Intermodal Freight Transportation: Projects and Planning Issues (Letter
Report, 07/09/96, GAO/NSIAD-96-159).

Pursuant to a congressional request, GAO reviewed intermodal freight
transportation issues, focusing on: (1) the Department of Transportion's
(DOT) efforts to track how states use Intermodal Surface Transportation
Efficiency Act (ISTEA) funds to facilitate intermodal transportation;
(2) the nature and extent of ISTEA funds used by states for intermodal
freight projects; (3) how some local and regional areas that handle
large volumes of freight have considered intermodal freight
transportation issues as part of their planning processes; (4)
impediments some areas face in improving intermodal freight
transportation; and (5) trends in intermodal freight transportation.

GAO found that: (1) DOT has not developed the statutorily required
database on public and private intermodal transportation investments, or
tracked how states use ISTEA funds for such projects; (2) DOT says that
its limited role in allocating funds, states' inconsistent
identification of projects, and intermodal projects' multiple financing
sources make establishing the database difficult; (3) as of September
1995, 10 states had obligated about $35.6 million in ISTEA funds for 23
intermodal-freight-related projects; (4) as of December 1995, 9 states
had obligated $68.4 million, or 36 percent of the $191.8 million in
ISTEA funds authorized, for 20 priority intermodal freight projects; (5)
the total amount of funds obligated for intermodal freight projects
through the first 4 ISTEA fiscal years equals less than 1 percent of
ISTEA funds apportioned to the states for highways and other nontransit
infrastructure projects during the same period; (6) metropolitan
planning organizations have to balance intermodal freight issues with a
wide range of other transportation needs; (7) public transportation
planners lack experience and planning tools for intermodal
transportation, but states are slowly developing such expertise and
tools; (8) local and regional planners are addressing problems specific
to their areas; and (9) impediments to improving intermodal freight
transportation include obtaining necessary proprietary information on
freight movements and coordinating public and private-sector planning,
but public-private partnerships may help overcome such impediments.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-96-159
     TITLE:  Intermodal Freight Transportation: Projects and Planning 
             Issues
      DATE:  07/09/96
   SUBJECT:  Freight transportation operations
             Data bases
             Federal aid for transportation
             Intergovernmental relations
             Transportation industry
             Trucking operations
             Railroad transportation operations
             Regional planning
IDENTIFIER:  DOT Surface Transportation Program
             National Highway System
             California
             Illinois
             New York
             Texas
             Chicago (IL)
             Los Angeles (CA)
             Alameda Corridor Project (CA)
             Western Transportation Trade Network
             New England Transportation Initiative
             DOT National Freight Partnership
             
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Cover
================================================================ COVER


Report to Congressional Committees

July 1996

INTERMODAL FREIGHT TRANSPORTATION
- PROJECTS AND PLANNING ISSUES

GAO/NSIAD-96-159

Intermodal Freight Transportation

(280120)


Abbreviations
=============================================================== ABBREV

  BTS - Bureau of Transportation Statistics
  CMAQ - Congestion Mitigation and Air Quality
  DOT - Department of Transportation
  FHWA - Federal Highway Administration
  GAO - General Accounting Office
  MARAD - Maritime Administration
  ISTEA - Intermodal Surface Transportation Efficiency Act
  MPO - Metropolitan Planning Organization
  NARC - National Association of Regional Councils
  NETI - New England Transportation Initiative
  STP - Surface Transportation Program
  TEU - Twenty-foot equivalent container units

Letter
=============================================================== LETTER


B-260658

July 9, 1996

The Honorable John H.  Chafee
Chairman
The Honorable Max S.  Baucus
Ranking Minority Member
Committee on Environment and Public Works
United States Senate

The Honorable John W.  Warner
Chairman, Subcommittee on Transportation
 and Infrastructure
Committee on Environment and Public Works
United States Senate

To improve the nation's surface transportation system over a 6-year
period ending in fiscal year 1997, the Intermodal Surface
Transportation Efficiency Act ([ISTEA], Public Law 102-240, Dec.  18,
1991) authorized $155 billion.  Although ISTEA primarily authorized
highway construction and improvements, it also emphasized how
intermodal connections can enhance the nation's transportation
infrastructure.  Intermodal connections link the various
transportation modes--highways, rail, air, and maritime facilities. 
According to the National Commission on Intermodal Transportation's
1994 report, these connections are typically the weakest links in the
nation's transportation system.  Economists and transportation
planners believe that productivity and efficiency gains can be
achieved by improving intermodal connections. 

In preparation for reauthorization of ISTEA, you asked us to review
several intermodal freight transportation issues.  We reviewed (1)
the Department of Transportation's (DOT) efforts to track how states
use ISTEA funds for facilitating intermodal transportation and the
nature and extent of ISTEA funds used by states for intermodal
freight projects, (2) how some local and regional areas that handle a
large volume of freight have considered intermodal freight
transportation issues as part of their planning process, and (3) what
kind of impediments some areas face in improving intermodal freight
transportation.  In addition, we developed information on intermodal
freight transportation trends. 


   BACKGROUND
------------------------------------------------------------ Letter :1

ISTEA made it U.S.  policy to develop a national intermodal
transportation system that "provides the foundation for the Nation to
compete in the global economy, and will move people and goods in an
energy efficient manner." In terms of freight transportation, an
intermodal shipment is one that moves by two or more modes during a
single trip.  Although intermodalism is not defined in ISTEA, an
example of an intermodal freight project would be a port improvement
project that facilitates the transfer of cargo from ships to trucks
or rail.  However, DOT has not established an all-encompassing
definition of what constitutes an intermodal freight project.  While
ISTEA required that DOT develop a data base that included investments
in public and private intermodal transportation facilities, it
contained no requirement for states to use a specific category of
funds for intermodal projects.  The majority of ISTEA funding for
surface transportation improvements is provided to states through
such categories as the Surface Transportation Program or the National
Highway System, which have historically been directed to highway
construction.  However, ISTEA authorized specific "priority
intermodal" projects, some of which were freight related. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

DOT has not yet developed a data base that provides information on
public and private investment in intermodal transportation, nor has
it tracked how states use ISTEA funds for such projects.  Our
analysis of available DOT data and interviews with agency officials
showed that 10 states had obligated about $35.6 million in ISTEA
funds for 23 projects identified as intermodal freight related as of
September 30, 1995.  In addition, DOT provided information that $68.4
million, or 36 percent of the $191.8 million authorized for
obligation in ISTEA funds for 20 priority intermodal freight
projects, had been obligated by states as of December 31, 1995.  The
total amount of funds obligated for intermodal freight projects
through roughly the first 4 of ISTEA's 6 fiscal years thus equals
$104 million--less than 1 percent of ISTEA funds apportioned to the
states during that period for highways and other nontransit
infrastructure projects.  DOT does not have more complete data on
funding for intermodal freight projects.  Such information would be
necessary to assess whether progress has been made toward improving
intermodal connections. 

In reviewing the approach of several local and regional areas to
meeting intermodal freight transportation needs, it became clear that
metropolitan planning organizations (MPO)\1 have had to balance their
consideration of intermodal freight issues with a wide range of other
transportation needs.  MPOs are required to consider 15 planning
factors when prioritizing projects to include in state transportation
plans, only 2 of which relate to intermodal freight transportation. 
Furthermore, the public sector's transition from a modal planning
environment to an intermodal planning approach is taking time to
institutionalize.  One reason for this delay is that while much
intermodal freight expertise resides in the private sector, public
sector officials are just beginning to develop appropriate planning
tools for this work.  These tools include local planning to identify
and overcome intermodal freight bottlenecks and regional planning to
address interstate freight issues. 

Public and private transportation officials experienced several
impediments to improving intermodal freight transportation.  Two
issues identified as particularly problematic involved:  (1)
obtaining necessary information on freight movement that private
firms may consider proprietary and (2) coordinating the different
planning time lines between the public and private sectors for
meeting immediate versus long-term intermodal needs.  However,
efforts are under way by some groups to bring both public and private
interests together at the MPO and the national level. 


--------------------
\1 Transportation planning at the local level is the responsibility
of MPOs.  Title I of ISTEA designated MPOs "for each urbanized area
of more than 50,000 population by agreement among the Governor and
units of general purpose local government which together represent at
least 75 percent of the affected population (including the central
city or cities as defined by the Bureau of the Census) or in
accordance with procedures established by applicable State or local
law."


   DOT HAS NOT DEVELOPED
   STATUTORILY REQUIRED DATA BASE
   ON INTERMODAL INVESTMENTS
------------------------------------------------------------ Letter :3

Title V of ISTEA established within DOT an Office of Intermodalism
and required that the Director of this office, through the Bureau of
Transportation Statistics (BTS), develop, maintain, and make publicly
available a data base that includes "information on public and
private investment in intermodal transportation facilities and
services."\2 To date, the data base on investment in intermodal
facilities and services has not been developed, and comprehensive
data on investment in public and private investment in intermodal
transportation facilities and services do not exist.  Moreover, DOT
does not track ISTEA expenditures on intermodal facilities.  DOT
officials gave us the following reasons why they have not developed
the data base:  (1) DOT has a limited role in managing how funds are
allocated because states are given primary responsibility for
allocating funds according to broad program categories; (2) the term
"intermodal" is subject to interpretation, and projects may not be
identified consistently among states; and (3) intermodal projects may
be financed from multiple sources, including federal, state, and
local funds, and it may be difficult to identify ISTEA funds used for
this purpose.  Nonetheless, DOT has not sought legislative relief
from this ISTEA requirement. 

States have provided DOT with detailed information about the use of
ISTEA funds on a project-by-project basis; this information has been
entered into DOT's computer information system.  In an attempt to
identify the extent to which states used ISTEA funds for projects
that facilitated intermodal freight movement, we reviewed thousands
of pages of DOT data and interviewed public sector officials.\3 Our
review was based on identifying the use of the term intermodal in
project descriptors.  We verified with DOT officials that each
project we identified involved the movement of freight.  We found
that only 10 states\4 used ISTEA funds for intermodal freight
projects.  A total of 23 projects obligated $35.6 million from two
ISTEA funding categories. 

We also reviewed the status of ISTEA-designated "priority intermodal"
projects (of the 51 projects designated in legislation, 20 were
freight related, according to DOT).  DOT officials said that $191.8
million was provided for these 20 freight-related projects in 9
states.\5 As of December 31, 1995, $68.4 million, or 36 percent, had
been obligated by the states for these projects. 

Our review of available information in the CMAQ, STP, and "priority
intermodal" funding categories found that federal intermodal freight
project funding obligated in roughly the first 4 of ISTEA's 6 fiscal
years totaled $104 million.\6 Because most intermodal freight
movement is done by private companies, it is likely that the private
sector would be responsible for a large portion of investment in
intermodal freight facilities. 

While some limited information on funding for intermodal projects can
be discerned from available information within DOT, DOT has not
collected in a data base public and private investment information on
intermodal facilities and services, as required.  Without such data
on funding for intermodal freight projects, decisionmakers can not
ascertain if progress is being made toward ISTEA's goal of improving
intermodal connections. 


--------------------
\2 The two other elements of the data base are (1) "information on
the volume of goods and number of people carried in intermodal
transportation by relevant classification" and (2) "information on
patterns of movement of goods and people carried in intermodal
transportation by relevant classification in terms of origin and
destination." DOT officials stated that their initial work in
addressing the intermodal data base has focused on freight and
passenger movement data rather than investment data.  DOT efforts to
address these two elements of the data base are included in the
agency comments section of this report. 

\3 The two categories of ISTEA funding we reviewed were Congestion
Mitigation and Air Quality (CMAQ) and Surface Transportation Program
(STP).  According to DOT, states were most likely to use these
categories to fund intermodal freight projects.  Other ISTEA funding
categories include National Highway System, Surface Transportation
Enhancements, and Bridge Replacement and Rehabilitation. 

\4 The 10 states are California, Florida, Maine, New Hampshire, New
Mexico, New York, Ohio, Tennessee, Texas, and Washington. 

\5 The nine states are California, Florida, Michigan, Mississippi,
New York, Oklahoma, Oregon, Pennsylvania, and Utah. 

\6 A state-by-state breakdown of information on intermodal freight
projects is presented in appendix I. 


   INTERMODAL FREIGHT
   TRANSPORTATION PLANNING
------------------------------------------------------------ Letter :4

In our review of how several local and regional areas are attempting
to address intermodal freight transportation needs, we found that
MPOs have been given considerable responsibility for a wide range of
transportation concerns.  ISTEA not only requires that MPOs increase
public involvement in the planning process but also that MPO
officials prioritize projects and determine their financial
feasibility before submitting them to state transportation officials
for inclusion in the statewide transportation improvement plan.  In
addition to these broader concerns about transportation planning,
ISTEA specified 15 factors that MPOs were to consider in preparing
local plans, two of which relate to intermodal freight:  (1) "methods
to enhance the efficient movement of freight" and (2) "access to
ports, airports, intermodal transportation facilities, major freight
distribution routes .  .  .  ."

A broader perspective on the extent to which MPOs consider freight
issues in their planning activities is provided in a survey that the
National Association of Regional Councils (NARC) conducted in 1993
with the nation's 342 MPOs.  Of the 259 MPOs that responded to that
survey, 78 (30 percent) reported conducting freight-related planning
activities.  MPOs reported that they took into account the following
specific aspects of freight-related planning (which have implications
for intermodal freight movement) in performing their activities: 
truck (65 MPOs); rail (56 MPOs); air (40 MPOs); maritime/port
facilities (27 MPOs); and border crossings (17 MPOs).  In 1995, a
survey of how MPOs deal with freight issues was conducted by the
Freight Stakeholders National Network (a group of industry
associations).  According to that survey, 90 percent of the nation's
largest MPOs responding to the survey reported that they lacked
sufficient data to conduct adequate freight planning. 

While survey results indicate that intermodal freight-related
planning is not widespread among MPOs responding to the NARC survey,
it does show that freight issues are being considered.  According to
public and private officials we interviewed, the transition to an
intermodal planning environment is a new way of thinking that is
taking time to percolate through the public sector.  One reason for
this is that planning has traditionally been done by a single mode of
transportation (e.g., highways), and planning has been structured in
that manner.  Another is that intermodal freight innovations have
often originated in the private sector.  Consequently, much of the
intermodal expertise resides with private officials.  Several public
sector officials mentioned that ISTEA planning requirements spurred
them to develop intermodal planning tools.\7 These same officials
found that developing these tools had required time and money.  For
example, California's DOT officials stated that their intermodal
management system took 2.5 years to complete and cost $1.9 million in
outside contracts.  Of the 259 MPOs responding to the National
Association of Regional Councils survey, 39 percent reported having
an ISTEA intermodal management system. 


--------------------
\7 ISTEA required that the Secretary of Transportation issue
regulations for state development, establishment, and implementation
of six transportation management systems, including one for
intermodal facilities and systems.  It authorized the Secretary to
withhold up to 10 percent of a state's federal funds beginning in
fiscal year 1996 if the state was not implementing the management
systems.  A provision in the National Highway System Designation Act
of 1995 (P.L.  104-59) allows states to elect not to implement one or
more of the management systems without jeopardizing any funding.  The
act prohibits the Secretary from imposing any sanction on, or
withholding benefit from, a state based on a decision not to
implement a management system. 


      LOCAL PLANNING TO ADDRESS
      INTERMODAL FREIGHT
      BOTTLENECKS
---------------------------------------------------------- Letter :4.1

In our visits to states that have local and regional areas that
handle large volumes of freight--California, Illinois, New York, and
Texas--public and private officials told us how intermodal freight
bottlenecks near ports and rail yards can affect traffic and freight
movement.  In part, our discussions with these officials focused on
the implications of such bottlenecks for goods movement at the local,
regional, and national levels as well as specific projects proposed
to address such problems.  However, in these visits we did not
evaluate intermodal freight projects. 

Besides handling large volumes of passenger and intermodal freight
traffic, Chicago and Los Angeles are also crucial links in what has
been termed the nation's "land bridge" between Asia and the
northeastern United States.\8 The following examples outline the
intermodal problems each city faces and the short- and longer-term
solutions proposed to address them. 

  -- Chicago is a major hub for national and international freight
     movement because it is where the nation's eastern and western
     rail carriers meet.  Nearly half of the nation's intermodal rail
     shipments originate, terminate, or connect there.  The Chicago
     Area Transportation Study, the local MPO, has identified 23
     major intermodal (rail/truck) yards plus 2 lumber transfer
     points, 3 automobile transloaders, and 5 clusters of freight
     facilities that serve ships in the Chicago metropolitan region. 
     The "typical" truck-rail intermodal freight facility generates
     considerable activity, with over 200,000 container transfers
     from rail to truck or vice versa per year; the largest facility
     has 670,000 transfers, which represents a reported average 1,000
     to 1,400 trucks entering and leaving the facility a day.  It is
     a year-round, around the clock industry.  According to the MPO,
     the resulting traffic contributes substantially to local and
     regional traffic congestion and is concentrated on a small
     number of routes between the rail yards.  Such congestion can
     impede national and international freight movement, according to
     industry officials. 

To address these problems in the short term, Chicago's MPO officials
are seeking funds to permit improved connections between intermodal
facilities and nearby highways that are part of the recently
designated National Highway System.  The MPO has not yet developed
intermodal freight projects with ISTEA funds with the exception of
one CMAQ project approved in 1995 to make improvements at a major
rail yard.\9 However, according to a MPO official, a call for
projects in February 1996 resulted 47 new project proposals.  In 1992
we reported that the intermodal freight traffic problems facing
Chicago may require a longer-term solution such as a multiuser
intermodal terminal located near or in the city that would permit
rail-to-rail connections, thus eliminating crosstown drayage.\10

  -- The Southern California Association of Governments, the Los
     Angeles regional MPO, faces what it termed a problem of
     "national significance." This region has the nation's largest
     concentration of intermodal freight container movements, with
     20,000 truck trips and 29 train trips per day from the port area
     to Los Angeles intermodal facilities (25 percent of all trade
     entering the United States by sea passes through the Los Angeles
     and Long Beach ports).  As a result, the region experiences
     traffic congestion that is linked to air quality problems and
     passenger and freight delays. 

The proposed intermodal solution to these problems is called the
"Alameda Corridor" project.  This project involves consolidating 90
miles of rail track owned by 3 different rail companies into one
18-mile rail corridor to transport intermodal freight from the Los
Angeles and Long Beach ports to distribution centers in Los Angeles. 
This is expected to ease traffic congestion by taking trucks off the
road and eliminating delays at rail crossings.  The project, expected
to be completed in 2001, is budgeted at $1.8 billion
(ISTEA-authorized "priority intermodal" funds:  $55.4 million). 
Shippers we met with supported the project, noting that these ports
are significant links with Pacific Rim nations as well as with
emerging Latin American markets.  They indicated that their companies
are experiencing 4 to 7 percent annual growth in shipping volume
through these ports. 

To meet the growth in shipping, planners at the Southern California
Association of Governments are already thinking beyond the Alameda
Corridor.  Specifically, they are examining options to consolidate
three rail freight lines operating between downtown Los Angeles
intermodal facilities, where the corridor will terminate, and the
eastern end of the Southern California Basin (the San Bernardino
area).  According to a 1995 MPO-commissioned report, this
consolidation is motivated by two broad public policy objectives:  to
(1) enhance the region's ability to manage the flow of international
trade goods and (2) reduce emissions resulting from idling vehicles
at railroad grade crossings.  However, from the perspective of the
rail and shipping companies whose operations would be influenced by
consolidation, these public policy objectives must be balanced
against the potential loss of control over shipping schedules. 


--------------------
\8 "Land bridge" service over U.S.  rail tracks is used for
Asian-manufactured goods shipped to West Coast ports and on to the
northeastern United States because shipments usually arrive on the
East Coast 6 days to 2 weeks faster than goods shipped directly to
the East Coast by water.  G.  Muller, Intermodal Freight
Transportation, 3rd ed.  (Lansdowne, VA:  Eno Transportation
Foundation, 1995),
p.  106. 

\9 This project was not included in the DOT projects previously
discussed because it fell outside the period covered by our analysis. 

\10 Intermodal Freight Transportation:  Combined Rail-Truck Service
Offers Public Benefits, but Challenges Remain (GAO/RCED-93-16, Dec. 
18, 1992). 


      REGIONAL INTERMODAL FREIGHT
      PLANNING EFFORTS
---------------------------------------------------------- Letter :4.2

In addition to the planning done by MPOs, public and private sector
officials are also identifying and addressing intermodal freight
movement issues that transcend state boundaries.  For instance, at a
roundtable discussion we had with 12 public and private officials at
the Port Authority of New York and New Jersey headquarters, an
official from the New Jersey DOT suggested that while ISTEA was good
at delegating authority to local planning officials, for some
transportation problems it might be better to view the nation as a
series of regions.  We identified several initiatives where states
are attempting to incorporate a regional perspective into the
planning process by identifying freight concerns that cross state
lines. 

  -- The recently formed Western Transportation Trade Network,
     comprised of 16 western states, is identifying high-priority
     freight (air, land, rail, and marine) corridors and intermodal
     facilities throughout the western United States based on input
     from officials from state DOTs, MPOs, and the private sector. 
     This information will be used to assess the performance of the
     region's freight corridors and intermodal facilities as well as
     coordinate a regional approach in addressing emerging intermodal
     freight needs. 

  -- The New England Transportation Initiative (NETI), made up of six
     northeastern states, has been cited by DOT as an example of how
     regional intermodal planning can function.  NETI's goals include
     improving the region's mobility of persons and goods and
     promoting its economic competitiveness. 


   IMPEDIMENTS TO IMPROVING
   INTERMODAL TRANSPORTATION
------------------------------------------------------------ Letter :5

In visits to several local and regional areas that handle a large
volume of freight, officials emphasized two impediments that hinder
intermodal freight transportation planning.  One concerns whether
public sector officials should have access to data on freight
movement that may be considered proprietary.  Another impediment
concerns differing planning horizons--the private sector's tend to be
more short term while the public sector's often require longer time
lines to initiate projects.  We also found examples of efforts to
bring together public and private officials to identify and address
specific problems concerning intermodal freight transportation.  Two
DOT publications\11 discuss other intermodal freight impediments not
discussed in this report.  These include operational problems at
intermodal facilities (compatibility among freight tracking systems);
regulatory and institutional barriers (the lack of standardized
transportation regulations); and financial constraints (inadequate
funding for intermodal improvements). 


--------------------
\11 Intermodal Freight Transportation (Washington, D.C.:  U.S. 
DOT/FHWA, Dec.  1995) and Landside Access to U.S.  Ports (Washington,
D.C.:  U.S.  DOT/MARAD, Jan.  1993). 


      ACCESS TO DATA THAT
      COMPANIES CONSIDER
      PROPRIETARY
---------------------------------------------------------- Letter :5.1

Some transportation companies may consider specific data on private
freight movement to be proprietary.  However, public planners can use
these data to identify heavily traveled highways or intersections in
order to mitigate intermodal freight bottlenecks.  A representative
from an ocean shipping company we met with in southern California
explained why he believes industry officials are sometimes reluctant
to disclose data.  He said that when public officials ask for
"everything" on a subject (such as port use by a particular shipper),
rather than specific information, company officials are unsure how
the information may be used.  He suggested that public sector
requests for such information should be more focused; this might
allay private sector doubts about how it would be used. 

In some cases, public sector officials compile data on intermodal
freight activity from a combination of inputs.  For example, in
Chicago, the MPO developed figures on transfers at key intermodal
yards through various means, including traffic counts, direct
observations, and informal interviews with workers and gate guards to
present information to company executives for verification.  This
information was used to understand how intermodal freight shipments
can affect local traffic patterns. 


      DIFFERING PLANNING HORIZONS
---------------------------------------------------------- Letter :5.2

A second impediment to improving intermodal freight transportation
concerns differing public and private sector planning horizons. 
According to several MPO officials, their planning horizon extends
over longer-term periods, such as 25 years.  Such a planning time
frame is necessary to conduct impact studies or obtain funding. 
Private officials we met with in visits to California, New York, and
Texas, on the other hand, spoke of the difficulty of thinking long
term when short-term needs are pressing.  The freight industry is
also subject to fluctuations in demand for its services because of
economic conditions.  Likewise, ongoing business mergers sometimes
make it difficult for private officials to predict their company's
infrastructure needs in 15 to 20 years because they are unsure
whether their company will be active at that time in a particular
market. 

An example that highlights the problem involves Chicago.  There, MPO
officials commented that when a major shipping company relocated from
the downtown area to a nearby suburb where rail service would be more
convenient, they were concerned about how the move would potentially
influence regional traffic patterns.  In light of the volume of goods
that is expected to move through the company's new facility and its
likely impact on future traffic patterns, the MPO's longer-term
planning task was affected.  In this case, the shipping company's
move was prompted by its current business situation, while MPO
officials had to plan for how the company's move would influence the
region's long-term intermodal freight needs. 


      EFFORTS TO USE
      PUBLIC-PRIVATE PARTNERSHIPS
      TO HELP OVERCOME IMPEDIMENTS
---------------------------------------------------------- Letter :5.3

Because intermodal facilities are a nexus where public and private
interests intersect, bringing these groups together to plan or
cooperate on a project that neither could complete independently has
helped achieve intermodal goals.  In visits to four areas that handle
large volumes of freight, we found several examples of such efforts: 

  -- The Alliance Facility, located north of Fort Worth, Texas, is a
     7,500-acre intermodal transportation complex that began as a
     partnership of city, state, and federal governments; private
     businesses; and individuals (total federal investment:  $55
     million).  Key to this effort was federal funding for
     construction of a 9,600 by 150-foot runway that serves
     industrial, business, and general aviation users (private
     airliners) rather than commercial airliners.  The Alliance
     complex also has an intermodal rail terminal that the Santa Fe
     railroad built.  This rail facility can perform an estimated
     300,000 rail-to-truck transfers per year.  New highway
     interchanges and access routes serving the facility and
     intermodal terminal have been built and were financed by Texas
     DOT and private investors.  The Alliance complex opened in 1989,
     prior to the enactment of ISTEA.  According to a representative
     of Alliance Air Services, the complex has experienced increased
     industrial development since 1994.  Additional business is
     expected in 1997 when a major shipping company is scheduled to
     open a southwestern hub at Alliance. 

  -- The Chicago Area Transportation Study's Intermodal Advisory Task
     Force convenes regular meetings between public and private
     officials where major issues are discussed.  One tool used to
     help focus members' attention on bottlenecks in intermodal
     transportation is a computer-based geographic information system
     designed to highlight intermodal freight problems and then help
     the members establish priorities for repairing them. 

  -- The National Freight Partnership, coordinated by DOT, consists
     of public and private representatives who work at the national
     level to identify major bottlenecks in the nation's
     transportation system.  The Partnership provides a forum for
     private sector officials concerned with freight movements to
     apply their expertise to national problems and establish a
     dialogue with public sector leaders. 

  -- American Trucking Associations representatives we met with told
     us about the recently formed Freight Stakeholders National
     Network.  The Network is made up of eight national associations
     that represent the freight transportation modes and
     manufacturers.\12 Through this effort, they hope to identify and
     build support for transportation improvements, provide policy
     support and technical resources to make local freight coalitions
     with MPOs successful, and promote best practices for
     dissemination to other cities. 


--------------------
\12 The eight members of the Freight Stakeholders National Network
are the Air Freight Association, the American Association of Port
Authorities, the American Trucking Associations, the Association of
American Railroads, the Intermodal Association of North America, the
National Association of Manufacturers, the National Industrial
Transportation League, and the National Private Truck Council. 


   RECOMMENDATION
------------------------------------------------------------ Letter :6

We recommend that the Secretary of Transportation (1) establish a
definition of freight intermodal projects and (2) ensure that the
data base on intermodal investments required by title V of ISTEA be
developed and maintained in accordance with the statute. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :7

In commenting orally on a draft of this report, DOT officials
indicated that they (1) have collected some basic information on
where and how goods were shipped in the United States, (2) have
efforts underway to collect information on long distance passenger
travel by all modes, and (3) are currently developing information on
roads that link intermodal facilities and the National Highway
System.  DOT officials acknowledged that the investment data they are
collecting do not meet the requirements established by ISTEA,
emphasizing the difficulty inherent in collecting information on
private investment in intermodal facilities that is part of the ISTEA
requirement.  We believe a reasonable approach toward meeting the
ISTEA requirement would be to first establish a definition of
intermodal freight projects and develop the data base on public
investment, and then incorporate data on private investment that is
already available or could be readily ascertained. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8

To obtain information for this report, we (1) reviewed ISTEA and its
legislative history; (2) interviewed DOT headquarters and regional
officials; (3) interviewed state, local, and private sector
officials; (4) interviewed representatives of major transportation
organizations; (5) reviewed DOT data from fiscal years 1992 to 1995
showing the funding status of ISTEA-authorized priority intermodal
projects; and (6) reviewed volumes of DOT data highlighting projects
funded with the two categories of ISTEA money that DOT officials
believed states would most likely use to fund intermodal freight
projects.  We identified projects based on the use of the word
"intermodal" in project descriptions.  We did not independently
verify DOT data, but we confirmed that these were intermodal freight
projects by interviewing DOT officials at headquarters and in
selected DOT regions.  Our findings may not be comprehensive because
of limitations in DOT data. 

We visited four states--California, Illinois, New York, and
Texas--that transportation officials and reports identified as having
local and regional areas that handle large volumes of intermodal
freight and as having considered projects to address such problems. 
Our site visits included interviews with state and local government
transportation officials and meetings with private officials to
discuss their perspectives on intermodal transportation.  In
addition, in each state we visited intermodal rail, truck, or port
facilities to see firsthand intermodal problems, bottlenecks, and
areas targeted for specific projects to address these problems. 
However, in these visits we did not evaluate existing or potential
intermodal freight projects.  To obtain additional information on
local planning efforts, we analyzed data from the National
Association of Regional Councils' 1993 national MPO survey.  We also
reviewed state transportation plans and other materials relevant to
intermodal freight transportation planning and attended professional
meetings where intermodal freight issues were discussed. 

Our state visits were complemented by interviews in Washington, D.C.,
with a range of individuals at DOT, including officials from the
following offices:  DOT's Office of Intermodalism, the Federal
Highway Administration (FHWA), the Maritime Administration (MARAD),
and the Federal Rail Administration.  We also interviewed officials
representing the Transportation Research Board, the Intermodal
Association of North America, the American Trucking Associations, and
the American Association of State Highway and Transportation
Officials.  Moreover, we met with several private sector
transportation consultants.  In addition, we reviewed recent
literature on intermodal transportation. 

We conducted our review from February 1995 to February 1996 in
accordance with generally accepted government auditing standards. 

More detailed information on how states used ISTEA funds for
intermodal freight transportation is presented in appendix I. 
Information on trends that influence intermodal transportation is
presented in appendix II. 


---------------------------------------------------------- Letter :8.1

As arranged with your office, unless you publicly announce its
contents earlier, we plan no distribution of this report until 14
days after the date of this letter.  We will then send copies of this
report to the Secretary of Transportation as well as other interested
parties.  Copies will also be made available to others on request. 


Please contact me at (202) 512-8984 if you or your staff have any
questions concerning this report.  Major contributors to this report
are listed in appendix III. 

JayEtta Z.  Hecker, Associate Director
International Relations and Trade Issues


INTERMODAL SURFACE TRANSPORTATION
EFFICIENCY ACT FUNDS USED FOR
INTERMODAL FREIGHT TRANSPORTATION
=========================================================== Appendix I

Based on our review of Department of Transportation (DOT) data and
interviews with public and private sector officials, we attempted to
identify intermodal freight projects financed with the Intermodal
Surface Transportation Efficiency Act (ISTEA) funds not specifically
targeted for priority projects (see table I.1). 


   STATUS OF PROJECTS FUNDED UNDER
   ISTEA
--------------------------------------------------------- Appendix I:1

The 23 projects in 10 states represented a range of improvements to
facilitate intermodal freight transportation.  Some projects were
funded with as little as $40,000, others with as much as $11 million. 
For instance, state officials in New York used $6 million in ISTEA
funds to purchase a barge and to improve operations between the Red
Hook container barge terminal in Brooklyn, New York, and Port
Elizabeth, New Jersey.  These projects were expected to enhance the
competitiveness of the bistate port facilities as well as eliminate
an estimated 54,000 truck trips from the major regional highways of
New York and New Jersey annually, thus reducing traffic congestion
and improving air quality. 



                               Table I.1
                
                     Summary of Intermodal Freight
                Transportation Projects Funded With Two
                 ISTEA Financing Funds, as of September
                                30, 1995

                         (Dollars in millions)

                                                     ISTEA
                                                     funds       Total
                                         Total   obligated       ISTEA
                         Number of  intermodal          to       funds
                        intermodal     project  intermodal   allocated
State                     projects       costs    projects    to state
----------------------  ----------  ----------  ----------  ==========
California                       2        $0.5        $0.3      $6,408
Florida                          1         0.6         0.5       2,869
Maine                            3         2.7         2.0         339
New Hampshire                    2         1.1         0.9         326
New Mexico                       2         4.5         3.7         721
New York                         5        12.0         9.6       3,537
Ohio                             2        50.2        16.3       2,525
Tennessee                        2         0.2         0.2       1,418
Texas                            2         0.5         0.4       4,477
Washington                       2         2.0         1.7       1,311
======================================================================
Total                           23       $74.3      $35.6\     $23,931
----------------------------------------------------------------------
Note:  The two types of ISTEA funds were (1) Congestion Mitigation
and Air Quality and (2) Surface Transportation Program. 

Source:  GAO summary of data provided by DOT's Office of Information
Management and Systems Control. 


   STATUS OF PRIORITY INTERMODAL
   PROJECTS AUTHORIZED IN ISTEA
   LEGISLATION
--------------------------------------------------------- Appendix I:2

Section 1108 of ISTEA authorized funds to various states for
"priority intermodal projects," commonly referred to as
"demonstration" projects.\1 For projects specifically related to
improving intermodal freight transportation, ISTEA authorized $191.8
million for 20 projects in 9 states.  The projects include a variety
of improvements to interchanges and other roads in locations such as
the Alameda Corridor in southern California and improvements to
airport access in such cities as Detroit, Michigan; Pittsburgh,
Pennsylvania; and Jackson, Mississippi.  According to a DOT official,
the priority projects are in various stages of development.  The
official told us that ISTEA authorized only enough money to start the
projects and that it is the responsibility of each state to obtain
funding to complete the projects.  While some states have provided
financing for these projects, others have not. 

Table I.2 contains a breakout of the total number of priority
intermodal freight projects in each state, the total contract
authority for the projects, and the amount of funds obligated, as of
December 31, 1995. 



                               Table I.2
                
                  Status of ISTEA-Designated Priority
                Intermodal Projects, as of December 31,
                                  1995

                         (Dollars in millions)

                               Number of
                                priority    Total funds      Obligated
State                           projects     authorized          funds
-------------------------  -------------  -------------  -------------
California                           8\a          $82.7          $31.0
Florida                                1            6.9            0.3
Michigan                               2           37.2            7.8
Mississippi                            1            3.0            0.6
New York                               1           15.3            3.0
Oklahoma                               1            2.4            2.5
Oregon                                 1            2.1            0.5
Pennsylvania                           4           41.2           22.7
Utah                                   1            1.0              0
======================================================================
Total                                 20         $191.8          $68.4
----------------------------------------------------------------------
\a Of the total projects authorized in California, five were
associated with improvements related to the Alameda Corridor.  These
five projects were authorized $55.4 million, of which $18.5 million
was obligated as of December 31, 1995. 

Source:  GAO summary of data provided by DOT's Office of Information
Management and Systems Control, as of December 31, 1995. 


--------------------
\1 "Priority intermodal projects" represent a broad subgroup of
demonstration projects included in ISTEA legislation.  By way of
reference, ISTEA contained over 500 specifically named demonstration
projects. 


INTERMODAL FREIGHT TRANSPORTATION
TRENDS
========================================================== Appendix II

Several factors have transformed the nation's intermodal freight
transportation industry over the past 20 years; these factors are
expected to influence it in the future.  Among them are (1) the need
to reduce costs and streamline production using improved inventory
management, (2) the partial deregulation of the U.S.  rail and
trucking industries, and (3) the use of computer-based technologies. 

Demands will continue to be placed on the nation's transportation
system for efficient freight movement so that companies can compete
in the global marketplace.  For instance, the time it takes
warehouses to fill orders is expected to decrease by 15 to 20 percent
during the next 5 years, and transit times are expected to be reduced
between 5 and 10 percent.  Moreover, inventory turnover is expected
to increase by about 10 percent, and the percent of products shipped
"just in time" is expected to grow from 28 to 39 percent.\1 According
to the Intermodal Association of North America and the National
Industrial Transportation League, the estimated intermodal market
share of trailerload shipments moving 500 miles or more increased
from 10 percent in 1991 to 18 percent in 1994 and is projected to
rise to 25 percent by 1997.\2

Overall, however, trucking is currently the most frequently used
freight transportation mode because trucks provide convenient pickup
and delivery of shipments. 

Partial deregulation of the transportation industry in 1980 has also
influenced the intermodal freight industry.\3 One outcome of
deregulation that continues to influence the freight industry is
strategic alliances among carriers that have been made to capitalize
on each mode's strength.  For example, truckload carriers provide
door-to-door access to businesses, while rail carriers--particularly
double-stacked intermodal containers--provide low-cost, long-distance
service.  A 1995 study discussed what these transport alliances
portend for intermodal shipping, taking into consideration the
business environment that stresses flexibility in suppliers and
product lines, more frequent shipments of goods in smaller lot sizes,
and a more diverse mixture of commodities in each shipment.  The
study concluded that the use of intermodal containers will expand for
both domestic and international shipments.\4

Apart from noting consolidation among domestic companies, shipping
officials we interviewed in southern California mentioned ongoing
mergers among the world's major ocean carriers.  As consolidation
continues, companies are seeking greater economies of scale by
purchasing ships capable of carrying larger loads.  While current
ships carry 3,000 to 4,000 20-foot equivalent container units (TEU),
shippers said that 5,000 TEU vessels are on order.  The implication
is that port gate structures will have to be improved in order to
accommodate the larger vessels.  Further, the loads these larger
ships will carry will place increased demands on the infrastructure
surrounding ports because of the pressure to unload ships quickly and
move cargo to its destination. 

Technological innovations linked to computers and satellites have
also influenced how intermodal freight shipments are handled.  These
innovations include bar coding that allows shipments to be verified
and tracked, electronic data interchange that permits on-line
transmission of business data and documents, and in-vehicle
navigation systems that identify the most direct routes to avoid
congestion and delays. 

Improved intermodal freight transportation can result in economic
benefits such as lower transportation costs.  This, in turn, can
enhance the productivity and competitiveness of U.S.  businesses. 
According to transportation planners, other benefits from
intermodalism include improved air quality and environmental
conditions through reductions in energy consumption and traffic
congestion.  Other benefits might include increased employment from
jobs associated with constructing intermodal facilities and greater
employment at intermodal facilities themselves. 


--------------------
\1 See Intermodal Freight Transportation (Washington, D.C.: 
DOT/Federal Highway Administration, 1995), p.  1-8. 

\2 Intermodal freight shipments become more economical at 500 miles;
shipments beyond that distance often mean that rail transport is an
option, with goods being placed on trucks for final delivery.  For
distances under 500 miles, trucks usually carry the freight, although
this may depend on the type and value of goods being shipped. 

\3 More detailed information is provided in our report Railroad
Competitiveness:  Federal Laws and Policies Affect Railroad
Competitiveness (GAO/RCED-92-16, Nov.  5, 1991). 

\4 U.S.  - Mexico Trade and Transportation:  Corridors, Logistics
Practices, and Multimodal Partnerships LBJ School of Public Affairs,
University of Texas at Austin (Austin, TX:  1995), p.  45. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Susan S.  Westin
Phillip R.  Herr
Becky K.  Kennedy
Rona Mendelsohn

OFFICE OF THE GENERAL COUNSEL

Richard Burkard

*** End of document. ***