Freight Transportation: National Policy and Strategies Can Help
Improve Freight Mobility (07-JAN-08, GAO-08-287).						 
                                                                 
Continued development and efficient performance of the nation's
freight transportation system is vital to maintaining a strong
U.S. economy and sustaining our nation's competitive position in
the global economy. Yet, increasing congestion on our nation's
roads and rail lines threatens to undermine the efficiency of
our freight transportation system. Although the Department of
Transportation (DOT) has taken some steps to enhance freight
mobility, there is growing concern that additional action is
needed. To assist the Congress in enhancing national freight
mobility, GAO reviewed (1) factors that contribute to
constrained freight mobility and their effects in areas with
nationally significant freight flows, and (2) approaches to
address freight mobility in those areas and the challenges
decision makers face in implementing those approaches. GAO
analyzed freight transportation data and interviewed
stakeholders in four areas with large freight flows.
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-287						        
    ACCNO:   A79430						        
  TITLE:     Freight Transportation: National Policy and
Strategies Can Help Improve Freight Mobility						 
     DATE:   01/07/2008 
  SUBJECT:   Cost analysis
             Federal funds
             Freight transportation
             Freight transportation rates
             Funds management
             Program evaluation
             Risk assessment
             Road surfaces
             Strategic planning
             Transportation costs
             Transportation industry
             Transportation planning
             Transportation rates
             Transportation safety				 

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GAO-08-287



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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Committee on Environment and Public 
Works, U.S. Senate: 

January 2008: 

Freight Transportation: 

National Policy and Strategies Can Help Improve Freight Mobility: 

GAO-08-287: 

GAO Highlights: 

Highlights of GAO-08-287, a report to the Ranking Member, Committee on 
Environment and Public Works, U.S. Senate. 

Why GAO Did This Study: 

Continued development and efficient performance of the nationï¿½s freight 
transportation system is vital to maintaining a strong U.S. economy and 
sustaining our nationï¿½s competitive position in the global economy. 
Yet, increasing congestion on our nationï¿½s roads and rail lines 
threatens to undermine the efficiency of our freight transportation 
system. Although the Department of Transportation (DOT) has taken some 
steps to enhance freight mobility, there is growing concern that 
additional action is needed. To assist the Congress in enhancing 
national freight mobility, GAO reviewed (1) factors that contribute to 
constrained freight mobility and their effects in areas with nationally 
significant freight flows, and (2) approaches to address freight 
mobility in those areas and the challenges decision makers face in 
implementing those approaches. GAO analyzed freight transportation data 
and interviewed stakeholders in four areas with large freight flows. 

What GAO Found: 

A number of factors contribute to constrained freight mobility and, 
together, these factors have significant adverse impacts. First, 
growing freight transportation demand decreases freight mobility. 
Volumes of goods shipped by trucks and railroads, for example, are 
projected to increase by 98 percent and 88 percent, respectively, by 
2035. Second, the capacity of our transportation system is constrained 
by other factors, including the cost of surmounting geographic 
barriers, such as mountain ranges and waterways, population density, 
and urban land-use development patterns. Third, freight mobility is 
limited by inefficiencies in how infrastructure is used, such as poor 
road signal timing and prices paid by users that do not align with 
infrastructure costs, resulting in congestion. The widening gap 
between the volumes of goods and available system capacity is 
increasing transportation congestion. Constrained freight mobility has 
adverse economic costs for consumers, shippers, and carriers, as well 
as in urban centers where congestion exacerbates environmental 
pollution and increases health risks, such as respiratory illnesses. 

Although freight transportation stakeholders have advanced projects and 
proposals to enhance freight mobility by building new infrastructure 
and increasing system efficiency, public planners face several 
challenges when advancing freight improvement projects. These 
challenges include competition from nonfreight projects for public 
funds and community support in the planning process, lack of 
coordination among various government entities and private sector 
stakeholders, and limited or restricted availability of public funds 
available for freight transportation. Compounding these challenges 
facing state and local transportation planners is that the federal 
government is not well positioned to enhance freight mobility due to 
the absence of a clear federal strategy and role for freight 
transportation, an outmoded federal approach to transportation planning 
and funding, and the unsustainability of planned federal transportation 
funding. When combined, these challenges and factors hinder the ability 
of public sector agencies to effectively address freight mobility and 
highlight the need to reassess the appropriate federal role and 
strategy in developing, selecting, and funding transportation 
investments, including those for freight transportation. 

Examples of Railroad and Highway Freight Movements: 

[See PDF for image] 

This figure contains two photographs depicting railroad and highway 
freight movements. 

Sources: Digital Vision and Port of Long Beach. 

[End of figure] 

What GAO Recommends: 

GAO recommends that DOT work with the Congress and freight stakeholders 
to develop a national strategy to transform the federal governmentï¿½s 
involvement in freight transportation projects. This strategy should 
include defining federal and nonfederal stakeholder roles and using new 
and existing federal funding sources and mechanisms to support a 
targeted, efficient, and sustainable federal role. DOT did not comment 
on the recommendation. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-287]. For more information, contact 
JayEtta Z. Hecker, (202) 512-2834 or [email protected]. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Constrained Freight Mobility Could Have Negative Economic, 
Environmental, and Health Implications: 

Although Freight Transportation Stakeholders Have Advanced Various 
Approaches to Improve Freight Mobility, Planning, Coordination, and 
Funding Challenges Impede Progress: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Critical Factors and Questions and Components of a Federal 
Role in Freight-Related Transportation and Infrastructure Investments: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: DOT Actions Taken to Improve Freight Mobility: 

Table 2: Shipment Volumes by Mode in 2002 and 2035 Projections: 

Table 3: Examples of Capital Projects to Enhance Freight Mobility: 

Table 4: Examples of Proposals to Maximize the Use of Existing 
Capacity: 

Table 5: Examples of Projects and Proposals to Influence User Behavior 
and Manage Demand: 

Table 6: Key Transportation Challenges and Considerations Facing 
Federal Decision Makers: 

Table 7: Names and Locations of Organizations Contacted: 

Table 8: GAO's Critical Factors and Questions for Determining an 
Appropriate Federal Role in Freight-Related Transportation: 

Table 9: Three Components of GAO's Framework to Guide Federal 
Involvement in Freight-Related Infrastructure Investments: 

Figures: 

Figure 1: Inland Movement of Maritime Cargo from Port of Los Angeles by 
Truck in 1998: 

Figure 2: Example of Goods Movement from Port of Entry to Consumer: 

Figure 3: High Volume of Trucks Servicing the Port of Long Beach Are 
Routinely Delayed by Congestion on I-710: 

Figure 4: Example of How Constrained Freight Mobility Increases the 
Cost of Transportation and Consumer Goods: 

Abbreviations: 

AAR: Association of American Railroads: 

ACTA: Alameda Corridor Transportation Authority: 

BTS: Bureau of Transportation Statistics: 

CARB: California Air Resources Board: 

CMAQ: Congestion Mitigation and Air Quality: 

CREATE: Chicago Region Environmental and Transportation Efficiency: 

DOT: Department of Transportation: 

EPA: Environmental Protection Agency: 

FHWA: Federal Highway Administration: 

HOT: high-occupancy toll: 

ISTEA: Intermodal Surface Transportation Equity Act: 

MPO: metropolitan planning organization: 

RRIF: Railroad Rehabilitation and Improvement Financing: 

TIFIA: Transportation Infrastructure Finance and Innovation Act: 

TRB: Transportation Research Board: 

TTI: Texas Transportation Institute: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

January 7, 2008: 

The Honorable James M. Inhofe: 
Ranking Member: 
Committee on Environment and Public Works: 
United States Senate: 

Dear Mr. Inhofe: 

Strong productivity gains in the U.S. economy hinge, in part, on 
transportation networks working efficiently. Continued development and 
efficient management of the nation's freight transportation system--
especially highways and rail lines that connect international gateways 
and intermodal facilities to retailers, producers, and consumers--are 
important to sustaining the nation's competitive position in the global 
economy. However, the increasing congestion within the freight 
transportation system poses a threat to the efficient flow of the 
nation's goods and has strained the system in some locations. Moreover, 
recent growth in international trade has placed even greater pressures 
on ports, border crossings, and distribution hubs--key links in the 
freight transportation system. Congestion delays that significantly 
constrain freight mobility in these areas could result in serious 
economic implications for the nation. 

Public sector transportation agencies at the federal, state, and local 
levels have a significant role in developing and efficiently managing 
the freight transportation system; however, private sector entities, 
such as railroads and trucking firms, also play a significant role in 
enhancing freight mobility. Federal law establishes federal funding and 
financing programs for surface transportation projects. Federal support 
for freight transportation infrastructure projects mainly occurs 
through these programs and is allocated to surface transportation modes 
and purposes. Highway trust fund dollars are apportioned to states 
according to statutory formulas, and states, in turn, make investment 
decisions. In past work, we have observed that this framework can lead 
to a bias for passenger-oriented projects and differential mode 
treatment, both of which can put freight at a disadvantage.[Footnote 1] 
State and local planners are more likely to fund projects that directly 
benefit passengers in their localities rather than freight traffic that 
moves through the region. Further, though federal law has established 
intermodal goals and encouraged states to engage in intermodal 
planning, funding sources have remained largely tied to individual 
modes. Current federal transportation programs continue this modal 
treatment. We have previously reported that these factors pose 
significant challenges to transportation planners in advancing freight 
projects.[Footnote 2] Although steps have been taken at the federal 
level to address these challenges, there is a growing concern that the 
current funding structure is not well suited to advancing freight 
improvements and that additional action might be needed to better 
allocate federal funds in order to address impediments to freight 
mobility. 

As requested, this report provides information on and analyses of 
issues related to constrained freight mobility in areas with nationally 
significant freight flows. For this report, we considered areas with 
nationally significant freight flows to be those that are either a 
major seaport, international border, or freight distribution hub and 
areas that combine some or all of these characteristics. Specifically, 
this report examines (1) factors that contribute to constrained freight 
mobility in areas with nationally significant freight flows and their 
effects and (2) approaches that are being used to address impediments 
to freight mobility in selected regions with nationally significant 
freight flows and the challenges that freight transportation decision 
makers face in implementing solutions. 

To fulfill our objectives, we reviewed and analyzed industry, academic, 
and government research reports and analytical studies; interviewed a 
wide range of stakeholders, including federal, state, and local 
transportation officials and private industry representatives; and 
conducted four case studies in regions that represented either 
international gateways or major distribution hubs.[Footnote 3] In 
selecting regions for our case study analyses, we used information 
available from the Federal Highway Administration's (FHWA) Freight 
Analytic Framework database regarding freight volumes and values to 
judgmentally select at least one seaport, inland waterway port, land 
border, and major distribution center. In addition, we focused mainly 
on overland surface transportation from ports to markets and on 
intermodal freight, as these demonstrate freight movement between modes 
and across multiple jurisdictional lines. The results of our case study 
analyses are not generalizable because the locations selected are not 
necessarily representative of other types of international gateways and 
distribution hubs. See appendix I for more details about our scope and 
methodology. We conducted this performance audit from July 2006 through 
January 2008 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Results in Brief: 

A number of factors contribute to constrained freight mobility, which 
when combined, have significant adverse economic, environmental, and 
health impacts. One factor is the growing demand for freight 
transportation, as reflected by the increasing volume of domestic and 
international freight that is moved on the nation's transportation 
system. According to Department of Transportation (DOT) estimates, the 
volume of goods moved by truck and rail is projected to increase 98 
percent and 88 percent, respectively, by 2035 from 2002 levels. Another 
factor is that adding capacity to accommodate this projected increased 
demand for freight transportation will be constrained by limitations on 
the nation's transportation infrastructure, including geographic 
barriers, such as mountain ranges and waterways, population density, 
and urban land-use development patterns. A third factor is how freight 
mobility is limited by inefficiencies in how infrastructure is used. 
For example, the extent to which carriers bear the full cost of their 
infrastructure use varies across modes and can contribute to overuse 
and congestion on some modes. As a result of these factors, freight 
congestion is rising and is expected to increase in the future. This 
congestion will have a number of negative impacts. For example, 
producers, shippers, and consumers will suffer the higher economic 
costs of freight transportation. One study estimates that highway 
congestion alone costs shippers $10 billion annually.[Footnote 4] Also, 
constraints on freight mobility result in undesirable environmental 
impacts, such as air pollution, and contribute to increased risks for 
illnesses, such as respiratory disease. 

Although freight transportation stakeholders have advanced approaches 
to improve freight mobility, public planners still face planning, 
coordination, and funding challenges when attempting to advance freight 
improvements. Freight transportation stakeholders have advanced 
various approaches in order to improve freight mobility. Their 
proposals involve adding physical capacity to the freight 
transportation system by building new facilities and increasing the 
efficiency of existing infrastructure through projects designed to 
improve traffic flows or influence driver behavior. Although 
stakeholders have taken steps to enhance freight mobility, public 
planners in areas with nationally significant freight flows face 
challenges when attempting to advance freight improvements. These 
challenges include competition for public funds from nonfreight 
projects, gaining community support in the planning process, lack of 
coordination among various government entities and private sector 
stakeholders, and limited or restricted availability of public funds 
for freight transportation. These challenges are exacerbated by the 
absence of a clear federal strategy for enhancing freight mobility; an 
outmoded, modally-focused federal approach to transportation planning 
and funding; and projected revenue shortfalls in the Highway Trust 
Fund, which public sector agencies use to fund the bulk of their 
transportation projects. When combined, these challenges and factors 
hinder the ability of public sector agencies to effectively address 
freight mobility and highlight the need to reassess the appropriate 
federal role and strategy in developing, selecting, and funding 
transportation investments, including those for freight 
transportation. 

We are making a recommendation to the Secretary of Transportation to 
develop, in conjunction with Congress and public and private 
stakeholders, a national strategy for freight transportation in order 
to improve freight mobility by more clearly defining the federal role 
in the freight transportation network and to begin to align federal 
expenditures with economically significant national public benefits. 
This strategy should clearly define the federal role using criteria to 
identify areas of national significance and determine the use of 
federal funds in those areas; establish the roles of nonfederal 
stakeholders; and use new and existing federal funding sources and 
mechanisms to support a targeted, cost-effective, and sustainable 
federal role. DOT did not comment on the recommendation; however, DOT 
officials did provide technical comments, which we have incorporated 
into this report, as appropriate. 

Background: 

Freight movement is vital to the functioning of the national economy, 
and increases in freight volumes have closely coincided with increases 
in productivity and the gross domestic product. Domestic producers are 
increasingly reliant on suppliers from around the world and are finding 
global markets increasingly profitable for the sale of their products. 
Additionally, to control costs, domestic production often relies on 
prompt, timely shipments of materials in small batches. Domestic 
retailers have implemented inventory management systems that lower 
overall costs by relying on prompt shipping of needed goods, instead of 
more costly warehousing. In 2003, the nation's top 14 freight gateways 
handled more than 50 percent of total U.S. international merchandise 
trade by value, but, despite this concentration, the reach of this 
trade is nationwide. For example, the Port of Los Angeles handles cargo 
destined for the entire continental United States, as shown in the 
example in figure 1. 

Figure 1: Inland Movement of Maritime Cargo from Port of Los Angeles by 
Truck in 1998: 

[See PDF for image] 

This figure is an illustration of inland movement of maritime cargo 
from Port of Los Angeles by truck in 1998 on a map of the continental 
United States. Depicted are lines which represent the following 
volumes: 
0 - 250,000 tons; 
250,000 - 500,000 tons; 
500,000 - 1,000,000 tons; 
More than 1,000,000 tons. 

Source: Department of Transportation. 

[End of figure] 

The movement of goods involves a wide array of public and private 
stakeholders, including all levels of government that plan and fund 
transportation projects, as well as the firms that use and provide 
freight transportation, such as railroads and trucking firms. 
Frequently, freight transportation is intermodal and crosses multiple 
jurisdictional boundaries within the United States. Figure 2 depicts an 
example of the movement of goods from a port to a consumer. 

Figure 2: Example of Goods Movement from Port of Entry to Consumer: 

[See PDF for image] 

This figure is series of illustrations depicting the movement of goods 
from port of entry to consumer. The following data is depicted: 

International container ship arrives at U.S. port; 
Trucks transport containers out of port; 
Containers are transferred to rail at an intermodal facility; 
At a distant intermodal facility, containers are transferred back to 
trucks; 
Distribution center receives containers from intermodal facility and 
unpacks goods; 
Warehouse receives goods from distribution center and serves retailer; 
Retailer receives delivery of goods from warehouse; 
Consumer buys goods from retailer. 

Source: GAO. 

[End of figure] 

The many freight transportation stakeholders involved in maintaining 
and improving the freight transportation system have complex and varied 
roles, but none are responsible for the entire system. Public planning 
agencies, such as state departments of transportation and local 
metropolitan planning organizations (MPO) have principal responsibility 
for planning and funding new highway infrastructure and maintaining 
existing highways. Public planning agencies may also work with ports, 
shippers, and terminal operators to forecast freight volumes and plan 
needed system improvements to port infrastructure. The Army Corps of 
Engineers, too, provides technical information and harbor dredging. 
Rail and trucking firms transport goods out of ports to warehouses and 
distribution facilities, from which goods are routed to final 
destinations. While public sector agencies fund transportation 
improvements with proceeds from taxes, railroad companies, which are 
largely private companies, make investments in their own networks to 
improve operations and expand infrastructure capacity. 

DOT has also taken several actions in the past 5 years to address key 
impediments to freight mobility by developing programs and policies to 
address congestion in the United States. Specifically, it has drafted a 
framework for national freight policy, released a national strategy to 
reduce congestion, and created a freight analysis framework to forecast 
freight flows along national corridors and through gateways. In 
addition, DOT has provided guidance to simplify access to existing 
funding and recommended ideas for congressional consideration to make 
more funding available, created working groups to increase 
collaboration, and made data and analysis tools available.[Footnote 5] 
(See table 1 for more detail regarding specific DOT actions to improve 
freight mobility.) 

Table 1: DOT Actions Taken to Improve Freight Mobility: 

DOT action: Finance Guidebook for Freight; 
Description: Summarizes the potential funding available for freight 
projects. 

DOT action: Freight Analysis Framework; 
Description: Quantifies existing freight flows and forecasts future 
freight flows along national corridors and through international 
gateways. 

DOT action: Intermodal Freight Technology Working Group; 
Description: Cooperative effort of public and private stakeholders to 
identify and operationally test technology solutions to freight 
transportation issues. 

DOT action: Transportation Planning Capacity Building Program; 
Description: Provides a source of information to state departments of 
transportation and MPOs. Through this program, information has been 
posted on how to include freight interests in the planning process. 

DOT action: Freight Professional Development Program; 
Description: Offers training, education, technical assistance, and a 
resource library to assist state and local officials, as well as, 
private stakeholders in freight transportation planning and systems. 

DOT action: Guide to Quantifying the Economic Impacts of Federal 
Investments in Large-Scale Freight Transportation Projects; 
Description: Helps to ensure that freight projects are appropriately 
considered in national, regional, and state decisions about the future 
of transportation system investments. 

DOT action: Freight Industry Roundtable and Draft Framework for a 
National Freight Policy; 
Description: The Freight Industry Roundtable outreach effort led to the 
creation of the Draft Framework for a National Freight Policy, which is 
a new policy initiative to address freight transportation concerns. 
Viewed as a living document, the Draft Framework is intended to 
stimulate discussion and local responses. 

DOT action: Corridors of the Future congestion program; 
Description: Encourages states to think beyond their boundaries to 
reduce congestion on some of the nation's most critical trade 
corridors. DOT plans to facilitate the development of these corridors 
by helping project sponsors reduce institutional and regulatory 
obstacles associated with multistate and multimodal corridor 
investments. 

DOT action: Freight performance measures; 
Description: Measures travel speeds and travel time reliability for 
commercial vehicle traffic on 25 freight significant corridors, and 
measures crossing times and crossing time reliability on five 
U.S./Canadian border crossings. 

DOT action: New offices established by the Maritime Administration; 
Description: The Maritime Administration (MARAD) established 10 offices 
in U.S. ports to help promote and coordinate solutions across 
jurisdictional lines and provide local, state, and regional 
stakeholders with a local link to MARAD. Additionally, MARAD 
established the office of Marine Highways and Passenger Vessel Services 
to focus efforts to relieve road and rail congestion by shifting some 
cargoes to coastal and inland waterways. 

Sources: GAO analysis of DOT data and GAO-07-718. 

[End of table] 

In 2006, DOT attempted to move beyond the traditional modal approach to 
freight transportation by developing a Draft Framework for a National 
Freight Policy. Due to the federal government's current limited role in 
freight transportation, the Draft Framework focuses on facilitating 
freight transportation through collaborative action between the public 
and private sectors. The Draft Framework outlines a vision and 
objectives, then details strategies and tactics that both public and 
private sector transportation stakeholders can pursue to achieve those 
objectives. DOT describes its Draft Framework as a living document and 
emphasizes that the nation's freight transportation challenges are of 
such a nature and magnitude that governments at all levels and the 
private sector must work together to address them. 

In May 2006, DOT also released the National Strategy to Reduce 
Congestion on America's Transportation Network.[Footnote 6] The primary 
goal of the plan is to encourage states to explore innovative financing 
as a tool to reduce congestion on some of the nation's most critical 
trade corridors, improve the flow of goods across our nation, and 
enhance the quality of life for U.S. citizens. It outlines a six-point 
plan to address both freight and passenger congestion, including (1) 
creating Urban Partnership Agreements with "model cities" to implement 
demonstration projects, such as congestion pricing, tolling, express 
bus services, telecommuting, and flex-scheduling; (2) removing barriers 
to private sector investment in the construction, ownership and 
operation of transportation infrastructure; (3) working with state and 
local stakeholders on reducing freight congestion in Southern 
California, a major gateway for international freight coming into the 
United States; and (4) establishing a Corridors of the Future program 
to help identify and fund six major growth highway corridors in need of 
long-term investment, among others.[Footnote 7] 

Constrained Freight Mobility Could Have Negative Economic, 
Environmental, and Health Implications: 

The volume of domestic and international freight moving through the 
country has increased dramatically, and continued growth is expected in 
the future. Concurrently, the capacity of the nation's freight 
transportation infrastructure has not increased at the same rate as 
demand, and the infrastructure in many areas that handle nationally 
significant freight flows is constrained by geographic and land-use 
development patterns. Inefficiencies in the use of freight 
infrastructure also limit the system's capacity. All of these factors 
have contributed to increasing freight congestion, which, in turn, has 
led to a number of adverse effects, including (1) higher direct 
economic costs for producers and consumers; (2) higher indirect costs, 
such as passenger traffic congestion costs that affect the quality of 
life of all transportation users; and (3) aggravated environmental 
impacts, such as air pollution, and associated health risks, such as 
respiratory illness. 

Increasing Demand for Freight Transportation Services Is Straining the 
Nation's Supply of Transportation: 

Increasing demand for freight transportation services to provide 
efficient goods movement strains the nation's available capacity, or 
supply, of infrastructure. This increased demand is reflected in the 
growing volume of international and domestic freight moving across the 
transportation system. On the supply side, the capacity of the nation's 
transportation system has not increased with increased demand. 
Exacerbating this problem, many freight corridors and major 
destinations for freight are located in areas that are constrained due 
to geographic barriers, such as waterways and mountains, and have 
patterns of land-use development that do not easily accommodate growth 
in freight transportation. Finally, some infrastructure is not used as 
efficiently as possible because of operational inefficiencies and 
pricing mechanisms that do not charge users the full cost of their 
infrastructure use, among others. 

Constrained Freight Mobility Linked to Increasing Volume of 
International and Domestic Goods Movement: 

The volume, by value and weight, of international and domestic goods 
movement has increased significantly in recent years, and this increase 
is a factor contributing to constrained freight mobility. According to 
the Bureau of Transportation Statistics (BTS), the value of U.S. 
international trade merchandise imported and exported through the 
nation's ports and borders increased by approximately 6 percent per 
year in dollar terms, on average, from $889 billion in 1990 to about $2 
trillion in 2003.[Footnote 8] According to another BTS study, domestic 
freight moved by rail and truck increased from 2.4 trillion ton-miles 
to approximately 3 trillion ton-miles between 1996 and 2005.[Footnote 
9] These increases are partly linked to changes in supply-chain 
management as increasing volumes of goods are moved over the system in 
smaller, more frequent shipments to more distant destinations.[Footnote 
10] 

The freight volume handled by ports, railways, and highways is expected 
to continue to grow. While domestic and international freight are both 
expected to increase in the future, international freight volumes are 
expected to increase at a faster rate than domestic freight volumes. 
According to a DOT study, freight moving through the nation's largest 
international gateway ports may quadruple by 2025.[Footnote 11] Volume 
growth is expected across all major modes of surface transportation--
truck, rail, and water--and intermodal shipments are expected to be a 
larger proportion of the value of total shipments than today. (See 
table 2.) This trend was also evident at the sites we visited. For 
example, according to the Houston-Galveston Area Council, the regional 
planning organization, freight tonnage hauled on the area's railways is 
projected to increase from 124 million tons in 2004 to over 200 million 
tons in 2035. In addition to this growth, freight traffic patterns may 
also shift between ports. For example, according to the Maritime 
Administration, the expansion of the Panama Canal and the increased use 
of the Suez Canal could shift some container traffic from ports on the 
west coast to new and existing east coast ports. 

Table 2: Shipment Volumes by Mode in 2002 and 2035 Projections 
(Millions of tons): 

Truck: 
2002: 11,539; 
2035: 22,814; 
Percent increase: 98. 

Rail: 
2002: 1,879; 
2035: 3,525; 
Percent increase: 88. 

Water: 
2002: 701; 
2035: 1,041; 
Percent increase: 49. 

Intermodal[A]: 
2002: 1,292; 
2035: 2,598; 
Percent increase: 101. 

Source: GAO analysis of FHWA's Freight Facts and Figures 2006 data. 

[A] Intermodal includes U.S. Postal Service, courier shipments, and all 
intermodal combinations except air and truck. 

[End of table] 

The Relative Shortfalls in New Transportation Infrastructure Capacity 
Have Constrained Freight Mobility: 

According to studies on transportation infrastructure 
investments[Footnote 12] and several of the stakeholders with whom we 
spoke in conducting this review, the capacity of the nation's freight 
transportation infrastructure is not keeping pace with the increasing 
volumes of freight moving on the system. This is particularly evident 
with respect to rail and highway modes. 

* Rail capacity has not kept pace with recent increases in demand. 
According to the American Association of Railroads (AAR), since 1980, 
total track miles have declined, but the number of tons moved per mile 
has tripled. Though AAR estimates that overall capacity is currently 
adequate on 88 percent of the nation's rail system, it notes that the 
system is beginning to reach its capacity limits.[Footnote 13] Some 
railroad corridors between major markets do not have double tracked 
right-of-ways; adequate passing areas, intermodal yards, or switching 
facilities; or bridges or tunnels that can simultaneously accommodate 
multiple trains on different routes. For example, the 1.7-mile Howard 
Street rail tunnel in Baltimore, which is on a major corridor linking 
the mid-Atlantic with Chicago, has only one track, does not accommodate 
double stack intermodal container trains, and the curves near the 
tunnel limit speeds to only 25 miles per hour. As we and others have 
found, it is uncertain whether private rail companies will be able and 
willing to make the necessary infrastructure investments to keep pace 
with projected demand for rail capacity.[Footnote 14] 

* Highway capacity, too, has not increased as fast as demand. For 
example, according to the Texas Transportation Institute (TTI), road 
use increased 15 percent or faster than capacity between 1982 and 2005 
in 80 out of the 85 urban areas that TTI studied. As a result, TTI 
estimated that in 2005, one in three trips took place in congested 
conditions, whereas only one in nine did in 1982.[Footnote 15] Funding 
to expand the road system, at both the federal and state levels, is 
also limited, and much of the current funding available goes toward 
maintenance and repair instead of capacity expansion projects.[Footnote 
16] 

Intermodal connections have also failed to keep pace with demand. As we 
have previously reported, the nation's transportation system lacks 
adequate intermodal connections to efficiently move freight across 
modes.[Footnote 17] Intermodal infrastructure improves the connections 
between modes, which, in turn, can improve freight mobility. In some 
cases, however, current intermodal infrastructure constrains freight 
mobility. For example, the roads that connect ports to highways are 
heavily used by trucks but are often in poor condition, creating 
freight bottlenecks. 

Geography and Urban Land-Use Development Patterns Constrain Freight 
Mobility: 

In some regions with nationally significant freight flows, geography 
and patterns of land development constrain freight mobility, making it 
difficult to cost-effectively increase infrastructure capacity. 
Geographic constraints include water barriers and mountain ranges that 
can be crossed only at a limited number of points. For example, the New 
York City metropolitan region is divided by waterways that can only be 
crossed at a limited number of bridges and tunnels, and building 
additional bridges or tunnels can take billions of dollars and years to 
complete.[Footnote 18] Because of the difficulty of adding highway 
capacity in densely populated, developed urban areas, these bridges and 
tunnels must handle increasing volumes of freight traffic, even though 
they are not designed to handle current and projected volumes. 
Additionally, some bridges can be used by trucks only under special 
restrictions, and one--the Brooklyn Bridge--prohibits trucks entirely. 
Once in Manhattan, trucks have a difficult time navigating narrow 
roadways and finding adequate parking to make deliveries. Trucks also 
compete with passenger vehicles on these routes, particularly during 
peak travel periods, further decreasing freight mobility on roadways, 
bridges, and tunnels. Though these problems are particularly dramatic 
in lower Manhattan, other large, urban areas in the country also 
experience similar problems. 

Freight movement in population centers and along major corridors is 
also constrained by the physical barriers created by urban land-use 
development patterns and the built-up urban environment, such as 
buildings and other facilities that are adjacent to ports, rail yards, 
and highways. According to several shippers, the areas surrounding 
critical freight infrastructure are increasingly dense with 
development, making it more difficult and expensive to build or expand 
centrally located freight facilities. For example, land near the Port 
of New York that was previously vacant or used for freight warehouses 
has recently been redeveloped into high-value commercial and 
residential property. Consequently, freight distribution centers have 
moved away from the urban core to the New Jersey suburbs and eastern 
Pennsylvania where land values are comparatively lower, but where 
access to ports is more difficult. Major transportation corridors are 
also increasingly squeezed by development and population density, and 
freight infrastructure expansion along these corridors is difficult to 
implement or simply does not occur. For example, the Alameda Corridor-
-a rail project designed to help move freight from the Ports of Los 
Angeles and Long Beach to the transcontinental rail facilities near 
downtown Los Angeles--took 18 years to complete, in part, because the 
project had to be built underground to bypass highly developed and 
populated urban areas. In addition, the development patterns of cities 
are increasingly dispersed across wide-geographic areas. The 
Transportation Research Board (TRB) reports that this urban land-use 
pattern disadvantages rail and favors trucking, which better 
accommodates smaller, relatively short-distance shipments.[Footnote 
19] However, as a result of this land-use pattern, trucks must travel 
farther from ports to distribution centers and from distribution 
centers to final destinations. 

Inefficient Use of Existing Infrastructure Constrains Freight Mobility: 

Freight mobility in areas with nationally significant freight flows is 
further constrained because, in some instances, existing port, road, 
and rail infrastructure is not used efficiently.[Footnote 20] A number 
of factors can contribute to inefficiencies in freight movement, 
including operational constraints and infrastructure pricing 
mechanisms.[Footnote 21] 

A variety of operational inefficiencies occur in the daily movement of 
goods. For example, at ports, operational inefficiencies are caused 
when port operators must adjust their work practices because empty 
containers occupy valuable acreage. At the Port of Los Angeles, fewer 
than 2 percent of the containers that arrive at the port are empty, but 
approximately 60 percent are shipped out of the port empty because 
there are not enough exported goods to fill all available 
containers.[Footnote 22] Consequently, as port operations take place 
amid stacks of empty containers, the time it takes to move freight 
through the port increases, and the ability of the port to handle 
increases in freight volumes declines. The rail network, too, 
experiences some operational inefficiency that can constrain freight 
mobility. As we have reported in the past, private rail companies might 
be able to serve their customers more efficiently if they instituted 
collaborative operational processes, such as sharing terminal 
facilities for a fee, which could allow more rail companies access to 
customers near specific terminals or reciprocal switching. For example, 
one rail company could deliver, for a fee, railcars to another rail 
company's customers.[Footnote 23] Inefficiencies in roadway use include 
daily management and operations practices that do not maximize existing 
roadway capacity, such as uncoordinated timing of traffic signals and 
inefficient incident response capabilities. 

In a number of ways, current pricing of freight transportation 
infrastructure can result in inefficient use by failing to align the 
capital and operational costs of infrastructure with the fees paid by 
users. First, the financing mechanisms that collect fees from the 
users--freight carriers--of freight transportation infrastructure do 
not consistently collect revenues in direct relation to the full cost 
of providing the infrastructure these carriers use. Consequently, 
prices often do not provide the correct signals to carriers as they 
make decisions about their use of transportation infrastructure and the 
prices they charge their customers. Second, the extent to which 
carriers bear the full cost of their infrastructure use varies across 
modes, sometimes distorting the competitive position between them. As a 
result, a mode that is more costly to society might be used for some 
shipments if the fees charged to users only reflect a portion of the 
full cost of the selected mode. For example, according to DOT's most 
recent calculations, the revenues generated from federal fuel taxes 
levied on smaller trucks that weigh less than 25,000 pounds cover 150 
percent of their cost impact, but larger trucks weighing over 100,000 
pounds pay only 40 percent of their costs.[Footnote 24] From an 
economic standpoint, this relationship between revenue and cost 
distorts the competitive environment by making it appear that heavier 
trucks are a less expensive shipping method than they actually are and 
puts other modes, such as rail and maritime, at a disadvantage. 
[Footnote 25] 

If Present Trends Continue, Freight Congestion Is Likely to Increase: 

The combination of increasing demand for freight transportation 
infrastructure and capacity limitations has contributed to increased 
congestion and constrained freight mobility. Many of the highways used 
heavily by trucks to move freight are already congested today. For 
example, as shown in figure 3, Interstate 710, a principal route 
leaving the Port of Long Beach, is routinely congested with port and 
passenger traffic. Such congestion on many freight significant 
corridors is expected to worsen in the future.[Footnote 26] Likewise, 
congestion is expected to become a regular occurrence on many intercity 
highways in addition to congestion on urban highways, where congestion 
is already common. For example, according to FHWA projections, without 
any additional capacity, congestion during peak periods occurring on 
highways comprising the National Highway System will increase from 
10,600 miles in 2002 to 20,000 miles in 2035.[Footnote 27] Similarly, 
congestion could worsen on the nation's rail lines as freight volumes 
continue to grow. For example, a recent AAR study predicts that, 
without system improvements, the expected increases in rail volume by 
2035 will cause 30 percent of primary rail corridors to operate above 
capacity and another 15 percent at capacity. This congestion, the AAR 
report states, might affect the entire country and could shut down the 
national rail network.[Footnote 28] Ports are also likely to experience 
greater congestion in the future as more and larger ships compete for 
limited berths. 

Figure 3: High Volume of Trucks Servicing the Port of Long Beach Are 
Routinely Delayed by Congestion on I-710: 

[See PDF for image] 

This figure is a photograph of highway congestion on I-710 in Long 
Beach. 

Source: Port of Long Beach. 

[End of figure] 

Constrained Freight Mobility Results in Higher Economic Costs and 
Environmental and Health Risks: 

Congestion caused by constrained freight mobility has led to negative 
effects that impact both the direct users of freight services--
producers, shippers, and receivers--as well as passenger traffic and 
individuals living in congested areas. These impacts include higher 
direct economic costs for freight services and indirect economic costs 
borne by passenger traffic impacted by freight congestion. Furthermore, 
constraints on freight mobility cause negative environmental impacts, 
such as air pollution, and their associated health risks, particularly 
to vulnerable populations living next to congested areas. 

Constrained Freight Mobility Has Negative Direct Economic Effects: 

Transportation costs impact the total cost of many goods and services 
and affect all the stakeholders in the supply chain, as these costs are 
factored into the prices they charge their customers. For example, one 
shipper told us that deliveries to a congested urban area cost about 
five times more than those to noncongested areas. One study estimates 
that roadway congestion delays cost shippers approximately $10 billion 
per year and notes that although the freight sector experiences about 
27 percent of congestion costs, truck traffic represent only 5 percent 
of total vehicle miles.[Footnote 29] According to a study conducted by 
the Texas Department of Transportation, every hour of delay costs 
private rail companies operating in the Houston area approximately 
$300.[Footnote 30] As shown in figure 4, when freight costs increase 
due to constraints on freight mobility, prices also are likely to 
increase. 

Figure 4: Example of How Constrained Freight Mobility Increases the 
Cost of Transportation and Consumer Goods: 

[See PDF for image] 

This figure is a series of illustrations of how constrained freight 
mobility increases the cost of transportation and consumer goods. The 
following data is depicted: 

International container ship arrives at U.S. port: 
Cost increase: Empty containers crowd port. 

Trucks transport containers out of port: 
Cost increase: Traffic congestion slows key port access routes. 

Containers are transferred to rail at an intermodal facility: 
Cost increase: Inadequate capacity to handle container volumes 
efficiently adds delay. 

At a distant intermodal facility, containers are transferred back to 
trucks: 
Cost increase: Increased train traffic strains rail network and adds 
delay. 

Distribution center receives containers from intermodal facility and 
unpacks goods: 
Cost increase: Distribution center is located far away from port and 
city adding time and cost to freight transportation. 
 
Warehouse receives goods from distribution center and serves retailer: 
Cost increase: Competing development causes urban freight facilities to 
become more expensive. 

Retailer receives delivery of goods from warehouse: 
Cost increase: Limited parking for delivery to be received adds delay. 

Consumer buys goods from retailer: 
Goods cost more than they would have without delays. 

Source: GAO. 

[End of figure] 

Transportation costs affect businesses' capital investments and 
marketing strategies and, in turn, these decisions affect consumers. In 
some industries, transportation costs largely define the markets served 
and prices offered by individual companies. For example, one 
stakeholder told us that rising transportation costs and decreasing 
reliability in the Northeast could result in the company adding a new 
production facility closer to a major northeastern market that is 
currently served by a facility in Virginia. Transportation costs also 
can limit the geographic size of the markets in which firms operate. As 
the costs of transportation to a given area increase, fewer producers 
will ship products to that market. Consequently, a narrower selection 
of goods will be available in the market, and goods that are available 
could be more expensive due to less competition in that market. 

Constraints on freight mobility that reduce the reliability of the 
transportation network can play an important role in many business 
supply-chain management and production processes. Reduced freight 
reliability can cause businesses to take extra steps to work around the 
unpredictability of the transportation system. Adjustments could 
include carrying higher inventories in warehouses to meet production 
needs, planning for longer than normal transit time, and not serving 
specific markets that cannot be reliably accessed.[Footnote 31] In 
cases in which a solution cannot be found, customers may experience 
unforeseen delays and complications in fulfilling their orders. 
Industries that use "just-in-time" production processes--and, 
therefore, rely on the timely and predictable arrival of goods--are 
likely to be especially affected by reductions in the reliability of 
the freight transportation system. While supply-chain processes such as 
"just-in-time," developed in response to the reliability and low cost 
of the transportation system, such supply-chain strategies may not be 
economically beneficial in the future should freight mobility decline. 
In all of these scenarios, users experience direct economic costs in 
the form of higher transportation costs, higher warehousing and 
operational costs, or missed opportunities for other investments or 
production. 

Constrained Freight Mobility Has Negative Indirect Social Costs: 

Freight congestion also adds to the social costs of congestion 
experienced by passenger traffic. In some cases, the strategies 
implemented by freight movers in response to chronic congestion and 
poor reliability of the roadways may make congestion worse. For 
example, in one congested market, an official from a freight 
transportation company explained that the company will sometimes send 
multiple trucks for deliveries that it previously completed with only 
one truck because it is more likely that at least one truck will 
complete its delivery on time. In this instance, though the carrier 
minimizes the risk of missed or delayed pick-ups, it incurs increased 
operational costs and all users of the roadway experience increased 
roadway congestion resulting from the extra truck traffic. The indirect 
social costs of such congestion negatively affect the quality of life 
of the nation's citizens. The hours already wasted inching along 
clogged roads and highways will increase as congestion continues to 
worsen. As the transportation system becomes less reliable, people will 
have less access to recreation, shopping, and other activities that are 
an important part of everyday life. While the cost of added congestion 
is dispersed widely across individuals and businesses, the collective 
magnitude is high and is likely to increase if freight mobility 
decreases in the future. 

Constrained Freight Mobility Results in Environmental Pollution and 
Increased Health Risks: 

While unconstrained freight movement also causes environmental 
pollution, constrained freight movement significantly increases 
pollution. According to FHWA data, freight transportation is a major 
source of nitrous oxide pollution, accounting for 27 percent of all 
U.S. nitrous oxide emissions and about one-third of particulate matter 
emissions from mobile sources.[Footnote 32] In fact, all four regions 
we visited in conducting this study have air quality below EPA 
standards. [Footnote 33] Further, the California Air Resource's Board 
(CARB) has identified freight movement as the dominant contributor to 
transportation pollutants in the state. For example, according to CARB 
estimates, freight movement causes approximately 75 percent of the 
diesel particulate emissions in California. In some instances, 
pollution can be most severe when congestion or another localized 
bottleneck slows freight, as large volumes of slow moving truck traffic 
cause more air pollution per mile traveled than freely moving trucks 
would. These emissions, especially the particulate matter and the 
constituent components that form smog, can remain highly concentrated 
in a local area. 

The environmental pollution that results from constrained freight 
mobility, particularly when it occurs in areas proximate to residential 
neighborhoods, can cause people to suffer acute negative health issues, 
such as respiratory illness. According to public health research, 
children and the elderly can be most acutely affected by these 
emissions. For example, CARB attributes 2,400 premature deaths 
statewide to freight emissions and estimates that health costs of 
freight pollution could be $200 billion by 2020. Further, CARB 
estimates that, each year, freight emissions result in almost 3,000 
hospital admissions due to respiratory or cardiovascular causes and 
that 1.1 million days of school are missed.[Footnote 34] While it is 
difficult to estimate the extent to which these impacts are 
attributable to freight movement generally versus specific freight 
bottlenecks, in some cases, it is clear that freight delays exacerbate 
the problem. 

Although Freight Transportation Stakeholders Have Advanced Various 
Approaches to Improve Freight Mobility, Planning, Coordination, and 
Funding Challenges Impede Progress: 

Freight transportation stakeholders have advanced varied approaches to 
improve freight mobility. These have included projects and proposals 
both to build new physical capacity within the system and to increase 
the efficiency of existing infrastructure. However, state and local 
transportation planners still face challenges when attempting to 
advance freight improvements. Challenges typically involve three 
central issues: (1) securing support for freight improvements within a 
public transportation planning process that puts emphasis on modally-
oriented projects that produce more obvious public benefits, such as 
highway projects that enhance passenger mobility; (2) reaching 
agreement on specific freight improvements among multiple freight 
stakeholders, each with their own perspectives and agendas; and (3) 
accessing funding sources that are generally modally focused for 
freight projects that are often intermodal in nature. 

Freight Transportation Stakeholders Have Implemented or Proposed 
Capacity-Enhancing Approaches to Improve Freight Mobility: 

Through our review of studies on transportation issues and our 
discussions with freight transportation stakeholders in the four 
regions we visited, we identified two broad approaches that are 
currently being implemented or considered by state and local freight 
transportation stakeholders to improve freight mobility. The first 
approach entails adding new physical capacity to the transportation 
network, and the second approach aims to increase the efficiency of 
existing infrastructure. 

Adding New Physical Capacity in the Freight Transportation System to 
Enhance Freight Mobility: 

One approach that freight stakeholders are using to improve freight 
mobility involves projects and proposals designed to create new 
physical capacity. This approach includes building new facilities, such 
as intermodal yards, roads, and bridges, and adding more capacity to 
existing transportation networks, such as dedicating roads for trucks 
or adding new railroad tracks. 

In areas that are not as constrained by space or geography to build new 
capacity, such as some areas of southern California and Texas, various 
projects and proposals are being advanced to build new facilities. 
These types of projects and proposals include building new rail 
infrastructure, such as tracks and intermodal rail yards; building new 
roadways; and replacing bridges with inadequate capacity. (See table 3 
for some examples of capacity-adding capital projects.) 

Table 3: Examples of Capital Projects to Enhance Freight Mobility: 

California: (1) Alameda Corridor. Completed in 2002, the Alameda 
Corridor is a 20-mile freight rail line linking the Ports of Los 
Angeles and Long Beach to the transcontinental rail yards and railroad 
mainlines near downtown Los Angeles. The corridor consists of a below-
ground-level rail corridor that eliminated 200 at-grade crossings, 
thereby doubling rail speeds. 

California: (2) State Route (SR) 47 Expressway. The primary goals of 
this project are to replace an aging bridge, which is too small to 
accommodate high truck volumes, and to build an expressway that 
bypasses a maze of local, extremely congested roads, which would allow 
trucks to quickly haul their loads from the port of Los Angeles and 
Long Beach to the Intermodal Container Transfer Facility located three 
miles away. 

California: (3) Freight railroad improvements. Railroad improvements 
include building new intermodal facilities and adding tracks to the 
rail network to relieve capacity constraints and enhance freight 
mobility. For example, the railroads serving southern California have 
added or are beginning to build new double track lines into and out of 
Los Angeles to accommodate the growing freight traffic. 

California: (4) Gerald Desmond Bridge replacement. This project 
involves rebuilding this bridge at the Port of Long Beach, making it 
wider to accommodate growing traffic and higher to allow larger ships 
to pass underneath. 

Texas: (1) Proposed freight rail improvements. In Houston, 
transportation planners have proposed several projects to relieve 
congestion along busy freight rail corridors, including construction of 
new mainline track and a new bridge to relieve congestion in 
bottlenecked sections, construction of grade separations to allow for 
trains to stop without causing delays or safety hazards to the public, 
and construction of new rail corridors that bypass populated 
areas.These transportation planners must coordinate with the railroads 
to implement these projects because rail infrastructure is owned by the 
railroads. 

Texas: (2) Trans Texas Corridor. This is a large-scale, multimodal, 
tolled transportation project that will span the state from Mexico to 
Oklahoma and will be financed, constructed, operated, and maintained by 
a combination of public and private sector investors. As envisioned, 
each route's road section will include separate freeway lanes for 
passenger vehicles and large trucks. The rail section will include 
freight and passenger lines. In addition to addressing current trade 
flow needs, this project would create some of the future roadway 
capacity needed to accommodate increased port-related freight traffic, 
especially container traffic. Funding for this project will comprise a 
combination of Texas Department of Transportation funds and tolls. 

Illinois; Chicago Region Environmental and Transportation Efficiency 
(CREATE) project is an example of a project advanced by public agencies 
and private investors to ease freight and passenger rail traffic 
through the largest rail hub in North America.[A] When completed, the 
CREATE Program is expected to reduce congestion on area roadways, 
improve air quality, and improve freight and passenger mobility in part 
by creating 25 new roadway overpasses or underpasses to eliminate many 
grade crossings, creating 6 new rail overpasses to separate passenger 
and freight tracks, and upgrading tracks, switches and signal 
systems.[B] 

Source: GAO and interviews with various transportation stakeholders. 

[A] CREATE project partners include the AAR, the Chicago Department of 
Transportation, the Illinois Department of Transportation, Metra, and 
six Class I freight railroads--Burlington Northern Santa Fe (BNSF), 
Canadian National, Canadian Pacific, CSX, Norfolk Southern, and Union 
Pacific. 

[B] GAO-07-718. 

[End of table] 

Two areas that we visited--Atlanta and New York City--have less space 
to build new infrastructure and are investing in other improvement 
projects that are intended to add more physical capacity to the 
existing roadway and rail networks. For example, the Georgia Department 
of Transportation is proposing to dedicate a number of existing highway 
lanes to truck-only lanes to separate truck traffic from commuter 
traffic. If combined with a tolling scheme, this approach would also 
provide a revenue source to pay for additional infrastructure 
improvements. Furthermore, the New York State Department of 
Transportation is considering a project that would entail a series of 
road ramp reconfigurations along the Van Wyck corridor, near John F. 
Kennedy International Airport, that would ease the flow of operations 
in moving air cargo out of the airport. 

Increasing Efficiency of Existing Infrastructure to Improve Freight 
Mobility: 

A second approach that freight stakeholders use to improve freight 
mobility involves advancing projects and proposals designed to increase 
the efficiency of existing infrastructure. Although the projects and 
proposals are varied, stakeholders are using two broad strategies. The 
first strategy is to improve traffic flows or accommodate increased 
freight volumes on existing transportation networks. The second 
strategy involves influencing driver behavior and demand. 

The first strategy--improving traffic flows within the transportation 
system or making maximum use of transportation system capacity--
involves a variety of activities focused on existing roadway and rail 
networks. These activities include implementing incident management 
programs, deploying transportation technology, and improving truck 
routes. The state of New York serves as an example of how public sector 
stakeholders have employed this strategy. Incident management programs 
are designed to rapidly deploy vehicles that remove accident vehicles 
and debris to quickly restore traffic flow after accidents. The New 
York State Department of Transportation has implemented this strategy 
by dispatching better towing equipment to an accident scene to provide 
a faster response to traffic incidents. Transportation technologies are 
also used to improve the flow of traffic and better manage the highway 
system. The New York State Department of Transportation has invested 
hundreds of millions of dollars in equipment that will give motorists 
advance information about traffic delays and incidents to better inform 
their travel decisions. While incident management programs and 
transportation technologies are intended to improve freight and 
passenger traffic alike, other initiatives focus specifically on 
enhancing freight mobility. Recognizing that New York City is heavily 
dependent on trucks for goods movement, the New York City Department of 
Transportation initiated the Truck Route Management and Community 
Impact Reduction Study. This study revealed several negative effects of 
truck traffic on local communities, including traffic congestion, 
damage to residences and roads, and safety concerns for pedestrians and 
passenger traffic. In response to these findings, the New York City 
Department of Transportation has started to implement a number of 
solutions to mitigate these negative effects. For example, in some 
areas of the city, routing changes were implemented that improved 
access into the area by taking truck traffic off of some residential 
streets and putting it onto wider streets.[Footnote 35] 

As we have reported previously, railroads typically try to improve 
their processes before enhancing infrastructure to mitigate 
congestion.[Footnote 36] Process improvements and other strategies 
generally cost less and are more cost effective than infrastructure 
enhancements. Process improvements such as double stacking intermodal 
containers on rail cars, where the rail infrastructure allows, or 
increasing the number of cars per train enable more freight to move on 
rail lines without increasing rail congestion. Other railroad process 
improvements have included updating operating plans to reflect changes 
in business volume and traffic mix, increasing the number of fully 
loaded cars per train, decreasing car cycle times, increasing service, 
and hiring more train crews. 

Other proposals aimed at increasing overall freight transportation 
capacity involve diverting freight traffic from one mode to another, 
less congested mode or using technology to improve efficiency. A 1996 
DOT study evaluating the status of intermodal freight in the United 
States reported that diverting freight traffic away from highways 
reduces congestion. The study found that for every ten containers 
carried by rail, a minimum of seven trucks are taken off 
highways.[Footnote 37] Regions serving as international gateways are 
investing in alternative modes for transporting goods short distances, 
including short sea shipping and short haul rail, and creating virtual 
container yards through the internet that better match empty containers 
with freight transportation companies to reduce the number of truck 
trips to and from the port area. (See table 4 for examples of proposals 
to maximize the use of existing capacity.) 

Table 4: Examples of Proposals to Maximize the Use of Existing 
Capacity: 

Short sea shipping: Short sea shipping encompasses waterborne 
transportation of commercial freight between domestic ports through the 
use of inland and coastal waterways. Moving freight in this manner 
could potentially relieve some highway and rail congestion while 
increasing freight mobility.[A] For example, the Port Authority of New 
York and New Jersey has proposed to expand the Port Inland Distribution 
Network (PIDN) system to include service to water-accessible ports 
further north, such as Bridgeport, Conn.; Providence, R.I.; and Boston, 
Mass. PIDN is a planned system for distributing containers moving 
through the Port of New York and New Jersey by barge and rail. 

Short haul rail: Proposals have been advanced by transportation 
stakeholders in the New York and New Jersey region to divert truck 
traffic to rail for short hauls. Transportation decision makers in New 
York suggest that if rail capacity could be expanded to allow for short 
hauls from the port to 15-30 miles out, then trucks would not have to 
go into the congested urban areas.[B]. 

Virtual container yards: In 2006, the ports and the Alameda Corridor 
Transportation Authority in southern California implemented a virtual 
container yard--an internet-based matching service for empty 
containers--which reduces the number of empty containers being 
transported back to the port after goods have been delivered to a 
destination. Instead, containers are delivered to an exporter who needs 
empty containers for goods going to the port for shipment overseas. 
This reduces truck trips to and from the port area. It has been 
estimated that approximately 2 percent of the import containers are 
currently taken directly to exporters. The goal of the virtual 
container yard is to increase that percentage to at least 10 
percent.[C]. 

Source: GAO. 

[A] GAO, Freight Transportation: Short Sea Shipping Option Shows 
Importance of Systematic Approach to Public Investment Decisions, GAO-
05-768 (Washington, D.C.: July 29, 2005). 

[B] The Port Authority of New York and New Jersey, The Port Authority 
Strategic Plan: Transportation for Regional Prosperity (New York, N.Y., 
August 2006). 

[C] Southern California Association of Governments, Southern California 
Regional Strategy for Goods Movement: A Plan for Action (February 2005, 
amended March 2005). 

[End of table] 

The second strategy--influencing user behavior and managing demand--
typically involves charging fees during peak hours to encourage users 
to shift to off-peak periods, use less congested routes, or use 
alternative modes, thereby spreading out demand for available 
transportation infrastructure. Even though some of these approaches 
have been applied only to passenger traffic, the congestion reduction 
could benefit freight transportation through those areas. Congestion 
pricing strategies include incorporating the use of high-occupancy toll 
(HOT) lanes and implementing a cordon pricing scheme in crowded urban 
areas. HOT lanes are priced lanes that offer drivers of lower occupancy 
vehicles, often people driving alone, the option of paying a toll to 
use lanes that are otherwise restricted to vehicles with a greater 
number of passengers. HOT lanes are beneficial in that they offer 
drivers a choice of paying a charge to reduce their travel time or 
continuing to take longer to make their trips on uncharged roadways. In 
addition, they can channel traffic into underused lanes and decrease 
congestion in non-HOT lanes, thereby increasing the overall throughput 
of a corridor. HOT lanes can also shift traffic to less congested times 
by charging a lower toll just before and after peak period.[Footnote 
38] Cordon pricing is a form of congestion pricing whereby drivers are 
charged a fee to enter a certain area during peak hours. Congestion 
pricing can be applied to various modes and has the potential to create 
other benefits, such as generating revenue to help fund additional 
transportation investments. Another approach that has been used to 
influence user behavior and manage demand involves working with 
businesses to extend their hours to accept deliveries during non-peak 
hours. This approach has the potential to reduce peak hour congestion 
by giving delivery drivers a wider delivery window and avoiding traffic 
delays. In some cases, congestion pricing is also applied in setting 
fees that are charged for peak hour transportation and deliveries, 
providing an incentive for users to shift deliveries to off-peak 
periods. (See table 5 for examples of projects and proposals to 
influence user behavior and manage demand.) 

Table 5: Examples of Projects and Proposals to Influence User Behavior 
and Manage Demand: 

Congestion Pricing: HOT lanes. Drivers willing to pay to use the HOT 
lanes in California and Texas saved an average of 12-20 minutes per 
trip in the peak period.[A] A previous GAO evaluation of the State 
Route 91 HOT lane project in Orange County, California, showed that, 
although the HOT lanes represent only 33 percent of the capacity of 
State Route 91, they carry about 40 percent of the traffic in peak 
hours.[B] 

Congestion Pricing: Cordon Pricing. New York City has been selected by 
DOT as an urban partner to implement a cordon pricing pilot. Pending 
state legislative approval, a congestion pricing scheme would be 
implemented in Manhattan to encourage more efficient freight deliveries 
to retailers. For example, truck drivers would have to pay a $21 fee to 
enter the cordon during peak hours but, in turn, would have greater 
access to curbside parking and thereby decrease overall trip time. The 
pricing plan would also encourage off-hours deliveries. 

Freight Transportation Demand Management: Extending business hours. 
Some businesses in New York City have opted to extend hours of 
operation to reduce peak daytime traffic congestion. As a result, these 
businesses receive special incentives from the City to receive 
deliveries late in the day. For instance, some retail stores have 
arranged to have employees stay late to receive deliveries after 9:00 
p.m. The City, in turn, has provided special approval of curbside 
parking to these businesses and has agreed not to ticket delivery 
vehicles during off-peak hours. In addition, City officials are 
considering expanding the hours that curbside space is available to 
delivery vehicles (typically 4-7 p.m.) 

Freight Transportation Demand Management: PierPass. The PierPass 
program in southern California was created to alleviate port congestion 
at the ports of Los Angeles and Long Beach. In an effort to encourage 
cargo owners to arrange transport during nights and weekends, the 
program imposes a $50 per twenty-foot equivalent unit Traffic 
Mitigation Fee on loaded containers that are moved during peak hours. 
According to a PierPass official, the program has resulted in 
approximately 36 percent of traffic moving at night, taking thousands 
of truck trips out of daytime freeway traffic patterns, thus 
alleviating daytime congestion. 

Source: GAO. 

[A] GAO, Reducing Congestion: Congestion Pricing Has Promise for 
Improving Use of Transportation Infrastructure, GAO-03-735T 
(Washington, D.C.: May 6, 2003). 

[B] GAO-07-920. 

[End of table] 

The Current State and Local Transportation Decision-Making Structure 
Impedes the Advancement of Freight Capacity-Enhancing Solutions: 

Although stakeholders have advanced a variety of approaches to improve 
freight mobility, state and local public planners face three broad 
challenges when attempting to advance freight projects. First, public 
planners face challenges in advancing freight projects within a public 
transportation planning process that is not well suited to the 
identification and advancement of freight projects. Second, public 
planners face challenges reaching agreement among the various freight 
stakeholders on freight needs and solutions. Finally, due to the modal 
structure of transportation funding, public planners face challenges in 
accessing funding, even when freight projects merit public sector 
involvement. 

Challenges Associated with Advancing Freight Projects within the 
Planning Process: 

Within the state and local transportation planning process, freight 
projects often have difficulty competing with other transportation 
projects, such as passenger related projects, for limited public funds 
and community support. Although the public transportation planning 
process includes freight transportation improvements, in practice, 
freight projects have difficulty competing with other projects because 
(1) public planners, as well as the communities they represent, tend to 
favor projects that produce more apparent local public benefits, such 
as passenger-oriented projects, rather than projects that are seen as 
providing direct benefits to private companies or yield benefits to 
other jurisdictions; (2) public planners often lack the tools and data 
to evaluate freight projects, putting those projects at a disadvantage 
when compared with other transportation projects; and (3) in the 
absence of proper evaluation to quantify potential costs and benefits 
of a project, public planners are not able to articulate the merits and 
costs of freight improvements, which could hinder the advancement of 
some freight projects where there are community-based concerns about 
air pollution and public health effects, for example. 

First, within the public transportation planning process, freight 
projects have difficulty competing with nonfreight projects for limited 
public funds because public planners are more likely to focus on 
projects that clearly produce local public benefits, such as projects 
that improve passenger mobility. Although freight improvements may also 
produce public benefits, the benefits are not always immediately 
obvious to the public. For example, a project that adds lanes to a 
crowded freeway is likely to benefit both passengers and freight 
haulers, while a road that enhances freight access to a port facility 
would likely be perceived as having only limited public benefit, even 
though it could improve freight mobility, and therefore, ease 
congestion for passenger vehicles. Public planners are wary of spending 
public funds on improvements to privately-owned freight infrastructure, 
such as the freight rail network. These types of projects have 
difficulty competing with other transportation projects in the public 
planning process because of the direct benefits that such improvements 
provide to private companies. Because the private railroad companies 
lack incentives for investing in projects that yield primarily public 
benefits and the public sector is wary of providing support when 
private benefits are apparent, some freight rail projects that produce 
public benefits may be disregarded. For example, some of the freight 
stakeholders with whom we spoke said that freight rail improvements are 
often overlooked when competing against commuter rail projects. One 
stakeholder stated that many of the rail corridors in the New York City 
area are owned by public agencies and are dominated by passenger 
traffic, putting freight rail traffic at a disadvantage. 

The public planning processes also focus on projects that produce local 
public benefits, whereas freight improvements can produce benefits 
beyond local jurisdictions. In general, many decisions in the 
transportation planning process are left to state DOTs and regional 
MPOs, which operate within defined jurisdictions. Although state DOTs 
work to address freight mobility challenges on a statewide basis, many 
freight transportation corridors cross state boundaries, and unless 
states are part of a multistate coalition, they usually do not address 
projects that involve these corridors. Rather, public planners tend to 
focus on the transportation needs that will directly benefit their 
constituencies, which can result in significant national freight needs 
going unaddressed. Stakeholders we spoke with in the four areas we 
visited confirmed that it is difficult to expend public funds on 
projects that clearly benefit other jurisdictions. For example, in 
Houston, public officials who oversee multiple jurisdictions said that 
local governments tend to give higher priority to their own favored 
projects and it can be difficult to get local governments to adopt a 
system wide perspective. 

A second challenge state and local planners face in securing public 
support for freight improvements is that tools to evaluate freight 
projects are often lacking. FHWA and TRB have noted that, in making 
freight-related investment decisions, public planners are not applying 
appropriate evaluation elements, such as criteria by which to choose 
freight projects versus alternative projects, impeding the progress of 
freight-related projects.[Footnote 39] In our past work, we noted that 
state and local planners have not developed the tools to evaluate 
freight projects with nonfreight projects.[Footnote 40] Without tools 
to quantify the costs and benefits of various proposals, public 
planners may find it difficult to determine the extent to which public 
investment is required and to understand the trade-offs and 
relationships between alternative solutions involving different 
transportation modes. Moreover, in the absence of proper evaluation, 
public planners are unable to adequately judge the relative merits of 
freight improvement proposals, as opposed to passenger projects. 

In addition to the lack of planning tools, the data necessary to 
conduct proper evaluations and make sound decisions are often lacking. 
TRB and FHWA studies have identified two possible explanations for the 
difficulty in acquiring freight data.[Footnote 41] First, state and 
local planners are unable to obtain the data needed to sufficiently 
evaluate freight infrastructure proposals because public agencies may 
not have the necessary staff or resources to collect the data. Second, 
freight data on smaller geographical areas, which are necessary for 
effective freight planning, are not available, and as a result, some 
state and local agencies find it necessary to obtain data from costly 
private sources. Moreover, some companies that have data on private 
freight movement consider the information to be proprietary and are 
unwilling to share these data with public agencies.[Footnote 42] For 
example, in Houston, a consortium of four local transportation agencies 
collects and provides information on the Houston area's major roadway 
system, including interstates, toll roads, and some highways. While the 
consortium has the capability to extend its tag-reading technology to 
track overall freight rail traffic, the railroads do not allow this 
practice because they consider that information proprietary. However, 
such data can often be used to identify heavily traveled highways and 
intersections and possible measures to mitigate intermodal freight 
bottlenecks. The lack of complete freight data necessary for freight 
improvement projects to compete with other transportation projects was 
also apparent in Atlanta, where a public planner told us that there are 
plenty of passenger data available to make sound investment decisions, 
but this same kind of data are missing for freight traffic. 

Third, public planners also face challenges in advancing freight 
projects when affected communities oppose the advancement of certain 
projects. The public planning process requires transportation agencies 
to provide the public with meaningful opportunities to provide input on 
transportation decisions, and planners are expected to consider the 
full range of financial, social, economic, and environmental 
consequences of all proposed transportation projects. However, without 
the tools and data to adequately evaluate proposals, public planners 
are not able to articulate the merits and costs of freight 
improvements, which could hinder the advancement of some freight 
projects. Community resistance to freight improvements was evident in 
all of the locations that we visited, but was most apparent in 
California where community-based concerns about air pollution and 
public health effects were raised in opposition to projects for 
expanding freight transportation capacity. Many local communities 
directly affected by freight transportation have opposed new freight 
projects citing environmental and health hazards that these projects 
might produce. However, freight improvements may be able to address 
some of these concerns by reducing congestion or unblocking a 
bottleneck. In the absence of proper evaluation to quantify the 
potential costs and benefits of a project, affected communities may 
continue to oppose the advancement of freight improvements. 

Coordinating Among Multiple Public and Private Stakeholders Presents 
Challenges to Implementing Freight Proposals: 

When freight proposals are advanced in the public planning process, 
planners are faced with the challenge of coordinating among various 
public and private stakeholders. To elevate freight improvements in the 
public planning process, planners must take into consideration the 
views of local elected officials, public agencies involved in 
transportation planning, and the private sector, including rail and 
trucking companies. Agreement among all parties is often desired before 
a project can be advanced. 

Obtaining cooperation among numerous public sector transportation 
stakeholders on freight proposals that extend across multiple 
jurisdictions is difficult and can deter advancing freight projects 
that cross jurisdictional boundaries. The public planning process 
involves public agencies that vary in terms of mandates from their 
constituencies, geographical and jurisdictional responsibilities, 
funding capacities, and staff resources. Given these factors, each 
agency often develops its own mission, agenda, studies, and processes; 
also, its decisions will often reflect political, as well as 
transportation, concerns. Given the unique characteristics of each 
agency, obtaining cooperation among these different officials can make 
the planning and implementation of multistate and multiregion freight 
projects difficult, as the following examples describe: 

* In southern California, a number of public entities play a role in 
setting freight transportation priorities--4 district offices of the 
California DOT, 14 subregions, 6 county transportation commissions, and 
184 city governments. Prior to the last California state transportation 
bill, the Alameda Corridor Transportation Authority (ACTA) developed a 
project list that they believed represented the projects that were in 
the best interest of southern California as a whole.[Footnote 43] The 
Los Angeles Metropolitan Transportation Authority disagreed with their 
list and proposed a different set of projects and priorities, creating 
competition--instead of cooperation--for the limited funds available. 

* Public planners we spoke with in New York State explained that 
planning freight projects in the New York and New Jersey region is 
particularly challenging to manage because of multiple agencies in each 
state, as well as each state's separate government. For example, 
completion of the Staten Island lift bridge, a railroad project to 
connect Staten Island with the national freight rail network, was 
especially challenging because it required the approval of 26 federal, 
state, and local planning bodies. 

* Officials in Atlanta said that Georgia, along with four other states, 
submitted an application for proposed improvements to Interstate 95 
through DOT's Corridors of the Future program. A public planner that we 
spoke with said coming to a consensus on the proposed improvements was 
difficult because each state had competing demands. For example, one 
state wanted truck-only lanes, while another state wanted to increase 
the number of lanes for all vehicles. 

While reaching agreement among public sector entities about freight 
projects can be very challenging, securing the participation and 
support of the private sector can also be difficult. Private entities-
-mainly manufacturers, railroads, trucking companies, marine terminal 
operators, overseas shipping lines, logistics providers, wholesale 
distribution centers, and retailers--can provide meaningful input in 
freight transportation planning. According to FHWA, private sector 
participation can help local planners identify and address needed 
freight transportation improvements and provide expertise and data to 
make informed decisions.[Footnote 44] However, obtaining private sector 
participation in the public sector transportation planning process has 
been difficult, due to the lengthy public planning process. Many 
transportation planning agencies have planning horizons that extend 
over long periods compared to the private sector and are required to 
develop and update a long-range transportation plan covering a planning 
horizon of at least twenty years. This long time period is necessary 
for the public sector to complete impact studies and to obtain 
necessary funding, but may result in the private sector losing interest 
or becoming frustrated with the process. For example, the Atlanta 
Regional Commission's Freight Advisory Task Force includes public and 
private sector freight representatives who inform the regional planning 
process on freight issues. However, some private sector freight 
stakeholders with whom we spoke in the Atlanta area expressed 
frustration that, while there has been much discussion of freight 
issues affecting private companies, the public sector has yet to 
implement any change. 

Even if public planners are successful in securing private sector 
participation in the planning process, getting them to support and help 
fund freight projects may be hindered by the lack of sufficient 
benefits for the private sector. In prior reports, we found that 
limited participation by the private sector stems from the fact that 
freight projects proposed through the transportation planning process 
do not offer sufficient benefits to warrant their involvement.[Footnote 
45] For example, the railroads that serve the west coast have been 
reluctant to support the Alameda Corridor East project, which connects 
the Alameda Corridor and the Ports of Los Angeles and Long Beach to the 
transcontinental rail network. According to public planners, although 
the project would yield substantial public benefits, such as safety and 
reduced pollution, it would do little to help the railroads in terms of 
increasing capacity.[Footnote 46] In another case, an official from a 
Class I railroad operating in the southwest said that company officials 
were wary of the Texas DOT's freight rail plan for Houston because the 
agency had not met with railroad officials during the planning process 
to discuss the private benefits that would accrue to the railroad from 
projects that were in the plan. Railroad officials said that it seemed 
as though Texas DOT attributed more private benefits to those projects 
than would actually accrue and that Texas DOT would want higher 
contributions from the railroad than the railroad would be willing to 
pay toward those projects. 

Funding for Freight-Specific Projects is Difficult to Secure: 

When freight improvements have been identified within the public 
planning process, public planners face a number of challenges in 
securing funds to advance those improvements. The limited federal, 
state, and local funding available for freight improvements and 
restrictions built into existing programs; the modal stovepiping of 
funding programs; and the complexity of funding multimodal, 
multijurisdictional projects all contribute to the difficulty of 
advancing freight improvements. 

The limited availability of funding sources specifically targeted to 
freight projects was cited as a challenge by freight stakeholders in 
each of our four case study regions. Only one federal program--the 
Freight Intermodal Distribution Pilot Grant Program--offers federal 
funding specifically for intermodal freight projects. Congress has 
authorized $30 million for projects in five states through this pilot 
program. Other federal programs, such as Projects of National and 
Regional Significance and National Corridor Infrastructure Improvement 
Program, can also provide funding for intermodal freight projects. 
However, some funding for all of these programs has been 
congressionally directed to specific projects. According to a recent 
DOT Inspector General report and a prior GAO report, the congressional 
direction of funds for particular projects may not result in the 
highest priority projects being funded.[Footnote 47] For example, a 
public planner with whom we spoke in New York City said that, although 
federal money in the form of congressional directives were given to New 
York City, the funds were directed at projects that were not included 
in any city plans. In addition, freight-specific funding sources are 
also lacking at the state and local levels. For example, according to 
local transportation officials with whom we spoke in southern 
California, an estimated $26.2 billion will be needed for regional 
infrastructure enhancements to promote efficient goods movement. 
Although a $20 billion bond measure to fund transportation projects was 
recently passed in the state, only $2 billion has been set aside for 
freight-specific projects throughout the state. In Houston, a freight 
stakeholder said that Houston area public planners cannot rely on Texas 
DOT to provide a share of state funds needed for local interstate, 
highway, and freight projects. Area governments have, therefore, 
pursued several alternative means of funding projects, including toll 
roads and a freight rail district.[Footnote 48] 

Aside from the lack of freight-specific federal programs dedicated to 
improvements, freight projects can be especially difficult to fund or 
finance because of restrictions built into existing federal programs. 
Rail projects, in particular, are difficult to fund even when 
considered a priority in the public planning process because rail 
infrastructure is privately owned. Although two federal credit 
programs--the Transportation Infrastructure Finance and Innovation Act 
of 1998 (TIFIA) and the Railroad Rehabilitation and Improvement 
Financing (RRIF)--can be used to finance freight rail projects, these 
programs have eligibility criteria that may limit some projects. For 
example, to qualify for TIFIA assistance, the project must generate a 
revenue stream from user charges or other nonfederal funding sources. 
The RRIF program includes an up-front fee applicants must pay in order 
to receive the loan, and applications must be approved by both the 
Federal Railroad Administration and the Office of Management and 
Budget.[Footnote 49] According to one short line railroad 
representative with whom we met, the program only benefits those 
companies that can generate enough money to pay back the loan principal 
and interest. In other cases, freight projects can be difficult to fund 
because only specific types of projects are eligible for program funds, 
such as with the Congestion Mitigation and Air Quality (CMAQ) program. 
In the case of CMAQ, unless a project has a positive effect on air 
quality in certain nonattainment or maintenance areas, it would not be 
eligible for CMAQ funds. 

The modal structure of funding programs and of public transportation 
bodies also affects the funding of intermodal freight improvement 
projects. Reflecting the separate federal transportation funding 
programs, many state and local DOTs are generally organized into 
several operating administrations with responsibilities for particular 
modes. According to our previous work and other published studies, this 
modal focus can impede the funding of freight projects, which tend to 
be intermodal in nature.[Footnote 50] Because different operating 
administrations oversee and manage separate funding programs, these 
programs often have differing timelines, criteria, and matching fund 
requirements, which can make it difficult for public planners to plan 
and implement these intermodal freight projects. Moreover, because 
federal programs are often structured such that they dedicate funds on 
a modal basis, state and local decision makers may choose projects 
based on the mode eligible for federal funding, which puts freight 
projects at a disadvantage.[Footnote 51] For example, a traditional 
project, such as a project to widen a highway, typically involves only 
one mode. The planning and development of this type of project involves 
a single sponsor (such as a local transportation agency) and one 
clearly defined funding source (such as the federal-aid highway 
program). In contrast, freight improvement projects tend to be more 
complicated because they are frequently intermodal (such as a rail-to-
truck transfer site), which means that a clear sponsor for the project 
may not exist, discussions among multiple sponsors are usually 
required, and consideration of multiple funding sources may be 
necessary. A public planner in Atlanta said that modal stovepiping of 
funds presents challenges for public transportation planners when 
attempting to make improvements on nonhighway modes, as well as on 
infrastructure that has a private component. 

Finally, public planners are often faced with the challenge of funding 
freight improvements that reap national benefits. As noted earlier, the 
public transportation planning process leaves infrastructure 
improvement decisions to state and local planning bodies without 
considering the national or global nature of freight transportation. 
Although freight transportation is international and national in 
nature, state and local planners control the planning and project 
identification process for improvements to enhance freight mobility. 
Since these local communities have limited funds for transportation 
projects and federal funding sources are limited, projects that provide 
benefits that are more readily discernible to immediate localities--
such as highway projects that address passenger transportation--are 
often given priority for funding. For example, a public planning 
official in Atlanta noted that 36 percent of the freight tonnage and 46 
percent of the value of freight traveling on Georgia's transportation 
system has neither an origin nor a destination in the state. Public 
officials in Atlanta told us that it is difficult for Atlanta and 
Georgia to pay the high costs of improving the freight transportation 
system when much of the freight is not benefiting Atlanta or the state 
of Georgia. In addition, according to a paper released by the Southern 
California Association of Governments, while the ports of Los Angeles 
and Long Beach handle one-third of all waterborne freight container 
traffic entering the United States, the region is not compensated for 
the public or external costs associated with moving this freight, such 
as traffic congestion, air pollution, noise, public health effects, 
visual blight, and freight-related safety incidents.[Footnote 52] In 
the absence of a national strategy and nationally established criteria 
by which to choose critical freight projects, public officials at the 
state and local levels will continue to invest federal funding on 
projects that most benefit their constituencies. 

Federal Government Faces Challenges in Resolving Freight Mobility 
Issues: 

The ability of the federal government to help address freight mobility 
issues is constrained for several reasons. First, as we have previously 
reported, there is no strategy or clearly defined federal role in 
transportation generally and in freight transportation specifically, 
despite a clear federal interest in freight transportation stemming 
from Congress' constitutional role to regulate interstate commerce and 
freight transportation's effect on the national economy. While DOT's 
Draft Framework for a National Freight Policy takes a step forward in 
developing a national freight transportation policy, we have found that 
it does not comprehensively guide the implementation of a federal role 
in freight transportation investments. It assumes a federal role 
without indicating whether federal involvement is appropriate or, when 
appropriate, what the goals of federal involvement should be, what 
specific roles the federal government and other stakeholders should 
play, and what federal revenue sources and funding mechanisms should be 
used to support freight-related investments.[Footnote 53] Without a 
clearly defined federal role in the planning and funding structure, 
federal officials are limited in their ability to promote broad, 
regional solutions to freight mobility that transcend state and local 
jurisdictions to yield national benefits. Additionally, until the 
federal role is more clearly defined, the current system, in which an 
average of over $38 billion per year in federal gas tax 
revenues[Footnote 54] are allocated to states by formula, will likely 
continue. As we have found previously, most federal highway grant funds 
are apportioned to state and local governments by formula, without 
regard to the needs, performance, capacity, or level of effort of 
recipients and with no assurance that they are dedicated to projects 
that best meet mobility needs of either freight or passengers.[Footnote 
55] 

Another factor constraining the federal government from helping address 
freight mobility issues is that the government is still trying to do 
business in ways that are based on conditions, priorities, and 
approaches that were established decades ago and are not well suited to 
addressing 21st century challenges. For example, the current federal 
transportation structure is stovepiped around individual modes with 
their individual funding sources, leaving little room for flexibility 
in a transportation network in which many modes work together to 
provide for freight transportation. 

Finally, federal action is constrained because the main transportation 
funding mechanism--the Highway Trust Fund--is at risk at a time when 
the federal government faces a long-term fiscal imbalance that 
threatens the financial viability of the government. Although, as we 
have previously reported, private entities, such as railroads, are 
investing in their own transportation infrastructure,[Footnote 56] the 
federal government faces serious challenges to its ability to invest in 
transportation. In terms of the Highway Trust Fund, the Office of 
Management and Budget has stated that absent any changes, the Highway 
Trust Fund will reach an estimated $4 billion negative balance by 
fiscal year 2009,[Footnote 57] seriously limiting the amount of federal 
resources to invest in the nation's infrastructure. With regard to the 
governmentwide fiscal imbalance, unless changes are made, balancing the 
federal budget by 2040 could require actions as large as cutting all 
federal expenditures by 6 percent or raising federal taxes to twice 
today's level.[Footnote 58] 

These challenges--the lack of a clearly defined strategy and role, an 
outdated modal-focused structure, and the current transportation 
funding shortfall combined with an unsustainable federal fiscal 
situation--not only hinder the ability of the federal government to 
help address freight mobility challenges, but also contribute to the 
broader transportation challenges facing federal decision makers at all 
levels. Any efforts to address these freight mobility challenges must 
be done in the context of broader transportation challenges facing the 
nation. Table 6 summarizes the key transportation challenges and 
considerations that have been raised in our prior work. 

Table 6: Key Transportation Challenges and Considerations Facing 
Federal Decision Makers: 

Key challenges: Focusing federal transportation policy; 
Considerations: Define national transportation goals with targeted 
areas or corridors of national interest and a clear federal role in 
achieving those goals in those areas and corridors. 

Key challenges: Creating performance criteria for federal 
transportation investments; 
Considerations: Establish criteria to ensure federal funds invested 
achieve the highest national public benefits. 

Key challenges: Aligning roles of state, local, and private 
stakeholders; 
Considerations: Create partnerships that maintain a level of effort by 
other transportation stakeholders that aligns their costs and 
contributions with their respective benefits. 

Key challenges: Reestablishing user based financing for transportation 
programs; 
Considerations: Ensure revenue sources take into account all economic 
and social costs of each mode. 

Key challenges: Ensuring federal funding sources can meet future 
national transportation demands; 
Considerations: Reduce modal stovepipes for federal funding; allow for 
more multimodal flexibility in federal investments; increase 
sustainability by increasing capability to adjust to reductions in 
demand or consumption. 

Sources: GAO-05-325SP, GAO-07-310, GAO-07-770, GAO-07-1210SP. 

[End of table] 

We have previously reported that these challenges and considerations 
highlight the need for the federal government to reassess the 
appropriate federal role and strategy in funding, selecting, and 
evaluating transportation investments, including those for freight 
transportation.[Footnote 59] Conducting this type of reassessment could 
better position the federal government to work with state and local 
decision makers to address the challenges to freight mobility and lead 
to a more efficient transportation system. We have also reported that 
critical factors and questions can be used as criteria for determining 
the appropriateness of a federal role and a framework with components 
that we believe would be helpful in guiding future federal freight 
transportation investments. Implementing this framework would include 
setting national goals for federal investment in freight-related 
infrastructure, clearly defining federal and other stakeholder roles, 
and identifying sustainable revenue sources and cost-effective funding 
mechanisms that can be applied in order to maximize the national public 
benefits of federal investments. (See app. II for critical factors and 
questions as well as components of GAO's framework.) 

Conclusions: 

The nation is at a crossroads regarding the future of the freight 
transportation system. The current federal role in surface 
transportation is unclear and unfocused, and the federal government 
does not maximize opportunities to promote the efficient movement of 
freight. Federal surface transportation programs also lack assurance 
that the federal transportation funds granted annually to states are 
being dedicated to projects that best meet the mobility needs of either 
freight or passengers. This structure functions as an impediment to 
meeting freight mobility challenges. Solutions to these challenges 
require strategic, multimodal, and economically sound strategies that 
local, state, and regional governments and planning organizations are 
fundamentally limited in addressing. Moreover, finding solutions to 
these challenges by reframing and focusing the federal role in freight 
transportation is complicated by the increasingly unsustainable federal 
fiscal condition that makes it imperative to maximize the national 
public benefits of any federal investments. 

DOT and Congress, which have important oversight roles in regulating 
interstate commerce, should both play key roles in bringing about 
needed changes to address the challenges we have identified in order to 
increase the efficiency and capacity of the nation's freight 
transportation system. Given the clear interstate and international 
character of many freight challenges, the federal government has a 
distinct and important role in bringing a national scope and vision to 
the problems that now face localities, states, and regions that have 
national freight flows. By promoting and coordinating solutions across 
jurisdictional lines, the federal government could increase the 
effectiveness of localities, states, and regional governments and 
planning organizations in overcoming their freight-related challenges. 
The federal government could also more effectively direct national 
resources towards those freight investments and solutions that have 
nationwide influence. 

While DOT has made some progress in enhancing the nation's freight 
transportation system through its Draft Framework and the Corridors of 
the Future program, more fundamental changes will be required to 
address challenges and meet anticipated freight flows. In developing 
and implementing ways to address freight transportation needs, Congress 
and DOT face a challenging and complex job. There is no quick and easy 
solution for addressing the freight transportation challenges; rather, 
a fundamental reassessment of the federal role in addressing the 
nation's freight transportation challenges as part of a larger 
reexamination of national transportation programs is needed. Essential 
to this reexamination is developing a federal strategy to achieve 
national freight policies that both embodies basic economic and 
management principles; provides a base from which to determine an 
appropriate federal role in funding, selecting, and evaluating freight 
transportation investments; and seeking and allocating alternative 
sources of revenues. 

DOT must begin to work in earnest with the Congress in formulating 
these fundamental changes because, ultimately, Congress will have to 
make difficult choices--especially in finding funding solutions--that 
may please some stakeholders, but will likely generate opposition by 
sectors or regions who anticipate being disadvantaged. As the projected 
revenue shortfall in the Highway Trust Fund rapidly approaches and as 
freight congestion increases, time to forge a meaningful freight 
strategy and policy is running out. 

Recommendation for Executive Action: 

In order to improve freight mobility by more clearly defining the 
federal role in the freight transportation network and to begin to 
align federal investments with economically significant national 
benefits, we recommend that the Secretary of Transportation develop 
with Congress and public and private sector stakeholders a 
comprehensive national strategy for freight transportation. This 
national strategy should include: 

* defining the federal role and national interests in freight 
transportation, including economically-based and objective criteria to 
identify areas of national significance for freight transportation and 
to determine whether federal funds are required in those areas; 

* establishing the roles of regional, state, and local governments, as 
well as the private sector; and: 

* using new or existing federal funding sources and mechanisms to 
support a targeted, cost-effective, and sustainable federal role in 
freight transportation. 

Agency Comments: 

We provided a draft of this report to DOT for review and comment prior 
to finalizing the report. DOT officials generally agreed with the 
information in this report, and they provided technical clarifications, 
which we have incorporated into this report, as appropriate. DOT did 
not comment on the recommendation. 

We are sending copies of this report to congressional committees with 
responsibilities for transportation issues and the Secretary of 
Transportation. We will also make copies available to others upon 
request. In addition, this report will be available at no charge on the 
GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-2834 or [email protected]. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made key contributions to 
this report are listed in appendix III. 

Sincerely yours, 

Singed by: 

JayEtta Z. Hecker: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of this report were to examine (1) factors that 
contribute to constrained freight mobility in areas with nationally 
significant freight flows and the effects of this constrained mobility 
and (2) approaches that are being used to address impediments to 
freight mobility in selected regions with nationally significant 
freight flows and the challenges that freight transportation 
stakeholders face in implementing solutions. For this report, we 
considered areas with nationally significant freight flows to be those 
that are either a major seaport, international border, freight 
distribution hub, or areas that combine some or all of these 
characteristics.[Footnote 60] We also primarily focused on overland 
surface transportation from ports to markets and on intermodal freight, 
as these demonstrate freight movement between modes and across multiple 
jurisdictional lines. To address these objectives, we conducted a 
literature review and completed four case studies in regions with 
nationally significant freight flows. 

Our literature review included Transportation Research Board 
publications, U.S. Department of Transportation (DOT) studies, academic 
studies, and consulting firm reports. Using these sources, we analyzed 
the content to categorize freight mobility issues related to our 
objectives. Though we did not independently verify the accuracy of the 
analyses and data presented in the literature, the result of this 
limitation is minimal because we relied on a broad array of literature 
to generally describe the key factors that cause impediments to freight 
mobility and their associated effects, as well as the approaches that 
are being used to enhance freight mobility and challenges associated 
with advancing solutions. 

We also completed four case studies to illustrate the range and 
complexity of the factors that constrain freight mobility and their 
effects, in addition to the approaches and associated challenges, used 
by stakeholders to implement solutions to these challenges. To select 
regions with nationally significant freight flows for our case study 
analyses, we relied on information available from the Federal Highway 
Administration's (FHWA) Freight Analytic Framework database regarding 
freight volumes and values and used that information to judgmentally 
select at least one seaport, land border, and major distribution 
center. Finally, we chose sites that provided geographic diversity. At 
each of these locations, we conducted multiple interviews with a wide 
variety of public and private sector freight transportation 
stakeholders. However, the results of our case study analyses are not 
generalizable because the locations selected are not necessarily 
representative of other types of international gateways and 
distribution hubs. 

The four case study regions were: New York and New Jersey, Atlanta, 
Houston and Laredo, and Los Angeles and Long Beach. To understand the 
dynamics of freight movement in case study regions, approaches used in 
freight planning and operations, and what transportation stakeholders 
are doing in response to challenges faced in implementing freight 
projects, we conducted interviews with public and private freight 
transportation stakeholders in these areas. In addition to our site 
visits, we interviewed other stakeholders in the national freight 
transportation network. We also analyzed documents provided to us by 
the stakeholders pertaining to their transportation planning efforts. 
For a complete list of all entities interviewed, see table 7. 

Table 7: Names and Locations of Organizations Contacted: 

Name: Class I freight railroads: Burlington Northern Santa Fe; 
Location: Los Angeles, Calif. 

Name: Class I freight railroads: CSX Transportation; 
Location: Newark, N.J. 

Name: Class I freight railroads: Kansas City Southern; 
Location: Laredo, Tex. 

Name: Class I freight railroads: Norfolk Southern; 
Location: Atlanta, Ga. 

Name: Class I freight railroads: Union Pacific Railroad Company; 
Location: Houston, Texas, Washington, D.C. 

Name: Class III freight railroads: New York & Atlantic; 
Location: New York, N.Y. 

Name: Federal agencies: U.S. Army Corps of Engineers; 
Location: Houston, Texas, Washington, D.C. 

Name: Federal agencies: U.S. DOT; Office of Intermodalism; 
Location: Washington, D.C.; 

Name: Federal agencies: U.S. DOT; Federal Railroad Administration; 
Location: Washington, D.C.; 

Name: Federal agencies: U.S. DOT; Offices of Freight Operations and 
Policy; 
Location: Washington, D.C.; 

Name: Federal agencies: U.S. DOT; Maritime Administration; 
Location: Los Angeles, Calif. 

Name: Federal agencies: U.S. Department of Homeland Security; 
Location: Laredo, Texas. 

Name: Federal agencies: U.S. Department of Homeland Security; Customs 
and Border Protection; 
Location: San Diego, Calif.; Washington, D.C. 

Name: State agencies: California DOT; 
Location: Los Angeles, Calif. 

Name: State agencies: Georgia DOT; 
Location: Atlanta, Ga. 

Name: State agencies: New Jersey DOT; 
Location: Newark, N.J. 

Name: State agencies: New York DOT; 
Location: New York, N.Y. 

Name: State agencies: Texas DOT; 
Location: Houston, Texas, Laredo, Texas. 

Name: Local organizations and authorities: Alameda Corridor East 
Construction Authority; 
Location: Irwindale, Calif. 

Name: Local organizations and authorities: Alameda Corridor 
Transportation Authority; 
Location: Carson, Calif. 

Name: Local organizations and authorities: Atlanta Chamber of Commerce; 
Location: Atlanta, Ga. 

Name: Local organizations and authorities: Atlanta Regional Commission; 
Location: Atlanta, Ga. 

Name: Local organizations and authorities: Bi-State Motor Carriers 
Association; 
Location: Newark, N.J. 

Name: Local organizations and authorities: Georgia Motor Trucking 
Association; 
Location: Atlanta, Ga. 

Name: Local organizations and authorities: Georgia State Road and 
Tollway Authority; 
Location: Atlanta, Ga. 

Name: Local organizations and authorities: Greater Houston Partnership; 
Location: Houston, Tex. 

Name: Local organizations and authorities: Gulf Intracoastal Canal 
Association; 
Location: Houston, Tex. 

Name: Local organizations and authorities: Houston-Galveston Area 
Council; 
Location: Houston, Tex. 

Name: Local organizations and authorities: Houston TranStar; 
Location: Houston, Tex. 

Name: Local organizations and authorities: International Longshoremen's 
Association; 
Location: New York, N.Y. 

Name: Local organizations and authorities: International Longshore and 
Warehouse Union; 
Location: Los Angeles, Calif. 

Name: Local organizations and authorities: Laredo Metropolitan Planning 
Organization; 
Location: Laredo, Tex. 

Name: Local organizations and authorities: Laredo Truckers Association; 
Location: 
Laredo, Tex. 

Name: Local organizations and authorities: Los Angeles Chamber of 
Commerce; 
Location: Los Angeles, Calif. 

Name: Local organizations and authorities: Los Angeles Economic 
Development Corporation; 
Location: Los Angeles, Calif. 

Name: Local organizations and authorities: Nation's Port; 
Location: Newark, N.J. 

Name: Local organizations and authorities: Natural Resources Defense 
Council; Location: 
Los Angeles, Calif. 

Name: Local organizations and authorities: New Jersey Shortline 
Railroad Association; 
Location: Newark, N.J. 

Name: Local organizations and authorities: New York City DOT; 
Location: New York, N.Y. 

Name: Local organizations and authorities: New York City Economic 
Development Corporation; 
Location: New York, N.Y. 

Name: Local organizations and authorities: New York Metropolitan 
Transportation Council; 
Location: New York, N.Y. 

Name: Local organizations and authorities: New York/New Jersey Freight 
Forwarders Association; 
Location: Newark, N.J. 

Name: Local organizations and authorities: North Jersey Transportation 
Planning Authority; 
Location: Newark, N.J. 

Name: Local organizations and authorities: PierPass; 
Location: Long Beach, Calif. 

Name: Local organizations and authorities: Port Authority New York New 
Jersey; 
Location: New York, N.Y. 

Name: Local organizations and authorities: Port of Houston Authority; 
Location: Houston, Tex. 

Name: Local organizations and authorities: Port of Los Angeles and Long 
Beach; 
Location: Los Angeles, Calif. 

Name: Local organizations and authorities: Port Terminal Railroad 
Association; 
Location: Houston, Tex. 

Name: Local organizations and authorities: San Diego Regional Planning 
Agency; Location: San Diego, Calif. 

Name: Local organizations and authorities: Southern California 
Association of Governments; 
Location: Los Angeles, Calif. 

Name: Local organizations and authorities: Triangle Network Trucking 
Association; 
Location: Newark, N.J. 

Name: Private transportation companies: ABF Freight Systems; 
Location: Atlanta, Ga. 

Name: Private transportation companies: APL Limited Eagle Marine 
Services Ltd.; 
Location: Terminal Island, Calif. 

Name: Private transportation companies: APM Terminals/Maersk Shipping; 
Location: Terminal Island, Calif. 

Name: Private transportation companies: Cal Cartage (drayage services); 
Location: Los Angeles, Calif. 

Name: Private transportation companies: Cal State Xpress (drayage 
services); 
Location: South Gate, Calif. 

Name: Private transportation companies: Coca-Cola Enterprises; 
Location: Atlanta, Ga., Elmsford, N.Y. 

Name: Private transportation companies: Exxon Mobil Chemical Company; 
Location: Houston, Tex. 

Name: Private transportation companies: Genesis Intermodal Delivery & 
Nordic Logistics; 
Location: Houston, Tex. 

Name: Private transportation companies: Kinder Morgan Terminals; 
Location: Houston, Tex. 

Name: Private transportation companies: Lyondell Chemical Company; 
Location: Houston, Tex. 

Name: Private transportation companies: Maher Terminals; 
Location: Newark, N.J. 

Name: Private transportation companies: Marine Terminals Corporation; 
Location: Los Angeles, Calif. 

Name: Private transportation companies: Mattel; 
Location: Los Angeles, Calif. 

Name: Private transportation companies: Modalgistics; 
Location: Atlanta, Ga. 

Name: Private transportation companies: New York Container Terminal; 
Location: New York, N.Y. 

Name: Private transportation companies: Pacific Harbor Line; 
Location: Wilmington, Calif. 

Name: Private transportation companies: Pacific Maritime Association; 
Location: Long Beach, Calif. 

Name: Private transportation companies: Pacific Merchant Shipping 
Association; 
Location: San Diego, Calif. 

Name: Private transportation companies: Seaside Transportation 
Services; 
Location: Terminal Island, Calif. 

Name: Private transportation companies: Southern Counties Express; 
Location: Rancho Dominguez, Calif. 

Name: Private transportation companies: United Parcel Service; 
Location: New York, NY, Washington, D.C. 

Name: Private transportation companies: Werner Enterprises; 
Location: Laredo, Tex. 

Name: Academic institutions and consultants: American Transportation 
Research Institute; 
Location: Smyrna, Ga. 

Name: Academic institutions and consultants: Mike Meyer, Professor 
Civil and Environmental Engineering, Georgia Institute of Technology; 
Location: Atlanta, Ga. 

Name: Academic institutions and consultants: George R. Fetty, 
Principal, George R. Fetty and Associates, Inc. (Rail Consultant); 
Location: Los Angeles, Calif. 

Name: Academic institutions and consultants: METRANS Transportation 
Center/Center for International Trade and Transportation; 
Location: Long Beach, Calif. 

Name: Academic institutions and consultants: Leigh Boske, Associate 
Dean and Professor of Economics, LBJ School of Public Affairs, The 
University of Texas at Austin; 
Location: Austin, Tex. 

Name: Academic institutions and consultants: Texas Transportation 
Institute; 
Location: College Station, Tex. 

Source: GAO. 

[End of table] 

To identify the factors that constrain freight mobility and the impacts 
of this immobility, we reviewed and analyzed the content of relevant 
literature. Our analysis categorized the factors and effects found in 
the literature in order to identify the major areas of agreement among 
experts regarding the factors that cause, and the effects of, 
constraints on the mobility of nationally significant freight flows. We 
supplemented our analysis of this literature by interviewing key 
freight transportation stakeholders in four regions with nationally 
significant freight flows. 

To identify approaches that have been proposed or implemented by 
transportation stakeholders and challenges associated with advancing 
solutions, we interviewed officials in the four case study regions, as 
well as DOT officials in Washington, D.C., and collected documents from 
these officials about their efforts to implement freight mobility 
solutions. This information covered topics such as the planning 
process, both at the state and local levels; each organization's role, 
including the extent to which each organization provides funding for 
freight projects; private sector participation, including the extent to 
which private sector stakeholders contribute to funding freight 
projects; and perspectives regarding collaboration between public and 
private sector stakeholders. In addition, we identified approaches that 
can be used to enhance freight mobility and the challenges associated 
with advancing freight improvements through the literature review; we 
confirmed this information through our interviews with key freight 
stakeholders in case study regions. We did not independently assess the 
relative success of the various approaches identified. Given that each 
approach was applied in areas with regional and geographic differences, 
comparisons between approaches cannot be inferred. We also relied on 
perspectives obtained from our past work in transportation and 
infrastructure systems and federal investment strategies. 

To identify challenges that decision makers face in implementing 
solutions, we reviewed pertinent literature, including past GAO reports 
on freight transportation, and confirmed this information through our 
interviews with key freight stakeholders in case study regions. Through 
our interviews with transportation stakeholders in local, regional, and 
state governments, as well as private shippers and freight 
transportation companies, we sought information on the transportation 
planning process, the collaboration of various stakeholders during that 
process, and various mechanisms used to fund and finance freight-
related transportation projects. These interviews focused on challenges 
that are specific to freight transportation solutions. To identify 
federal challenges to implementing freight transportation solutions, we 
integrated perspectives gained from our prior reports on various 
aspects of freight transportation and freight infrastructure. We also 
relied extensively on our past work in transportation and federal 
investment strategies to elaborate on the key components of a 
comprehensive federal freight investment strategy. 

We conducted this performance audit from July 2006 through January 2008 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Critical Factors and Questions and Components of a Federal 
Role in Freight-Related Transportation and Infrastructure Investments: 

Table 8: GAO's Critical Factors and Questions for Determining an 
Appropriate Federal Role in Freight-Related Transportation: 

Factors: Relevance and purpose of the federal role; 
Questions: Are some freight transportation issues of nationwide 
interest? If so, is a federal role warranted based on the likely 
failure of private markets or state and local governments to address 
underlying freight problems or concerns? Does current federal 
involvement in freight infrastructure encourage or discourage the 
private and other public sectors from investing their own resources to 
address the problem? 

Factors: Measuring success; 
Questions: Do current federal funding mechanisms and programs for 
freight-related infrastructure have outcome-based performance measures, 
and are all applicable costs and benefits considered? 

Factors: Targeting benefits; 
Questions: Are current funding mechanisms for freight-related 
infrastructure targeted to generate national benefits in areas with the 
greatest needs and the least capacity to meet those needs? 

Factors: Affordability and cost-effectiveness; 
Questions: Do current revenue sources and funding mechanisms for 
federal freight-related infrastructure encourage state and local 
governments and the private sector to invest their own resources? Are 
these revenue sources sustainable, and are the funding mechanisms 
affordable in the long term? Do these funding mechanisms use the most 
cost-effective or net beneficial approaches when compared to other 
tools and program designs? 

Sources: GAO-05-325SP and GAO-07-770. 

[End of table] 

Table 9: Three Components of GAO's Framework to Guide Federal 
Involvement in Freight-Related Infrastructure Investments: 

Component: Set national goals; 
Description: These goals, which would establish what federal 
participation in the freight transportation system is designed to 
accomplish, should be specific, measurable, achievable, and outcome-
based. 

Component: Establish and clearly define stakeholder roles, especially 
the federal role relative to the roles of state and local governments 
and private railroads; 
Description: The federal government is one of many stakeholders 
involved in freight-related investments. Others include state and local 
governments, port authorities, shippers, and the railroads themselves. 
Given the broad range of beneficiaries, it is important to gain 
consensus on what the transportation system is to achieve and to help 
ensure that the federal role does not negatively affect the 
participation or role of other stakeholders. 

Component: Determine which revenue sources and funding mechanisms will 
maximize the impact of any federal expenditures and investment; 
Description: This component can help expand the ability to provide 
funding resources and to promote cost sharing responsibilities. Given 
the current budgetary environment and the long-range fiscal challenges 
confronting the nation, federal funding for future freight-related 
transportation projects will require a high level of justification and 
should be prioritized to maximize national public benefits. 

Sources: GAO-02-1033, GAO-05-727, GAO-07-15, and GAO-07-770. 

[End of table] 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

JayEtta Z. Hecker, (202) 512-2834 or [email protected]: 

Staff Acknowledgments: 

In addition to the contact named above, Elizabeth McNally (Assistant 
Director), Jaime Allentuck, Carissa Bryant, Jay Cherlow, Colin Fallon, 
Holly Gerhart, Mark Gribbin, Greg Hanna, Carol Henn, Bert Japikse, Paul 
Kazemersky, Sara Ann Moessbauer, Josh Ormond, John W. Stambaugh, and 
Randy Williamson made key contributions to this report. 

[End of section] 

Footnotes: 

[1] GAO, Freight Transportation: Strategies Needed to Address Planning 
and Financing Limitations, GAO-04-165 (Washington, D.C.: Dec. 19, 2003) 
and GAO, Intermodal Transportation: DOT Could Take Further Actions to 
Address Intermodal Barriers, GAO-07-718 (Washington, D.C.: June 20, 
2007). 

[2] GAO, 21st Century Challenges: Reexamining the Base of the Federal 
Government, GAO-05-325SP (Washington, D.C.: February 2005) and GAO, 
High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: January 
2007). 

[3] The case studies include Los Angeles and Long Beach, Calif.; 
Houston and Laredo, Tex.; Atlanta, Ga.; and the N.Y. and N.J. port 
region. 

[4] Cost calculation is in year 2000 dollars. Clifford Winston and 
Ashley Langer, "The Effect of Government Highway Spending on Road 
Users' Congestion Costs," Journal of Urban Economics, vol. 60 (May 
2006). 

[5] GAO-07-718. 

[6] DOT, "Moving the Economy: National Strategy to Reduce Congestion," 
(Washington, D.C., Nov. 15, 2007). See [hyperlink, 
http://www.fightgridlocknow.gov] (accessed on Oct. 25, 2007). 

[7] These corridors are I-95 from Florida to the Canadian border; I-70 
in Missouri, Illinois, Indiana, and Ohio; I-15 in Arizona, Utah, 
Nevada, and California; I-5 in California, Oregon, and Washington; I-10 
from California to Florida; and I-69 from Texas to Michigan. 

[8] Dollars are in year 2000 inflation-adjusted terms as calculated by 
BTS. DOT, BTS, America's Freight Transportation Gateways (Washington, 
D.C., 2004). 

[9] A ton-mile is defined as 1 ton of freight shipped 1 mile. As such, 
changes in ton-miles reflect trends in both volume (tons) and distance 
(miles). BTS, A Decade of Growth in Domestic Freight: Rail and Truck 
Ton-Miles Continue to Rise (Washington, D.C., July 2007). 

[10] Changes in supply chains have increased the volume and frequency 
of freight moving across the transportation system and dramatically 
increased the reliance of U.S. businesses on transportation. For 
example, "just-in-time" production processes enable businesses to lower 
inventory carrying costs and add flexibility and adaptability to their 
decision-making timelines by closely controlling the quantities and 
arrival of source materials. 

[11] Cambridge Systematics, An Initial Assessment of Freight 
Bottlenecks on Highways, prepared for the Department of Transportation, 
October 2005. 

[12] Cambridge Systematics, An Initial Assessment of Freight 
Bottlenecks; DOT, Freight Performance Measurement: Travel Time in 
Freight-Significant Corridors, December 2006; Armando Carbonell et al., 
Global Gateway Regions, September 2005; and David Schrank and Tim 
Lomax, The 2007 Urban Mobility Report (College Station; Texas 
Transportation Institute, Texas A&M University, September 2007). 

[13] Cambridge Systematics, National Rail Freight Infrastructure 
Capacity and Investment Study, prepared for the Association of American 
Railroads (Cambridge, Mass., 2007). 

[14] GAO, Freight Railroads: Industry Health Has Improved, but Concerns 
about Competition and Capacity Should Be Addressed, GAO-07-94 
(Washington, D.C.: Oct. 6, 2006) and Cambridge Systematics, National 
Rail Freight Infrastructure Capacity and Investment Study (Cambridge, 
Mass., 2007). 

[15] Schrank and Lomax, The 2007 Urban Mobility Report, September 2007. 

[16] GAO-05-325SP; GAO-07-310; and GAO, Highway Trust Fund: Overview of 
Highway Trust Fund Estimates, GAO-06-572T (Washington, D.C.: Apr. 4, 
2007). 

[17] GAO-07-718. 

[18] The proposed cross harbor tunnel project is one such example in 
the New York/New Jersey region. The project study began in 1998, and 
the project remains in a planning phase with the earliest estimate for 
completion 7 years after approval and funding. The proposed freight 
rail tunnel would link New Jersey with Brooklyn, New York, and the 
current estimated project costs range from $4.8 to $7.4 billion. 

[19] Joseph Bryan, et al., Assessing Rail Freight Solutions to Roadway 
Congestion: Final Report, Transportation Research Board, National 
Cooperative Highway Research Program Report 586 (Washington D.C., 
November 2007) and Transportation Research Board, Short Haul Rail 
Intermodal: Can It Compete with Trucks? (Washington, D.C., 2004). 

[20] GAO, Surface Transportation: Strategies Are Available for Making 
Existing Road Infrastructure Perform Better, GAO-07-920 (Washington, 
D.C.: July 26, 2007). 

[21] Global supply chains and domestic freight are vulnerable to 
terrorist attack, and heightened security measures could also constrain 
freight mobility. Although a number of the stakeholders with whom we 
spoke noted their concern that imposing new security requirements would 
cause significant new delays, they generally agreed that security 
measures are not currently a major factor contributing to freight 
delays. In this report, we did not evaluate security measures and 
programs. 

[22] Containers are standardized shipping containers that can be loaded 
directly from ships to trains or trucks. 

[23] GAO-07-94. 

[24] DOT, Addendum to the 1997 Federal Highway Cost Allocation Study 
Final Report (2000), [hyperlink, 
http://www.fhwa.dot.gov/policy/hcas/addendum.htm] (accessed on Oct. 25, 
2007). 

[25] GAO, Freight Transportation: Strategies Needed to Address Planning 
and Financing Limitations, GAO-04-165 (Washington, D.C.: Dec. 19, 2003) 
and GAO, Railroad Bridges and Tunnels: Federal Role in Providing Safety 
Oversight and Freight Infrastructure Investment Could Be Better 
Targeted, GAO-07-770 (Washington, D.C.: Aug. 6, 2007). 

[26] DOT, Freight Performance Measurement: Travel Time in Freight-
Significant Corridors (December 2006). 

[27] DOT, Freight Facts and Figures, 2007 (Washington, D.C., pending). 

[28] Cambridge Systematics, National Rail Freight Infrastructure Study, 
(Cambridge, Mass., September 2007). 

[29] Cost calculation is in year 2000 dollars. Clifford Winston and 
Ashley Langer, "The Effect of Government Highway Spending on Road 
Users' Congestion Costs," Journal of Urban Economics, vol. 60 (May 
2006). 

[30] Texas Department of Transportation, Houston Region Freight Rail 
Study (Houston, Tex., July 2007), [hyperlink, 
http://www.houstonrailplan.com] (accessed Nov. 8, 2007). 

[31] Glen Weisbrod et al., Economic Implications of Congestion, 
Transportation Research Board, National Cooperative Highway Research 
Program Report 463 (Washington, D.C., 2001). 

[32] Particulate matter emissions refer to particulate matter 10 
microns, or smaller, in diameter or PM-10 emissions. DOT, Freight Facts 
and Figures, 2006 (Washington, D.C., 2006). 

[33] The EPA designates nonattainment areas based on the regularity 
with which the air in the area exceeds criteria pollutant standards. 
Nonattainment areas are required to have plans to lower air pollution. 

[34] California Environmental Protection Agency, Air Resources Board, 
Emission Reduction Plan for Ports and Goods Movement in California 
(Sacramento, Calif., March 2006). 

[35] New York City Department of Transportation, New York City Truck 
Route Management and Community Impact Reduction Study (New York, N.Y., 
March 2007). 

[36] GAO-07-770. 

[37] ICF Consulting, HLB Decision Economics, Louis Berger Group, 
Freight Benefit/Cost Study: Compilation of the Literature, prepared for 
the Federal Highway Administration, Office of Freight Management and 
Operations, February 2001. 

[38] GAO-07-920. 

[39] Transportation Research Board, Special Report 252: Policy Options 
for Intermodal Freight Transportation (Washington, D.C., 1998); 
Transportation Research Board, Special Report 271: Freight Capacity for 
the 21st Century (Washington, D.C., 2003); and Federal Highway 
Administration, Addressing Freight in the Transportation Planning 
Process (Washington, D.C., October 2001). 

[40] GAO-04-165. 

[41] Transportation Research Board, Special Report 276: A Concept for a 
National Freight Data Program (Washington, D.C., 2003) and Federal 
Highway Administration, Addressing Freight in the Transportation 
Planning Process (Washington, D.C., October 2001). 

[42] In an attempt to address this, FHWA has developed a Freight Cost 
Benefit Analysis Additive Benefits tool that provides a calculation for 
estimating a highway improvement project's benefits to the private 
sector by calculating the savings to shippers and manufacturers. 

[43] ACTA adopted an Expanded Mission in January 2004 to address cargo 
growth at the ports and to optimize use of the existing rail and 
highway network while larger scale projects are planned and funded. See 
[hyperlink, http://www.acta.org] (accessed on Oct. 4, 2007). 

[44] Federal Highway Administration, Addressing Freight in the 
Transportation Planning Process (Washington, D.C., October 2001) and 
Federal Highway Administration, Office of Freight Management and 
Operations, Freight Financing Options for National Freight Productivity 
(Washington, D.C., April 2001). 

[45] GAO-04-165. 

[46] The Alameda Corridor project involved significant collaboration 
and investment from the private sector, namely railroads, and was 
successfully completed in 2002. The Alameda Corridor East project is 
located in a different geographic area but extends the partnership idea 
from the first project. 

[47] DOT, Office of the Inspector General, Review of Congressional 
Earmarks Within Department of Transportation Programs (Washington, 
D.C., September 2007) and GAO-07-718. 

[48] The freight rail district is tasked with improving railroad 
capacity and operation, filling a gap where there has been limited 
expertise and focus outside of the rail industry. The district's 
mission is to better incorporate rail lines, both freight and commuter, 
into the region's transportation network. 

[49] According to a DOT report, a typical time estimate for an RRIF 
loan to be processed is 1.5 to 2 years. 

[50] GAO-07-718; GAO-05-325SP; GAO-04-165; The Brookings Institute, 
Principles for a U.S. Public Freight Agenda in a Global Economy, 
(Washington, D.C., January 2006); Transport Canada, Literature Review 
on Intermodal Freight Transportation, (Ottawa, Ontario, January 2004); 
and Transportation Research Board, Global Intermodal Freight: State of 
Readiness for the 21st Century, Report of a Conference (Washington, 
D.C., 2001). 

[51] When public planners make infrastructure decisions based on the 
mode eligible for federal funding, this can potentially result in 
funding a project for one mode, even when benefit-cost or cost-
effectiveness criteria may favor a project on another mode. 

[52] Southern California Association of Governments, Southern 
California Regional Strategy for Goods Movement: A Plan for Action 
(February 2005, amended March 2005). 

[53] GAO-07-770. 

[54] This amount is the average authorization from the Highway Trust 
Fund from fiscal year 2005 to fiscal year 2009. Most of these funds are 
specifically for highway projects. 

[55] GAO-07-545. 

[56] GAO-07-770. 

[57] Office of Management and Budget, Mid-Session Review, Budget of the 
U.S. Government, Fiscal Year 2008 (Washington, D.C., July 11, 2007). 

[58] GAO, Saving Our Future Requires Tough Choices Today, GAO-07-1164CG 
(Washington, D.C.: July 26, 2007). 

[59] GAO-05-325SP, GAO-07-1210SP, GAO-07-770, GAO-07-310. 

[60] We also concentrated on surface transportation modes, such as, 
highways, rail and marine freight modes, in this engagement. 

[End of section] 

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