Planning for Urban Freight Movement

Talking Freight SeriesSusie LahsenePort of Portland

Trends Affecting Urban Freight

Globalization Transportation deregulation Business Practices

• Logistics/Supply chain mgmt• Warehouse/distribution development• Industry/carrier mergers

Urban development• Markets• Economic base • Urban land use• Transport planning/investment

Globalization

Markets around the globe-products moving longer distances with more frequency

Freight mobility pressure added to urban environment- the site of ports and transport connections to reach other markets

Federal Transportation Deregulation

Aviation Deregulation of 1978 Motor Carrier Act of 1980 Staggers Rail Act of 1980 Ocean Shipping Act of 1984 Ocean Shipping Reform Act of 1998

Trade As A Percentage of GDP

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

9,000.0

10,000.0

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

GD

P i

n B

illi

on

s (1

996

Do

llar

s)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Per

cen

t o

f G

DP

U.S. Trade Increasing U.S. Trade Increasing

Source: U.S. Department of Commerce and U.S. Bureau of Economic Analysis, 2003

Freight Tonnage Increases by 2020

South Region89%

Northeast Region79%

Central Region89%

West Region100%

Source: FHWA Freight Analysis Framework Project Reebie Associates 1998 data (1st Approximation)WEFA economic data and forecasts

Business PracticesHistory of Industrial Competitiveness

1800sFirms stressed ability to decrease cost of production of each unit

Early 1900sAs production started to catch up with demand, businesses recognized the importance of sales

Emphasis on PRODUCTION

Emphasis onSALES

Emphasis onLOGISTICS

Late 1900s & 2000Sophistication of product offerings, globalization and increased customer expectations make logistics key to companies’, regions’ competitiveness

Distribution & Logistics: The New Business Model

The use of the transportation system, information technology, and distribution facilities to assemble and move raw materials and products to regional, national and international markets

Why ?• Increased competition for global markets• Increasing offshore production and movement of parts and

goods • Business cost savings already realized through production

efficiency • Supply chain management offers opportunity for additional

cost savings

Columbia Sportswear

1. Inbound Movement• Apparel, footwear, and accessories arrive via ship from Asia at T-6,

transported by truck to the Rivergate DC; some move through Seattle and Tacoma.

• Air shipments arrive both at PDX and Sea-Tac.• Ocean/air shipments arriving in Puget Sound transported by truck

to Rivergate.

1

2. Value Added Services• Ocean containers unstuffed; airfreight unpacked. Products

sorted/stored by SKU.• Once all SKUs for a customer's order arrive, shipment packed for

delivery.• Customers provide routing instructions; shipments prepared for

truck or air shipment accordingly.• The Rivergate DC also handles returns.

2

3. Reload Facility• Freight forwarders transport shipments by truck to reload

facility for air shipment.• LTL carriers take shipments by truck from DC to the LTL’s local

hubs in Portland for consolidation with other loads to same cities.

3

4. Outbound Movement• All three product lines (apparel, footwear, and accessories) shipped out

by air or truck.• Air cargo shipped out of PDX primarily using integrated carriers (such as

FedEx, UPS, Emery, etc.) for domestic delivery.• Once consolidated, LTL shipments move through carrier’s hub and spoke

network throughout North America.• Full truckload shipments move directly from DC to customers’ warehouses or

stores.

4

Freightliner

1. Inbound Movement• Subassemblies (axles and engines) arrive by ship from

Germany and Finland primarily through T-6.• Other parts and subassemblies arrive by truck from Mexico

and Canada, and by truck/rail intermodal from domestic suppliers.

1

2. Manufacturing• Steel and aluminum sourced locally.• Medium and heavy-duty trucks produced at Swan Island

production facility for global distribution.

2

3. Distribution• Finished trucks are distributed to dealers throughout the U.S.• Parts are shipped to regional warehouses.

3

4. Exports• Western Star brand trucks are shipped to Australia and New

Zealand predominantly through T-6.

4

Fred Meyer

1. Inbound Movement• Asian imports arrive predominantly through T-6 and are sent to

Fred Meyer distribution centers in Chehalis, WA and Clackamas, OR.

• Various grocery items and general merchandise arrive via truck and truck/rail intermodal from domestic suppliers.

• Seasonal goods for Kroger Supermarkets arrives through T-6.

1

2. Reload Facility• Kroger seasonal items are trucked to north Portland transload

facility.• Containers are unstuffed and consolidated into domestic

containers before being trucked to intermodal facility.• Goods are shipped via rail to Kroger’s distribution center in

Nashville, TN.

2

3. Warehousing/Distribution• All food and nonfood items from international and domestic

suppliers are sent to Clackamas distribution center for distribution to stores throughout the west (except WA and AK stores)

3

4. Retail/Local Consumption• Fred Meyer Stores operates a large fleet of trucks and trailers

for distribution of goods to its retail stores.

4

U.S. Metropolitan CentersFifty Largest

Manufacturing CentersEmployment Density by County

Wholesaling/Distribution CentersEmployment Density by County

Exports

Imports

International Freight GatewaysExports & Imports (Tons), 1998

Source: FHWA Freight Analysis Framework Project Reebie Associates 1998 data (1st Approximation)WEFA economic data and forecasts

Exports

Imports

Source: FHWA Freight Analysis Framework Project Reebie Associates 1998 data (1st Approximation)WEFA economic data and forecasts

Metropolitan Freight CentersMajor Population Areas

Freight Transportation Demand Growing in Most Urban Areas

Portland origin/destination freight volume to double by 2030

Thousand Short Tons

0

100,000

200,000

300,000

400,000

1996 2030

Thousand Short Tons

16.2%

11.4%

9.3%8.5%8.3%7.9%7.4%

4.7%

26.4%Gas, fuel, petroleum/coal products

Nonmetallic mineral products

Cereal grains

Wood products

Gravel and crushed stone

Logs and other wood in the rough

Foodstuffs and alcoholic beverages

Base chemicals

All other commodities

Commodity Share of Commodity Share of Portland/Vancouver Region TonnagePortland/Vancouver Region Tonnage

(Percent Share of Total Tonnage in 1997)

Eight commodity categories comprise 74% of all tonnage shipped in the region on all modes.

Freight Mobility Largely Dependent Upon Trucks

0%

10%

20%

30%

40%

50%

60%

70%

Percent of Freight by Mode Used(measured in short tons)

Rail

Truck

Water

Air

1996 2030

Pass Through Tonnage Doubles

The Portland region handles increasing pass through traffic for elsewhere in the country.

Tho

usan

d T

ons

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

1997 2000 2010 2020 2030

Pipeline

Rail

Truck

Barge

Tho

usan

d T

ons

ChallengesMeeting Urban Access Needs for Container

Growth

ChallengesMaintaining Industrial Land Adjacent to Freight Corridors

ChallengesMaintaining Good Access to Warehousing and Distribution

Centers

ChallengesFor Most Urban Areas Capacity Increases Represent a Hurdle

Implications Industry specialization and reliance on efficient

transportation means industries may choose to relocate if transportation costs affect their ability to compete

Congestion has real costs and affects business productivity

• Hard costs Extra time for pick-up and delivery/reduced production

time Extra vehicles to meet “just-in-time” demands of

customers and scheduling problems caused by longer delivery times

• Soft costs Business credibility Expansion decisions

Urban Freight Planning Tools Freight modeling Regional/local transportation plans Investment strategies Economic Base analysis Forecasting Comprehensive plans Land use location analysis Land use and tax policy assessment Design standards Access management policies

Urban Freight Planning Approach in Portland

Planning/Policy/Research• Reflect freight in region’s transportation and land use plan

Key Freight Corridors Industrial lands and intermodal facilities Other freight facilities

• Local transportation plans reflects freight routes• Policy emphasis on maintaining access to intermodal facilities

and industrial sanctuaries• Research on industry freight needs

Freight bottlenecks Supply-chain geography Economic relationship to freight investments

Freight Advisory committees• Regional, City and Statewide-linked by membership

Urban Freight Planning Approach in Portland

Forecasting/Analysis• Commodity flow forecast for six county region

41 Industrial sectors- tonnage, mode and growth

• Truck Model• Identification of freight bottlenecks

Port Transportation Improvement plan (PTIP) City Freight plan Region priority freight needs

Investments• Oregon Transportation Investment Act-legislative program with freight

emphasis

• Region allocation for federal funds

• Port request for demonstration projects