FHWA Talking Freight Webinar

Climate Change Policy Implications on State and MPO

Freight Planning

September 15, 2010

J Michael Zachary, PE PPMParsons Brinckerhoff

Seattle, WA

Why Do Freight Carbon Emissions Matter?

80% reductions in GHG are needed – huge!19% of US transportation GHG is from freight trucksFreight GHG is rising much faster than other sourcesFreight will have to contribute to 80% GHG reduction targetsReducing freight GHG will be much harder than for utilities, LDVs and other sourcesThe supply chain wants to be part of the solution, not the problem

What is Transportation’s Share of U.S. GHG?

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How can Freight GHG be Reduced?

Improve freight engine efficiency (Federal rulemaking pending)Use low-carbon fuels for freight modes (many options)Improve logistics on existing infrastructure (more efficient distribution networks, fewer empty back-hauls, modal options, etc.)Improve infrastructure for more efficient freight (accommodate double-stack trains; eliminate freight and truck bottlenecks; add truck only lanes, etc.)

What Freight GHG Planning Work is Needed?

Understanding of the supply chain routing criteriaNew models to analyze freight GHG based on supply chainsNew models to analyze freight GHG impacts from infrastructure and policy improvementsBased on the above, a need for Federal freight strategy

Different Views of GHG Emission Producers

• Supply Chain (e.g. Shippers)• Transportation Modes (e.g. Carriers)• Regions (e.g. MPO’s, Ports and State DOT’s)• Global

From a Shipper’s (BCO) Perspective

What does a shipper look for in a supply chain?ReliabilityEfficiency of costsDensity and balanced cargo flowRedundancy and contingencySocial responsibility

Supply Chains

• Why Focus on Supply Chains?It is how economies and businesses work How decision making is influencedGlobal with multiple jurisdictions

Issues:Complex Life cycles of Production-Transportation-Consumption

GlobalDynamic sourcing and distribution

– Legislative• Cap & Trade• AQ Attainment

Supply Chain/Transportation Networks

Legislative/Planning

Issues

Transportation

Networks

Global Supply Chains

Supply Chains – Global, Integrated Systems

No such thing as acting locally– Apparel– Footwear– Toys– Electronics– Frozen fish fillets

Supply Chains – Dynamic Sourcing

US Apparel Import Value- Market Share

Supply Chains – Dynamic Distribution

The “Big Shipper” EffectHouston Share of US Imports from Northeast Asia Container Value

Changing Transportation Networks

Panama Canal Expansion 2014

Changing Transportation Networks

Heartland Corridor 2010

Factors Affecting Shipper’s Decision Criteria• Costs

• Transportation Costs• Total Delivered Costs (vs. Landed

Costs)• Sourcing and manufacturing• Inventory costs• Environmental costs

• ReliabilitySpeedOn time performanceSecurity and SafetyLane & asset capacity

DensityBalanced flowVolume

• Uniform applicability and enforcement of policies

Alternative Routing Shanghai to Dallas

5,700 Miles

16 Days

10,000 Miles

24 Days

1,800 Miles

4 Days

The MPO Perspective:Mega-Regions

Mega-Regions Freight Impacts

66% US International trade concentrated in mega-regions77 % of Domestic trade moved by truckMega-regions experience heavier freight traffic on highways

60% by Truck 4-5 % by rail 13 % of rail usage in non mega-region areas

Mega-region Impacts

Requires Freight Movement Policy for mega-regions & metropolitan areasInternational trade will increase in mega-regions by 2035

134% increase in export goods; 85% in Mega-regions124% increase in import goods by 124 percent, 76% in Mega-regions

No national policy or standards on GHG emissions (from a shippers perspective)

Port of LA/LB Truck Licensing program

Federal Climate Policies May Take Many Forms

Legislation Cap and trade bill Energy bill Transportation authorization

RegulationsEPA regulations under Clean Air Act Transportation planning regulationsNEPA regulations

GuidanceCEQ guidance on NEPA/climate changeUSDOT guidance on transportation planning and climate change roles and standards

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U.S. Cap and Trade Legislation

U.S. Cap-and-trade legislation would likely:stimulate energy efficiency by consumers and businessesstimulate investment in low-carbon technologiesreduce GHG emissionsraise energy pricesraise gas prices generate billions in annual revenue – which could be used for many different purposescreate “winners” and “losers” among states and among industries

U.S. Cap-and-trade legislation could:Generate revenue for transportation needs

Point source vs. supply chainKey to supply chain participants!!!

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Federal Climate Legislation: Status

House: Passed cap-and-trade bill in 2009Senate: Cap-and-trade bill stalled on the floor in 2009Senate: Kerry-Lieberman “discussion draft” bill released May 12, 2010 – then stalledAdministration: Strongly supports cap-and-trade legislation But cap-and-trade legislation is doubtful, due to economy and many complex issuesAction on energy bills is more likelyNothing matches EEU Policy

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Proposed Planning Requirements

Similar provisions are in many different bills:TARGETS AND STRATEGIES: States and large MPOs must develop GHG reduction targets and strategies, as part of transportation plansPROGRESS: States and large MPOs must “demonstrate progress in stabilizing and reducing” GHG emissionsMETHODOLOGIES: EPA must issue regulations on transportation GHG goals, standardized models, methodologies, and data collectionCERTIFICATION: US DOT shall not certify state or MPO plans that fail to “develop, submit or publish emission reduction targets and strategies”PERFORMANCE REQUIREMENTS: US DOT must establish requirements, including performance measures, “to ensure that transportation plans… sufficiently meet the requirements.., including achieving progress towards national transportation-related GHG emissions reduction goals.”

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Transportation Planning – Many Issues and Challenges

GHG planning impacted by both state and federal policiesState DOTs and MPOs will be affectedInventories of transportation GHG requiredGHG reduction targets requiredAbility to predict GHG for different plans and strategies will be neededClean Air Act planning issues will carry over into GHG planning

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Federal Policies & Legislation: Summary Points

Many bills on climate change and energy being considered

- Cap-and-trade legislation appears to be stalled

- Energy legislation is more likelyMany bills contain requirements for MPOs and states to set transportation GHG targetsFederal policies on climate change/transportation directly affect freightData collection and modeling neededFor individual projects, both GHG analysis and adaptation analysis will be needed to meet Federal NEPA(EIS) requirements

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State Climate Plans (33 States)

Focused on major sectors: Electricity, Buildings, Agriculture, Industry, TransportationBased on very ambitious GHG targetsConducted in limited time framesOften relied on “cookbook” analysisTransportation stakeholders often excluded or had limited roleTransportation strategies are highly “aspirational”Cost estimates are often weak or lacking altogetherSome plans have been “officially” adopted, others are just reports

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Asia Pacific Gateway Strategy

Canada’s National Strategy for Goods Movement tied to Asia“a framework for policies, investments and initiatives that seek to make Canada the most competitive exit and entry point in North America”Identical strategy for Europe-North American gateway

Bottom Line

Freight is significant driver in regional, state and national economyManufacture’s and shippers are changing their sourcing criterionSupply chains are dynamicGreening of the supply chain is paramountDirect economic and operational benefits to the shipper must be realizedScreaming need for national freight policy that addresses GHG emission standards

Thank You!!!

Mike Zacharyzachary@pbworld.com

206-382-8317