overlooked when it 
comes to Federal funding. The FAST Act included new programs to help 
move freight more efficiently. However, I'm concerned that the programs 
don't go far enough to help ports.
    Question 3. How do limitations on the FASTLANE grants impact the 
ability to fund intermodal freight projects? What should be done to 
address these limitations?
    Answer. Integrated planning and funding that addresses the end-to-
end needs of freight movement will be critical to developing 
comprehensive regional and statewide plans to improve the Nation's 
freight infrastructure. There are several key items that can be done to 
address limitations on the FASTLANE grants. The first is to remove the 
$500 million cap on intermodal freight projects. Of the $11 billion in 
dedicated freight funding over five years authorized in the FAST Act, 
only $1.13 billion is eligible for intermodal freight projects. 
Congress should also reinstate a projects of regional and national 
significance program, under which freight infrastructure projects would 
be eligible. In addition, discretionary grant programs like Better 
Utilizing Investments to Leverage Development (BUILD), Consolidated 
Rail Infrastructure and Safety Improvements (CRISI) and Infrastructure 
for Rebuilding America (INFRA) have provided much-needed opportunities 
to fund freight-related projects and need to be expanded.
    The FAST Act also provided important support for enhancing the 
intermodal network because it looked to expand funding; streamline the 
environmental review and permitting processes to accelerate project 
approvals; promote the deployment of transportation technologies and 
congestion management tools; and expand port eligibility in the 
Congestion Mitigation and Air Quality Improvement Program. We need to 
build on these successes.

    Question 4. Does focusing freight policies largely on highways 
impact our ability to move goods efficiently?
    Answer. Yes. Focusing freight policies largely on highways ignores 
the fact that freight moves across modes--by water, rail and highways. 
To ensure that goods can move efficiently throughout the transportation 
network, policies should take into account planning for freight 
movement from origin to destination, and provide funding for investment 
in infrastructure across the modes and in technology that facilitates 
freight movements between and across modes. Intermodal by its nature is 
complex, and it requires resources that allow all stakeholders to work 
together to move freight in an efficient and timely manner

    Paying for Freight. I think we all know and see the value of 
investing freight, but we struggle to find agreement on how to pay for 
these investments. Congress has heard support for any number of 
proposals--including continuing the existing practice of using highway 
trust fund and general fund revenues or dedicating new revenue, such as 
the proposed waybill fee.
    Question 5. What are your views on how we pay for critical freight 
investments?
    Answer. We believe in the development of a comprehensive national 
freight policy that not only addresses funding for and improvements to 
the Nation's roadway, rail and bridge infrastructure system, but that 
also allows for significant investment in projects not directly related 
to highways. The following items are, in our view, critical to enabling 
America to compete more effectively in an increasingly global economy:

   Fuel taxes should be increased to support freight 
        infrastructure projects.

   Introduce Freight railroad infrastructure investment tax 
        credits to support rail infrastructure projects.

   Support and encourage common-sense Public-Private 
        Partnerships that improve and expand America's freight 
        infrastructure.
                                 ______
                                 
     Response to Written Question Submitted by Hon. John Thune to 
                               Donna Lemm
    Question. Ms. Lemm, you mentioned in your testimony that many 
agricultural commodities--including grains and soybeans--are 
increasingly migrating from bulk cargoes to containerized shipping.
    Could you describe how this transition is affecting the supply 
chain, as well as how intermodal infrastructure investment will change 
as a result?
    Answer. For ocean carrier service to and from the United States, 
the international ocean carriers allocate their containers first for 
the imported consumer goods coming from Asia and other regions, as 
these are the highest volume, and highest value goods, which pay the 
highest freight rates. Only a finite number of these containers are, 
once the imports are unloaded, allocated for export cargo. Many are 
simply returned back to Asia empty, in order to expedite the loading of 
additional imports to the US. A finite number of containers are used to 
load our agriculture exports, in many cases requiring repositioning to 
locations far inland from the ports, to locations where our agriculture 
is grown, processed, packed. Once loaded, these containers can return 
to the ports, and then return to Asia or other export destinations. For 
decades we have seen the conversion of grain and soybean into 
containers. Containerized shipments allow smaller, more manageable 
quantities for the overseas buyer to manage, as opposed to the massive 
quantities in the bulk ships that have traditionally carried soybeans, 
grains, wheat. Further, containers allow different varieties of these 
products to be segregated, for example GMO from non-GMO, and different 
grades of the grain or soybeans. For the ocean carriers, the 
containers, if not loaded with our exports, would return empty, meaning 
without generating any revenue for the ocean carrier. So even at low 
export freight rates, these containers became very attractive to get 
goods shipped competitively to foreign markets. As bulk shipping costs 
rose, containerized shipping fell and immediately conversion to 
containers occurred. Goods are well protected in ocean equipment and 
while we still see a tremendous amount of bulk shipping, containerized 
freight is favored by many shippers and receivers.

    How does it impact the supply chain?
    Answer. All agriculture commodities are scrambling to be served 
from the same pool of containers. Often there is more agriculture ready 
to be shipped, than there are containers available to be loaded. This 
is particularly frequent in places where the largest volumes of 
agriculture (soybean, grain) are sourced, which are the furthest from 
the ports (the Midwest), meaning empty containers must be brought long 
distances from the ports or metropolitan areas where the containers 
with imported consumer goods are destined. This involves trucking, rail 
and inland depots. So when we see a conversion from bulk/barge to 
containers, often preferred by the foreign receivers, the impact to the 
supply chain is huge--as shippers in the Midwest or other inland points 
scramble to get their hands on those containers.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                               Donna Lemm
    Freight Investment. I have long been a champion of Federal funds 
for freight projects, which for the first time received dedicated 
funding in the FAST Act with the implementation of the FASTLANE (now 
INFRA) program, which I championed. Trade and the movement of goods is 
the backbone of our economy. In Washington state, we know this all too 
well as forty percent of our jobs are tied to trade.
    Questions 1. Where do you see the main chokepoints that require 
multi-modal investments to keep freight moving?
    Answer. The main chokepoints that require multi-modal investments 
to keep freight moving are at places where the transportation modes 
meet. These are the place where cargo must be transferred from one mode 
to another. For example, at seaports where our export cargo (largely 
agriculture and forest products moving in international marine 
containers) arrives by truck or rail and must be transferred onto ship, 
for the voyage to foreign customers. Or vice versa--where cargo 
arriving from foreign origins, is transferred to truck or rail for 
delivery to nearby or distant distribution centers. Another chokepoint 
is at the inland rail ramps, where international cargo arriving by rail 
from seaports, is transferred to truck for delivery to ultimate 
destination. Or vice-versa, where our export cargo, (again, largely 
agriculture and forest products) arrives by truck, to be loaded onto 
rail for the onward movement to a seaport.
    It is the many process inefficiencies and lack of standard supply 
chain visibility at our choke points in the United States that require 
multi-modal investment. For example, on the West Coast there are 12 
terminals in Los Angeles and Long Beach with no standard visibility to 
the shipper on where that container is and whether containers are 
available for pick-up. To compound the congestion problems, terminals 
have added dual transaction requirements for inbound and outbound 
freight and appointment systems. The choke points at our ports are 
further pained by the lack of chassis supply (the metal frame with 
wheels upon which containers are mounted for over the road). When the 
system has no wheels for containerized freight movement, the end result 
is freight that stands still. In the interior of the United States 
these gridlocks are similar. We have a system at our hub locations in 
the interior like Chicago, Memphis and Dallas that have multiple Class 
1 Railroads serving these geographies. Freight is moving in and out of 
these hubs daily and there is a need for visibility to this cargo at 
all times. These inland hubs also have congestion problems when there 
are no chassis to move freight. During the FMC 2018 Fact Finding 
Investigation on Detention and Demurrage led by FMC Commissioner 
Rebecca Dye, The Memphis Supply Chain Team was formed to study this 
problem in Memphis. The team comprised of industry stakeholders from 
the rail, shipper, ocean carrier and motor carrier industry found that 
the supply chain could be greatly enhanced by a gray pool chassis model 
offering greater supply, interoperability, standard quality and a 
manager. While there is debate on the benefits of this gray chassis 
model vs private pool model, there are those that argue that chassis 
should be treated as a utility model with Federal funding 
consideration. The bottom line, chassis are a necessary component of 
the supply chain and shippers need fair access to wheels in order to 
move their freight. This is an area that needs multi-modal investment 
to meet the growing challenges and surges of freight in the US.
    It should be noted that we could assist in minimizing congestion at 
these choke points, if we could increase the weight limits allowable 
for transport in these multi-modal transfer locations. The U.S. has the 
lowest allowable weight limits for trucks in the developed world. 
80,000 lbs, GVW, compared to 105,500 lbs GVW in Canada and Europe, and 
often it is greater. Which means that the U.S. exporter, must hire 3 
trucks to haul her products to marine terminals, while the nearby the 
Canadian exporter (or the Australian, or Chilean exporter of the same 
products -agriculture and forest products) only needs 2 trucks to haul 
his hay to their seaports or inland rail ramps. The exporters in those 
countries, competing with the U.S. farmer, processor or manufacturer, 
therefore enjoy a significant cost advantage. Further, the roads and 
transfer points in those countries are less congested, and benefit by 
far fewer diesel emissions. In addition, the United States has a 
critical driver shortage with the average age of drivers at 55 years 
old. We need to take a hard look at how we keep U.S. exports 
competitive and moving.
    There are some states, such as Washington, Oregon, Idaho that 
permit the higher weights allowed in Canada, but this is not uniform 
across the country, meaning that interstate trucking must conform to 
our lower weight limits for moving our goods regionally and nationally.
    Canada and the Western European countries most certainly have 
safety and roadway maintenance concerns at least equal to ours. That is 
why their higher weight limits require truckers spread the load, by 
using an additional axle, which actually reduces the load on the 
roadway at each point where the tire is on the pavement. Further, 
studies show the truck brakes just as quickly, and the trailer swerves 
less than when the truck is only at the lower (80,000 GVW). Washington, 
Oregon, Idaho, and other states allowing the higher weight trucks 
similarly require the additional axle.

    Question 2. How can increased investments in the freight program 
better address these challenges?
    Answer. The challenge for U.S. transportation infrastructure is 
that it is insufficient to carry the dramatically increased volumes of 
cargo, beyond that for which the infrastructure was designed to carry. 
Dramatic increases in cargo volumes moving both internationally and 
domestically are straining our U.S. infrastructure. Unprecedented 
volumes of imports into the United States on ships of unprecedented 
size, are overwhelming the marine terminals at the gateway seaports. 
Roadways connecting the marine terminals to the interstate highway 
system aren't sufficient to carry the increased number of trucks, 
without quickly becoming congested. Adding complexity, those roadways 
must transit urban areas. For example, on the west coast, all the major 
gateways are located in urban areas where expanding the size and number 
of roads feeding to and from the marine terminals is extraordinarily 
expensive and may require exercising eminent domain. Further, cargo is 
moving on railroads, which are themselves stressed in terms of their 
own capacity to carry all the cargo, particularly during peak periods. 
Thus, additional capacity must be built, including more rails ramps, 
etc. In other words, while the cargo moving domestically and 
internationally has increased, with some exceptions, U.S. 
infrastructure to these increased volumes, has not increased.
    This leads to the question: who should make those investments and 
whether those investments are publicly funded, or whether they are 
private? For example, much of the railroad infrastructure needs will be 
funded by the railroads, not with Federal tax dollars. The inland rail 
service for international containers has seen transit times double over 
the past 2 decades. In 2000, U.S. ag and forest product exports would 
move from Dallas and Memphis to the the WC in 4-5 days. Today that same 
transit time is 8-10 days. It is absolutely unacceptable to have 
transit times in the interior double from key intermodal rail hubs to 
our ports.
    Similarly, marine terminals, particularly at U.S. West Coast ports, 
are all private terminal operating companies. In many of those 
instances, the marine terminals will have to be improved with 
additional cranes, etc. by the terminal operating company itself. In 
other cases, the public port authority operates the marine terminals, 
such as Georgia and South Carolina. In those cases, they are expanding 
the available infrastructure and funding it through both port revenues 
and state tax dollars.
    On the west coast it is clear that individual marine terminals are 
often much too small to handle ships now calling upon them. In the 
Nation's largest international trade gateway, Los Angeles and Long 
Beach, the marine terminals were built to facilitate the flow of 
containers on and off ships ranging in size from 5,000 to 8,000 TEU's. 
However, today's ships are more likely to be in the 14,000 to 18,000 
TEU's, and that is simply just too much cargo for the older smaller 
terminals that were built a generation ago. The gates to those 
terminals are insufficient, the footprint of the terminals is 
insufficient to handle all the containers stacked there awaiting to be 
loaded on the ship. And building additional freeways through Los 
Angeles to get cargo on or off a terminal is problematical best. In the 
Pacific Northwest, the Port authority has been expanding marine 
terminal sizes which is essential. However additional road access and 
railroad access is essential and that is expensive, particularly as 
they will both have to move through urban areas of Seattle and Tacoma.
    Up until approximately 10 years ago, most cargo containers entering 
or leaving marine terminals were on rail moving efficiently directly 
onto the terminals. Today most containers leaving or returning do so by 
truck, requiring tens of thousands of additional trucks on roadways--
adding to congestion and slowing the process of cargo movement. Each 
trucking container must move into the terminal through a controlled 
gate and there are insufficient gates because there is often 
insufficient room on the roads leading into the terminals. Thus, 
resources to pay for the infrastructure expansion required. Further, 
the public port authority efforts to combine the marine terminals must 
have the support of the Federal government. In terms of effort to 
expand the size of each of the terminals, will require that the Federal 
and state governments develop plans as to how to convert these 
privately managed terminals, located on public property, into fewer but 
larger terminals.
    Serving inland areas, where much of our U.S. agriculture cargo 
originates, requires long truck hauling, unless a rail ramp is located 
near the farmers, processors, packers. These containerized exports 
often get international marine equipment from hub locations in Chicago, 
Memphis, Kansas City and Dallas and then move on to our port gateways 
by rail. These transit times as discussed have doubled to the coastal 
ports and some rails have instituted appointment systems which often 
restrict exporters into meeting these windows. A careful review of our 
major hub locations and corresponding transits to the port for U.S. 
exporters and inefficient processes deserve study. It is also important 
to note that often inland rail ramps are far from the agriculture 
origins. Additional infrastructure could assist in moving cargo from 
rural areas into the Gateway seaports seamlessly without adding to 
roadway congestion--if load points could be added in rural areas. This 
requires the railroad to be agreeable to the operational challenges, 
and may require Federal funding of at least some of the hard 
infrastructure to facilitate loading and unloading of containers and 
their storage at these inland points. For example, for the railroad 
moving between Puget Sound and Minneapolis/Chicago, the addition of 
load points in places such as Minot, North Dakota and Tri-Cities in 
Washington state would remove hundreds of trucks from the freeways. If 
the rail, moving through Eastern Washington could stop add a rail ramp 
that would load containers of potatoes, onions, French fries, pulses 
etc., that would alleviate the current need to truck all that cargo 
from Eastern Washington, Idaho and eastern Oregon on congested highways 
to the urban areas Seattle Tacoma and finally to the seaport marine 
terminals.
    Marine terminal operators lease the terminals (albeit for many 
years), thus the port authority has some ability to determine the 
future of the terminals, even those leased long term. But for the 
railroads, building a rail ramp is only possible if the private sector 
entity, in this case in Burlington Northern Santa Fe, is amenable. They 
might do because it increases operational efficiency. To make the 
actual cost of building the extra sidings, ramp cranes, and other costs 
affordable, Federal grants and State funding support could make the 
project attractive. This would require another public-private funding 
mechanism.
    In addition to building intermediate rail ramps along the existing 
rail routes,a network of shortline railroads could significantly reduce 
transport costs for food, farm and fiber, whether for domestic or 
international consumption. This will require coordination with the 
Class I railroad and Federal authorities., as the Class I/short line 
agreements currently, give the Class I's almost complete discretion to 
deny access to shortline cargo. The STB has ruled on many cases 
relating to shortline cargo access to the Class 1 trains.
    At the international land borders particularly the southern border, 
U.S. investment in cross-border cargo infrastructure has lagged behind 
Mexico's investment in improving cross border roadways. Under the 
USMCA, the massive and growing volumes of trucks crossing the border 
require greatly expanded U.S. highway access to the border, as well as 
truck waiting areas, and inspection gates. On the U.S. side, projects 
that have been on the drawing board for many years are still 
languishing.
    The bottom line is increased freight volumes, whether moving 
domestically or internationally, require increased infrastructure. 
Bigger ships require bigger marine terminals, more gates, more rail 
access and highway access. More cargo moving from the coast to inland 
points requires more rail ramps and improved road access to those rail 
ramps. In many cases the current transportation infrastructure is 
privately owned or managed, thus requiring public-private partnerships 
to plan and fund the required infrastructure

    Paying for Freight. I think we all know and see the value of 
investing freight, but we struggle to find agreement on how to pay for 
these investments. Congress has heard support for any number of 
proposals--including continuing the existing practice of using highway 
trust fund and general fund revenues or dedicating new revenue, such as 
the proposed waybill fee.
    Question 3. What are your views on how we pay for critical freight 
investments?
    Answer. Some funding mechanisms are working, others are not. For 
example, to pay for dredging the Nation's waterways and marine 
channels, as well as jetties, the Harbor Trust Fund provides sufficient 
revenues. The question is not whether there is sufficient revenue, but 
rather how funds are distributed. Should they be distributed for land-
side projects to ports which do not necessarily need dredging, but 
could wisely improve terminals, or rail access, for instance. That is 
an ongoing debate. There has been some discussion of increasing the fee 
slightly in order to generate additional revenue dedicated to fund 
infrastructure at the so-called ``donor ports'' that is different than 
that originally contemplating when the HMTF was enacted (dredging, 
jetties). With the current crisis at that major seaports due to massive 
volumes of cargo overwhelming the capacity of the seaports, there may 
be an appetite for, or at least a willingness to enact a slight 
additional HMT in order to generate the revenues needed to make 
existing terminals more efficient, and to build new terminals, to 
combine existing terminals and take the other measures necessary to 
improve cargo flows.
    The Highway Trust Fund's ability to fund highways, bridges, 
subways, buses, is insufficient now, and diminishing. With better 
mileage for cars burning gasoline, with hybrid and electric cars not 
burning as much or any gasoline, the Federal gas tax that funds the 
Highway trust fund is generating less and less revenue. The existing 
funds are barely sufficient to maintain the current highways, subways, 
etc, leaving precious little to build additional freight 
infrastructure. And if a highway is built or expanded, the freight and 
passenger traffic must share it. Congestion remains and a growing 
concern. A solution is the Vehicle Miles Traveled--which treats are 
cars/trucks equally, regardless of fuel burned, or if electric, LNG, 
solar, wind. This is being tested in Oregon, and could lead ultimately 
to a carbon free environment.The VMT is discussed further, below.
    Transportation planners believe that separate network of highways 
dedicated to freight would dramatically increase not only freight 
efficiency, but reduce congestion on the highways upon which passenger 
traffic would remain dependent. In the recent past the trucking 
industry has indicated support for an additional Diesel Fuel Tax to 
generate revenue to pay for separate freight infrastructure, ranging 
from completely separate highways for truckers, to additional lanes 
dedicated to truckers on existing highways. Whether depending on a tax 
on diesel fuel at a time when electric and LNG vehicles are becoming 
more numerous, and which do not consume much or any diesel, is a 
significant question. in such instances, whether a dedicated fee for 
freight or generating funds for passenger transport (including urban 
transit) a shift to the Vehicle Miles Traveled formula could generate 
sufficient revenue by taxing all vehicle regardless of whether they 
consume gasoline or not. The trucking community is largely in support 
of this, as long as the funds they generate, are dedicated to freight 
infrastructure.
    Additional infrastructure could assist in moving cargo from rural 
areas into the Gateway seaports seamlessly without adding to roadway 
congestion--if load points could be added in rural areas. This requires 
the railroad to be agreeable to the operational challenges, and may 
require Federal funding of at least some of the hard infrastructure to 
facilitate loading and unloading of containers and their storage at 
these inland points. For example, for the railroad moving between Puget 
Sound and Minneapolis/Chicago, the addition of load points in places 
such as Minot, North Dakota and Tri-Cities in Washington state would 
remove hundreds of trucks from the freeways. If the rail, moving 
through Eastern Washington could stop add a rail ramp that would load 
containers of potatoes, onions, French fries, pulses etc., that would 
alleviate the current need to truck all that cargo from Eastern 
Washington, Idaho and eastern Oregon on congested highways to the urban 
areas Seattle Tacoma and finally to the seaport marine terminals. This 
is only possible if the private sector entity, in this case in 
Burlington Northern Santa Fe, is amenable. They might do because it 
increases operational efficiency and the actual cost of building the 
extra sidings, ramp cranes, and other costs are affordable. If not, 
Federal grants and State funding support could make the project 
attractive. Another public-private funding mechanism would be required.
    Bottom line: the HMT works. It could be expanded, The Highway Trust 
Fund may be on its last legs, insufficient revenue coming in from 
gasoline sales. Vehicle Miles Tax would capture the VMT tax from all 
vehicles on it's road, if so, the passing of the HTF would not be a big 
blow.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                              Joseph Szabo
    Freight Investment. I have long been a champion of Federal funds 
for freight projects, which for the first time received dedicated 
funding in the FAST Act with the implementation of the FASTLANE (now 
INFRA) program, which I championed. Trade and the movement of goods is 
the backbone of our economy. In Washington state, we know this all too 
well as forty percent of our jobs are tied to trade.
    Questions 1. Where do you see the main chokepoints that require 
multi-modal investments to keep freight moving?
    Answer. Many of freight infrastructure's largest, most complex, and 
most desperately needed improvements occur where multiple modes come 
together. These chokepoints must be untangled to unburden our 
communities and allow for the efficient flow of commerce. While 
multimodal chokepoints occur in communities of varying sizes across the 
nation, many of the most costly and critical occur in our Nation's 
largest freight hubs. These hubs, like Seattle and Chicago, are tasked 
with safely, efficiently, and reliably moving high volumes of freight 
and people across many competing modes. The need for investment in 
these multimodal chokepoints continues to grow, and for this reason, it 
is critical that Congress eliminate the cap on non-highway investment 
under the FASTLANE and Freight Formula Programs so states and 
localities are able to address their most pressing freight 
infrastructure chokepoints, regardless of mode.
    The Chicago region is North America's freight hub and a center of 
intermodal freight movement. But the region's rail lines--built more 
than a century ago--were not configured for the volumes and types of 
freight being carried currently, creating the largest U.S. rail freight 
chokepoint and also impacting commuter and intercity passenger rail 
service. Multi-modal investments in programs such as CREATE, a public-
private partnership to deliver rail grade separations and other 
improvements to address this chokepoint, will keep freight moving.

    Question 2. How can increased investments in the freight program 
better address these challenges?
    Answer. Currently, passengers and freight in the U.S. compete for 
an inadequate supply of infrastructure capacity and financial 
resources. Both suffer. Competitive grant programs, such as FASTLANE, 
are critical to funding large-scale freight infrastructure projects, 
such as where modes come together, which are difficult to fund through 
traditional distribution methods. The FASTLANE program makes 
investments in critical freight and highway projects but is currently 
oversubscribed. In the combined FY17 & FY18 round of awards, the U.S. 
Department of Transportation (USDOT) received $12 in unique requests 
for every $1 available. USDOT has received applications for this 
program from all 50 states, the District of Columbia, and Puerto Rico, 
demonstrating that needs span the Nation. Research also shows that for 
every $1 invested through a Federal competitive grant program, an 
additional $3.50 is invested in the project, leveraged through other 
sources. By increasing program funding to $12 billion annually, and 
ensuring that funds are invested in critical freight projects, goods 
movement infrastructure will be better positioned to support economic 
growth, domestic production and manufacturing, and U.S. competitiveness 
and trade in the world marketplace.

    Intermodal Port Projects. Ports and port terminals are a critical 
part of our freight network, but frequently get overlooked when it 
comes to Federal funding. The FAST Act included new programs to help 
move freight more efficiently. However, I'm concerned that the programs 
don't go far enough to help ports.
    Question 3. How do limitations on the FASTLANE grants impact the 
ability to fund intermodal freight projects? What should be done to 
address these limitations?
    Answer. Currently, only $500 million over the five-year duration of 
the FASTLANE program can be spent on non-highway projects. This cap 
severely limits the ability of intermodal freight projects to receive 
necessary funding from the FASTLANE program. Freight projects often 
span multiple modes and cross jurisdictional boundaries, making them 
expensive and difficult to fund through traditional formula programs. 
It is often in the places where various modes come together that public 
assistance is needed to close the funding and infrastructure gaps. 
Freight movement necessitates cooperation among many modes, and funding 
flexibility is required to make investments yielding the highest 
return. Therefore, it is critical that Congress eliminate the cap on 
non-highway investment under the FASTLANE and Freight Formula Programs 
to ensure that states and localities can make investments in their most 
pressing freight needs, regardless of mode.

    Question 4. Does focusing freight policies largely on highways 
impact our ability to move goods efficiently?
    Answer. Freight does not move on highways alone--where public 
benefit is derived, public investment must be made. Focusing solely on 
highways severely limits the effectiveness of any freight program--
intermodal freight is one of the fastest-growing sectors of the freight 
market and it is where highways meet other modes that bottlenecks and 
inefficiencies frequently occur. Investing in just one mode of the 
complex multimodal freight network will not address these bottlenecks 
nor will it improve the overall efficiency of the freight system.
    Moreover, system redundancies are necessary to meet the needs of a 
growing economy, and adding highway lanes is simply not an option in 
many of our Nation's most congested regions. For this reason, it is 
important that investment spans modes to allow for unfettered freight 
movement as populations grow and commuter traffic competes with truck 
traffic. Also worth noting is that extreme weather patterns, workforce 
shortages, and the simple economics of supply-and-demand challenge 
modes disproportionately, making supply chain redundancy and resiliency 
necessary to ameliorate negative economic consequences.

    Paying for Freight. I think we all know and see the value of 
investing freight, but we struggle to find agreement on how to pay for 
these investments. Congress has heard support for any number of 
proposals--including continuing the existing practice of using highway 
trust fund and general fund revenues or dedicating new revenue, such as 
the proposed waybill fee.
    Question 5. What are your views on how we pay for critical freight 
investments?
    Answer. The Highway Trust Fund (HTF) and its primary funding 
source, motor fuel taxes, have served our infrastructure network for 
many years. As noted, in recent years, general fund revenues have been 
used to supplement the HTF and continue making investments despite 
declining revenue from direct user fees. Should Congress continue this 
approach, we maintain that Congress should increase investments in our 
multimodal freight network as the system directly supports our Nation's 
economic health.
    However, certainty and reliability are critical for infrastructure 
development. As Congress contemplates long-term solutions to invest in 
the freight network, I encourage careful consideration of a waybill fee 
assessed on the cost of moving goods and dedicated to multimodal goods 
movement infrastructure. The fee, as applied on both road and rail 
movements, would raise significant funds and complement existing 
revenue sources. Importantly, collections based on a waybill fee will 
be resilient to factors such as movement toward alternative fuels, and 
the revenues will grow with the demand for services.

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