Thoughts on Transportation BCA Linking Water and Roads
Bruce Lambert
Good morning…
Why examine linkages across modes?




More State DOT’s have a navigation role
All states have other waterway resource considerations
General concerns over future of transportation activities
and infrastructure demands
Will a national dialogue on all public investment in
infrastructure emerge?
How Can One Look At Freight?







Inventory Functions – physical characteristics, numbers of
facilities, labor, equipment
Engineering – structural integrity, deterioration
Operational Reliability – delay, closures
Economical and Financial – Cost/Benefit Analysis, capital
and financial resources
Traffic volumes and flows
Safety and Security
Sharing resources with non-freight users and goals
Does Modes/Markets Matter?
(Southeastern Average, 2007 tonnage)
100%
80%
Other
Pipeline
Multiple modes & mail
Air (include truck-air)
Water
Rail
Truck
60%
40%
20%
0%
Within
From
To
Share of State Exports through a Port, 2011
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Share of State GDP Exported through a
Port, 2011
25%
20%
15%
10%
5%
0%
“Hinterlands Matter”
How is Navigation a Part of Freight System?





Balance with existing international/ coastal flows
Emissions and Environmental accountability
Determine ways to encourage private sector investment
in equipment, services
Recognize regulatory obstacles
Federal and State Multiagency planning, data, analysis
Maritime Needs
U.S. Public Port Projected Capital Expenditures by
Expenditure Category for 2007-2011 (AAPA and Marad)
Security
3%
Dredging
10%
Off-Terminal
3%
General Cargo
14%
On-Terminal
7%
Specialized General Cargo
30%
Other
23%
Passanger
6%
Dry Bulk
Luquid Bulk 1%
3%
Projected National Truck Flow Changes
with Collapse of Bridge at Webbers Falls.
s
We all recognize…



Need better data and analytical tools
Need more guidance/support on non-traditional analysis
Need to help others see the big picture
Summary
Need to consider Maritime System
as part of a national system
Maritime assets support commerce
and exports
What Does the Corps Do?
Federal Role in U.S. Waterway
Transport




1824 – authority to clear snags and make
improvements
Canal building era to mid-1800s (states)
Post Civil War – suction dredging, jetties
1885: 1st of 46 locks and dams on Ohio

1930s: Present system of locks constructed on
Upper Miss, Illinois, Tennessee, other waterways

1950s: Construction starts on present-day
higher lift locks on Ohio

1960s-70s: Navigation improvements to
Columbia-Snake, Arkansas River

1985: Tenn-Tom Waterway completed

1994 – Present: Upper Mississippi River & Illinois
Waterway Navigation Study
National Development
Context
1824 – 1936: Nation Building
Era of primarily Single
Purpose Navigation Projects
1936 – 1986: Era of Economic
Efficiency focusing on
Multi-Purpose Projects
1969 – 1986: Era of Environmental
Enlightenment, focusing on
Multi-Objective Planning
1986 – Present: Beneficiary Pays
Era, evolving towards Integrated
Water Resources Management
U.S. Army Corps of Engineers Activities –
Water Resource Missions

Primary





Allied Purposes





Navigation
Flood Control & Shore Protection
Ecosystem Restoration
Disaster Response & Recovery
Hydropower
Environmental Stewardship
Water Supply
Recreation
Regulatory Programs
Maritime Infrastructure Conditions and
Concerns






25,000 miles of waterway and harbor channels handle 2.4
billion tons of cargo vital to economy
Half of locks exceed 50-year design life and lock
maintenance downtime has doubled
Maintenance backlog continues to increase
Single year appropriations
Harbor improvements are needed to handle new larger
vessels
Lock Construction Projects underway continue to be
delayed by funding shortfalls
Role of Dredging in U.S.

40,000 km of Waterways


400 Major Ports -130 of
150 Largest Cities
Dredged Material
Placement


Inland waters and Confined
Disposal Facilities 110 -180
M m3
Ocean waters - 50 M m3

Types of Dredging



CAPITAL DREDGING
MAINTENANCE
DREDGING
CLEAN UP DREDGING
Six Step Planning Process for Dredging
(Construction)

Step 1





Congressional Authorization
Corps Headquarters and Congress
Step 6

Report Review and Approval
Corps District, other Federal Agencies
Step 5

Study Problem and Report Preparation
local community, Corps and Congressional request for
Reconnaissance report
Step 4

Requires for Federal Action
local community with Corps
Step 3


local community
Step 2

Problem Perception
Project Implementation
President, Corps HQ and Congress, Local sponsor, WRDA
Dredging Program in U.S. Navigation
Channels


When a project completed, federal interest remains into
future
How financed? Cost sharing is critical

Prior to 1986:



Federal dredging was funded from general revenues
No Cost Sharing
After 1986

Local sponsors to partially fund some of the project


a sign of commitment
spread federal dollars across multiple projects.
Summary
Corps has long work history in maritime
Clear planning and policy guidance
Navigation is one, but largest, focus
How does the Corps
plan for navigation
projects?
Challenges – Deep Sea Navigation and
Inland Waterways

All navigable waters in U.S. are responsibility of U.S.
Government




Once a navigation project is deemed to be a federal
responsibility, that responsibility remains with the federal
government in perpetuity
Excludes private terminals or channels
Increased demands for deeper and/or wider channels
Dredge management and disposal options



25,000 Miles of Waterways
400 Major Ports
$900M Annual Dredging Program
Capital Improvements
Cost Justification Required For Projects

Benefit-Cost Analysis



Life Cycle Analysis



Without Project costs and benefits
With Project costs and benefits
50 years into the future
Implies forecasting
Risk and Uncertainty
Figure 2.7.4 - Flow Chart of Deep Draft Navigation Benefit Evaluation Procedures
Source: Principles and Guidelines
What is a Navigation Project?

Channel Cut Schematic
UTW
UTE
MTW
MTE
LTW
LTE
Cut-D
PS
Cut-C
AR
Cut-B
Cut-A

MC
Multiuse project evaluation becoming more common
Transportation Benefits
Reductions In Transportation Costs

Origin to Destination



Waterborne Transport
Landside Transport
Other ?

Cargo Handling, Port or Terminal Throughput, etc.

Examples for Reduction in Transportation Costs for
Waterborne Transport or Vessel Operations:






Increased Waterway Depth
Increased Loading for a Given Vessel
Increased Vessel Size
Reduction Delay for Tidal Windows
Combination Thereof
Lower unit costs for transportation or delivery…..
Basic Transportation Benefit - Cost
Analysis; General Data Requirements



Vessel or Fleet Physical Characteristics
Vessel Cargo Traffic & Transit Information
Waterway System Physical Specifications & Costs
Data Requirements - Vessel or Fleet
Physical Characteristics





a.) Vessel Type and Mode of Service (Bulk Carrier; Tanker,
etc..)
b.) Deadweight (DWT)\GRT\NRT Class
c.) Dimensions (LOA, LBP, Breadth, Max. SLLD, Speed,
etc.)
d.) Relative Capacities (Volumetric vs. Weight, Immersion
etc.)
e.) Parameters for Management & Operation (Costs,
Logistics & scheduling, Underkeel Clearance, etc.)
Data Requirements - Vessel Cargo & Transit
Information
a.) Type & Mode of Cargo Transport
b.) Port & Facility\Terminal(s) Served
c.) Vessel Cargo Onload\Discharge (Tonnage, TEUs, etc.)
d.) Origin-Destination\Itinerary, Waterborne Transit
Distances & Time at Sea or In-Transit; Time In-Port
e.) Parameters for Management & Operation (Costs,
Logistics & Scheduling, Underkeel Clearance, etc.)
Data File Development for U.S. Naval
Vessels

Vessel Draft Clearance Requirements
Physical Stationing
General Operating Characteristics (?)

In cooperation with






U.S. NSWC Command
U.S. NAVSEA Carderoc
U.S. NAFAC
U.S. Naval Academy (USNA)
Data Requirements - Waterway System
Specifications & Costs

Estimated Costs of O&M Over Time


Periodic vs. Average Annual Equivalent (AAEQ)
Incrementally Evaluated According to


Navigation Feature, Reach or Channel Segment,
Depth (horizontal and vertical dimensions of plan formulation)
Deep-Draft Work Initiatives Under
Navigation Analysis (OTN & NETS)





Vessel Load Factor Analysis\Variable Immersion
Vessel Powering Analysis (Speed and Hydraulic
Confinement)
Container\Carriage Cost Analysis
Automated Worldwide Distance Tables
Vessel Fleet & Characteristic Forecasts over
corresponding time periods
One Framework for Waterborne Navigation
O&M Assessment
Vessel Characteristic Data
Sources
Lloyd’s Register & Clarkson’s Register
U.S. Coast Guard & U.S. MARAD
USACE NDC
Vessel Owner-Operators
Vessel Transit Cargo Data
Sources
USACE NDC
U.S. Customs & Bureau of Census
Lloyd’s Sea Searcher & Sea Web
Trade-Published Shipcards\Schedules
Vessel Owner-Operators
Port\Terminal Operators
Water System Specifications &
Costs
USACE – HQUSACE & Districts
U.S Coast Guard (ATON)
Waterway Users & Non-Federal Sponsors
Vessel Fleet
Physical
Characteristics
Vessel & Cargo
Transit
Information
Waterway
System
Specifications &
Costs
Transportation Cost
Differentials
Vessel Operational
Characteristics by Port; Relative
to Cargo Service and Itinerary
Served; Subject to (Varying)
Waterway Specifications or
Limitations (Depths, etc.)
Comparison
of Benefits to
Costs
(B\C ratios;
Incrementalized)
Deep Draft Navigation Analysis – NED Steps
in With Statements





Cost reduction benefits – same commodities, mode, O/D
efficiencies.
Shift of mode benefits for commodities and O/D
Shift in O/D benefits from new O/D or transportation
flows
New movement benefits - additional movements in a
commodity or there are new commodities
Induced movement benefits – new flows from lower
costs
Which would you choose?
constrained calls (thousands)
Constrained Containership Calls by Coastal Region with
and without Planned Corps Projects: Year 2000 and 2020
20
Year 2000
Year 2020 with
planned projects
16
Year 2020 without
planned projects
12
8
4
0
Atlantic Coast
Pacific Coast
Gulf Coast
Source: National Dredging Needs Study, USACE
Great Lakes
Asset Management
Asset Management Process at USACE



Districts determine projects based on HQ criteria, mostly
Remaining Benefit/Cost Ratios
Information supplied to HQ and sorted into various
groups based on B/C and other factors
Determinations based on actual budgets for upcoming
year
Asset Management Initiative
CORPS OWNS IT
“Short list”
1000 Coastal Structures
600 Dams
2500 Recreational Areas
250 Locks
75 Hydropower
285000 Tracts of land
12000 Buildings
7 Laboratories
VALUE: $200 BILLION+
CORPS MANAGES IT
Lifecycle Infrastructure
Management:
Campaign Goal 3c- The
Right Business Practices
Executive order 13327Right-sizing inventory
It's the RIGHT thing to do!
Project Economic Analysis

General Context of Economic Benefits vs. Economic
Costs


Costs  Relative to Requirements for:



Life-Cycle Evaluation
Initial Placement or Construction
Operations & Maintenance
Benefits  Reductions in Transportation Costs

(Transportation\Cargo Handling Efficiencies)
Life-Cycle Evaluation – Current Corps
Guidance on Navigation Projects



Typical Requirements for Study & Analysis of New or
Proposed Improvements
50 Years into the Future (Involves Forecasting or
Extrapolation of Trends)
Constant Price Levels Relative to a Designated Base Year
or Period (i.e., Future Valuations Discounted)
The Corps is Examining Performance
Measures for O&M Budgeting



Previous work on engineering based measures developed
and initially deployed
Developing new measures use and economic measures to
balance issues of scale, geography, and use
Seeking comparability with other USACE business lines:




Flood Damage Reduction
Hydropower
Environmental Stewardship (Natural Resources)
Recreation
Does it Matter? Navigation Delays Result in
Costs to Great Lakes Region
Asset Management Needs to be Formulated
Based on Direct Questions

Can USACE develop a practical & consistent method of
answering longstanding question(s) from the Office of
Management & Budget (OMB):


If USACE were given some specified level of marginal or extra funding could
the agency determine which projects would be most appropriate for funding
to maximize marginal benefits……….(or alternatively, if the agency were to
undergo a reduction in funding could it determine where to impose
corresponding reductions in funding to minimize negative impact or “loss” of
benefits)……….
Could USACE determine what level of maintenance for each project across
the navigation program would be applicable to maximize total benefits
program-wide………
What are the Key Accountability Elements?
Assuming request from OMB is feasible:
 Could supporting methods or systems be developed that are:




Analytically Credible
Cost Effective & Expeditious (to both develop & maintain)
Quantitatively Transparent & Consistent Across Program at the National
Level
Reasonably Comparable to Efforts Conducted by Skilled Analysts in the Field
and;
 Could methods of optimization be ultimately applied to


Initial Placement or Construction
Operations & Maintenance (O&M)
Highway Asset Management


Focus – strategic assessment of economic tradeoffs
between alternative infrastructure investments
Recognizing:





Increased demand on system
“Mature” network of roads and bridges
Increased competition for funding and support
Non-traditional players in decision process
More focus on maintenance and meeting user expectations
Evolution in Highway Asset
Management

Began with engineering criteria




Structures were gauged on risk of structural “failure” or
condition
Decision makers were not financially constrained to make
tough “economic” trade-off analysis
In 60’s/70s, began linking economic concepts to
“optimize” roadway investment
Most Asset Management models developed from legacy
systems
Limitations on Applying HERS type
methodology









Induced Demand in the original design, but no post plan
review
Background traffic concept different
Stronger seasonality changing peak/off peak design
considerations
Waterway studies are justified on travel savings
Network effects stronger
No functional class structure in U.S. databases
Waterways more prone to discrete changes
No national forecasts of water activities
Differences of links (highways) vs. Nodes (waterways)
A Quick Comparison
Corps







Study is requested
Network effects are more important
Corps does not routinely study
regional issues
Planning has more project elements
than in traditional highway studies
Robust Data and Models to capture
universe, share among Corps
divisions/districts
With a focus on engineering
economics, maintain project level
information
Limited by Federal Guidance (P&G)
DOT’s




Statewide plan is done to
identify needs, not in
response to study
Less network effects
Projects are planned and
programmed in separate
processes
Little data sharing across
regions
Summary
Corps does not routinely study regional
issues but rivers or ports
Will do single project evaluation for new
projects, but broader studies for O&M
Can share Data and Models
How do we think
about freight while
inside the box?
Some Cross or Corridor Modal
Studies Externalities Are Discussed





Black Warrior Tenn-Tom Waterway System
Minnesota Bridge Collapse
Business Realignment Estimates - FHWA
(NCHRP) Report 586: Rail Freight Solutions to Roadway
Congestion
Lock and Dam Closures



Chickamauga Locks
Emsworth, Dashields, and Montgomery
Marine Highway Program
Potential Marine Highway Services
M-5
(AK)
M-5
M-90
M-84
M-90
M-87
M-90
M-580
M-95
M-55
M-70
M-70
M-64
M-40
M-5
M-65
M-49
M-55
M-95
LEGEND
M-10
MH Corridor
MH Connector
MH Crossing
M-A1
M-2
U.S. Interstate
M-5 (AK)
Challenges Facing Domestic Waterway
Development





No clear political voice - ownership
“Invisible part” of system
Maintenance not properly developed or conducted
Geography of decision maker differs
Tie to economic growth not understood
Challenges Facing Port
Development





Ports are land development agencies
City-Port challenges
More considerations for navigation planning
Balancing system operations
Financing challenges
Can we rely upon old approaches to answer
new questions?…
How do we move from data into analysis
while providing useful information?
Multiport and Multimodal Analysis Must
Understand and Account For:




The relationship between Ports
The relationship of hinterlands to Port Activities
The tradeoff between modes that service Port regions
Challenge?



Corps Navigation programs becoming increasingly intermodal
or have intermodal implications
Infrastructure related to freight mobility and economic
recognized in current policy discussions (SAEFTEA)
Corps has little data on other modes or corridor traffic.
Some Considerations in Developing a
Multiport Model






What metrics are consistent with other measures used
elsewhere?
Can we provide a balanced, accurate picture?
Can data be collected consistently over time?
Will the selection of performance measures affect the
outcome?
What combinations of inputs are important to decision
making?
Can the report be well understood, explainable and
defensible?
Implementation Challenges?










Projects have multiple uses
No framework to determine and track user expectations
Competing and changing commercial interests
Determining or guaranteeing a minimum standards
Planning and defining current and future needs
Data integration – GIS and data warehousing
Can process transparency be developed?
Education
No long term strategic view of transportation needs
Public-Private Partnerships?
Every agency operates under specific
guidance

FHWA – DOT: Map-21



Section 1117 and Section 1118
Corps: WRDA, P&G
States: Federal and State law
Corps Economic Analysis Criticized



Too Rigid, not flexible to account for other project
elements
National and no local effects
Hard to compare projects on a BC ratio as study
objectives, and staff skill, can influence results
Some thoughts to broadly improve
Transportation BC Approaches





A clear federal standard for qualified benefits that focuses exclusively on all
efficiency gains, including externalities, and which carefully excludes
economic outcomes that simply reflect transfers of economic well-being;
A set of analytical methods that are not restricted to transportation
activities, but which capture the whole of the supply chain benefits and costs
that are attributable to transportation infrastructure improvements;
The development of analytical techniques that clearly recognize that capacity
deficiencies can actually choke off activity by causing system patrons to
abandon planned trips or shipments they would, otherwise undertake;
The reconciliation of long-standing differences in the determination of
planning horizons, discount rates, and other financial parameters; and
A steadfast commitment to the development and ongoing support of the
data resources needed to engage in defensible project evaluations.
Summary
Need to consider as part
of a national system
Maritime Assets Support
commerce and exports
Everyone is surrounded by reports,
studies, consultants, models, but…
We Want People To Make
Better Decisions
Problem Statement



Can we effectively make statements on broad benefits
and externalities related to multimodal projects?
Do we have the right tools (data, model, etc.) to develop
these tools?
Does the right guidance exist to allow for these benefits
to be considered?
Example - Investment In Corridor A-C
project
B
C
A
b
Choice - Mode, Route, Operational Patterns, Risk,
System Preservation, Pricing, Safety, Environment,
Security, National Defense, …
What Effects Are Considered?





Change in the Capacity and Economies or Scale of Services (larger
vessels, trucks, etc.)
Induced Service or Calls (new equipment enters service),
Social Political Effects – non monetary

Reduce emissions, environmental restoration, health risks and
exposure, risk management/ mitigation, etc.
Degree of Double
Counting

First Order Effects - Improved Operations (no change in
equipment or routing, but per movement costs decline
and\or reliability improves), Noise, Dust
Second Order Effects - Change in Routings (realignment
of services with existing equipment already in trade),
Third Order Effects –
Some Potential Effects of Inland River
Closures


Reliability - Closure Impact
Avoidance
Plant Closure/Idling






NETS (IWR-USACE)

Jobs/Earnings
Lost Output

Water Supply Disruption




Industrial/Hydropower
Municipal
Greenup 2003 Closure (52 days)$42 Million
Hannibal Locks 2005 Closure (5
days)-$5 Million
Lock 27 Closures


Road Closures
Recreational Losses
Environmental Losses



(August 2007)-$3.9 Million
(Oct 2005-Feb 2006)- $2.7 Million
McAlpine (August 2004)-$6.3
million
2008 Flooding in Upper Miss?
GLOBAL Insight – Upper Miss 90
Day Closure



$118.6 million for Waterway
freight
$482.8 million by rail
$1.50 billion by truck
Traditional B/C Ratio Formula


Shaped by demands to compare projects within a
given budget (mode) or geography
Differ by agency regarding what can be considered



Public Benefits and Costs
Externalities – treated and calculated
Forecasting and Scenario profiles




Project justification/review are coming under criticism
Certainty of answers often exceed analytical capacity
Network effects not included
No pre – post study analysis done on routine basis
Challenges

No analytical framework to do cross modal comparisons
with existing traffic models



No clear federal role regarding freight



Modal diversion
Stepwise facility increases, etc.
What are first principles?
Institutional and Legal Inflexibility
State and local role fragmented

Staffing, funding constraints, legislative directions
Some Research Ideas?







Are some externalities only negative, or can they be
viewed in a different context as positive, ie., can
rationalize second order benefits in a study?
What data, modeling gaps exists?
Do we need this approach or some other optimal
strategy for network improvements?
Do we want some framework for developing a systems
perspective for corridor investment?
What is the balance between local, regional, national
participation in project planning and operations?
Spatial markets and realignment in response to
transportation projects
Externalities related to non-monetary public goals (risks,
health, etc.)
U.S. is Largest Freight Transportation User
in World
100%
80%
60%
40%
20%
0%
Rail
Road
Waterway
US
ROW
Pipeline
Total
Summary
USACE and State DOTs look very much alike: political
pressures, constrained budgets, and project justification needs.
There is a rich analytical underpinning to Corps programs.
Federal, and not state, focus complicates guidance and
flexibility
More model and data integration will help, but will take time
Bruce Lambert
Executive Director
Institute for Trade and
Transportation Studies
540-455-9882
bruce@ittsresearch.org