Getting the Goods: What the U.S. Economy Gets from a More Efficient Freight Network
Published September 10, 2014
Updated On April 3, 2015
Senator Thomas Carper (D-DE)
Senior Director of Transportation,
Director of Transportation and Infrastructure Policy, National Association of Manufacturers
Deputy Assistant Secretary for Policy, Department of Transportation
Executive Counsel for Government Affairs & Policy, GE Transportation
Senior Policy Advisory, Third Way
Location: Capitol Visitor Center, Room SVC-201, Washington, D.C.
Time: 3:30 p.m. EDT
Date: Wednesday, September 10, 2014
Federal News Service
RYAN FITZPATRICK: All right. Well, thanks again everybody for coming. My name is Ryan Fitzpatrick, and I’m with Third Way. Third Way is a centrist think tank that helps legislators on both sides of the aisle and the administration develop and promote policy solutions to some of America’s greatest challenges.
My goal for this event is that once you’ve heard from Senator Carper and from this incredible knowledgeable panel of experts that we’ve assembled, and once you’ve had a chance to ask any questions you might have at the end of the event, that you’ll come away with a new or a stronger understanding of just how critical the freight network is to the – meeting the economic potential of America and also that you have a solid idea of some of the options that are out there for Washington that we can use to create a more efficient and modern system of moving goods around this country. So that’s a little bit of a lofty goal. So maybe as a – as a backup, hopefully you’ll just be able to keep these issues in mind and reach out to myself or anybody here on this panel if things come up, if you have questions later on and as we follow this issue. And if I can’t get that, I just hope nobody snores or throws a shoe. I’ll be happy if that’s the case.
So I’m part of the clean energy program at Third Way. Our goal in the clean energy program is to reduce greenhouse gas emissions from the energy sector and from other areas of the economy. So why am I the one that’s here talking about a freight event, especially if it’s specifically about the economic impacts of the freight network? And the way I think about it is that you can’t really steer a boat is the boat isn’t moving. We would like to see more use of highly energy-efficient modes, like rail and waterways. We’d like more opportunities for intermodal growth, for greater use of cleaner burning (advanced ?) and alternative fuels.
But no matter how important these specific concerns about energy and emissions from the freight sector are, Third Way doesn’t get anywhere by weighing in only on these niche issues. Safety groups don’t get anywhere by weighing in only on safety issues. If we’re going to shake the provisions that we care more about the freight policy debate, we first have to make sure that there actually is a freight policy debate. Passing an effective long-term transportation authorization is going to be a challenge. And the freight network has only recently joined a list of priorities in these transportation authorization efforts, and it now competes with other priorities that have very well-established bases of support.
So everyone with a stake in the future of the freight network, no matter how specific your policy concern is, needs to be sure that Congress and the general public fully understand the network’s importance and are moved to act on it. At that point groups like Third Way can help shape the priorities that are most important to them. But you have to get the boat moving before you can steer it.
Fact of the matter is, there is no argument capable of getting smarter freight policy moving as well as an economic argument, especially in times of tight budgets. The decision by Congress to make investments in the freight network or not will come down to whether or not lawmakers and voters that they serve think that we can afford it as a country. That’s it. If we don’t address that question, then we’ll just continue to patch our system of highways and waterways and airports and railroads and ports as best we can and keep our fingers crossed.
So luckily, we have a pretty good economic argument that says we can afford this. This planning and investment in the freight network, if it’s done strategically, it can more than pay for itself by ensuring that our businesses can compete, expand and employ. That’s what we mean when we say that better freight movement will help America get the goods. And that’s what our panelists will be discussing today.
Before we begin the discussion, I’m honored to introduce Senator Tom Carper of Delaware and excited to hear from him in just a minute. As one of our founding co-chairs, Senator Carper, sometimes referred to as the godfather of Third Way –
MR. : And other things.
MR. FITZPATRICK: And other things. And I won’t do my really, really terrible Godfather impersonation, so – I should get extra points for that. But we definitely wouldn’t be here without him and his support.
Since his time as congressman and then as governor of Delaware, Senator Carper has seen the positive impact that transportation investments can have on the economy and quality of life of his constituents. Most recently he played a key role in the unanimous passage of the multiyear reauthorization of MAP-21 as one of the big four on EPW. In particular, he worked to include a specific focus on freight transportation nationwide with $2 billion in dedicated annual funding.
Senator Carper’s been a longtime champion for improving the efficiency and sustainability of our transportation system, leading efforts to clean up air pollution from diesel vehicles and to help states and cities invest in projects that would reduce greenhouse gas emissions.
A near daily rider of Amtrak and former Amtrak board member, Senator Carper played a role in supporting passenger rail as a former member of the Commerce Committee and an author of the Passenger Rail Investment and Improvement Act of 2008.
So Tom Carper is the godfather of Third Way and could be called a rock star in the world of transportation policy. I’m glad he’s here to speak to us now and that he’ll be joining us for part of our panel discussion.
Senator Carper? (Applause.)
SENATOR TOM CARPER (D-DE): Thank you, Captain Morgan. (Laughter.) Anne (sp), does this guy look like he pretty much – (inaudible)? (Laughter.)
Q: (Off mic.)
SEN. CARPER: Ryan, thanks, bud. Thanks for a great introduction, very kind introduction. And thank – I just want a real big thank you to Third Way. I had no idea all the things that Third Way go off and do. I sure – well, I think we’re having – (inaudible) – national convention in Boston, and that was – turned out to be like the coming out party for Third Way all those many years ago. I think that was 2004. And the – I’m just very, very proud to be associated in any way with Third Way. And for those of you that are part of the Third Way team past or present, thanks for what you do.
Well, I mention a couple – I just – (inaudible) – words he said, he said snores or throws a shoe and – right at the beginning of his remarks. I woke up last night at about 3:00 in the morning. And usually when I wake up, I don’t know about you, I usually wake up, and I go back to sleep, and I sleep until – I usually get up around 5:00, catch a – go to – (inaudible) – catch a train, come down. But I never went back to sleep. Never went back to sleep. And if – I said to Colin – where is Colin Peppard – I said, Colin, if, like, I’m up here, and if I’m halfway through the panel, like, I slump over. And he said, don’t worry, I’ll nudge you. And I said, wait about 20 minutes before you do. (Chuckles.) I mean, I don’t usually drink coffee. I had a couple cups of coffee at lunch today, so I should be, like, walking on the ceiling for a guy doesn’t drink coffee.
But speaking of snore – throwing a shoe, I’m – we’re having a lot of discussion. We had a hearing today on – Committee on Homeland Security and Governmental Affairs. We focused on threats – we do this every year on the anniversary of 9/11, which is tomorrow, but a hearing today. We focused a lot on ISIS and the threat that they pose for us, not just in – around the other side of the world but also potentially here in our – in our country, and a fair amount of focus – (inaudible) – on Iraq and how we got involved there all those – all those years ago.
I remember George W. Bush going back to Iraq I think fairly near – sometime in the second term of his – of his presidency. And he was in a press conference with Prime Minister Maliki. And as I recall – (inaudible) – shoe story – halfway through the press conference, one of the Iraqi reporters took off his shoe and threw his shoe at then-President Bush, which is, like, in that culture is, like, a huge insult when somebody throws their shoe at you. And President Bush – and as this guy was taken into custody and hauled off, President Bush said, I looked directly into his soul – (laughter) – which I thought was a pretty good – a pretty good comeback for a guy throwing his shoe at him. And speaking of Republican presidents, I wanted to channel another one here – I’ll get serious in a second – but who do you think was the best president we’ve ever had? Let me just ask – how many – Polk? How many think Polk is? (Laughter.) OK. How many think Lincoln was the – maybe the best president we ever had? OK. I think, for my money, he was the best. I just think the world of him.
And when we have the – in Newark, Delaware, every year, we have the Halloween parade, and my counselor, a former congressman, would always go as Frankenstein. He makes a terrific Frankenstein. And I would always go as Abraham Lincoln. So I love Lincoln, and I like to quote him from time-to-time. Lincoln was asked to define the role of government. And he said the role of government is to do for the people what they cannot do for themselves.
Think about that. The role of government is to do for the people what they cannot do for themselves. Transportation is certainly one of those things that the people cannot just do by themselves. Ozzy Osbourne – (inaudible) – David Osbourne (sp), was once – (chuckles) – was once asked to talk about the role of government, and he used a Navy analogy, or – we don’t use the term boats in the Navy too much, but he said the role of the government is to steer the boat. The role of everyone else is to row the boat.
So the idea that government is to provide some policy and some direction, but not to do the steering all the time. And when you do construction – road construction projects – transportation projects in our state, and I think, most states. The DelDOT in my state doesn’t actually – they don’t go out and pave the roads and put up the bridges by themselves. You know, it’s – they oversee that and help develop the plans and so forth – do the permitting, but the work’s actually done by – usually by private contractors.
The other thing I would say – I love to go to schools, and I – the last couple of weeks, I’ve been in a bunch of high schools in my state as kids come back to school and a couple of colleges as well. And when I go to these – but I like to go to elementary schools, too, and these little kids would do assemblies with, like, third graders, fourth graders. We divide them into these big assemblies – like, the Democrats are here, and we’ll have the Republicans over here, and the – and then there will be the Congress.
And for part of this – the House of Representatives, and in the second half, there will be the Senate. Somebody gets to be president, somebody gets to propose a bill, take it through committee. And actually, it’s (role-playing ?) – there’s an old Chinese proverb about learning. Tell me, I’ll forget; show me, involve me. I’ll understand. So I’m one of those “involve me” guys, and involve the kids.
But after I went through the roleplaying, and produce a bill, and the president signs it or vetoes it – one of the students – we do a Q and A. And the kids always ask some really funny questions. The little kids ask funny questions like, are you rich? Are you married to a movie star? Say yes. Do you – my wife looks like one. They say, do you have a chauffeur-driven limousine? I have a 2001 Chrysler Town and Country minivan outside; it has 367,000 miles on it – now 377(,000). They say, do you live in a mansion? And I say, no, it’s a trailer. I used to when I was governor, but not anymore.
But they ask me some serious questions, too. They ask me questions like, what do you do? And I say, well, I’m a senator. And they go, well, what do you? And I say, well, I help make the rules for our country. We call them laws. And I deal with 99 other senators and 435 representatives and the president and vice president. And then they say, what do you like about your job? And I tell them the thing I like about my job is, I like to help people. And then they ask, how? And a lot of different ways. People call my offices in Delaware throughout the day – throughout the week, throughout the year – they need help. You know, somebody’s lost their job. They’re going to lose their house and lose their health care. Got a kid in Afghanistan – there’s an emergency at home – bring them home. So do all kinds of things to help people. But the best way to help somebody is to make sure they have a job – make sure they have a job.
And the – (inaudible) – when I think about roles of government, going back to Lincoln and Osbourne, I think about – the role of government is to provide a nurturing environment for job creation. That’s what the role of – a big part of – that’s not the only role of government, but to provide a nurturing environment for job creation. It include a world-class workforce. It includes access to capital, public safety – where you live, where you work – clean environment – clean air, clean water – fun things to do. Access to health care. And also, it includes the ability to get where you need to go when you need to get there and the ability to get products where they need to go when they need to go there.
So I’d come at this transportation thing as one who as governor worked on this stuff for eight years with Anne Canby, our secretary of transportation, but I love helping people, and I love helping make sure they have a job. And one of the best ways to do that is through transportation and making sure we have transportation systems that work.
I’m going to – I’m going to – I don’t usually speak from a prepared text. This is so good – this is – Colin worked on this for weeks, and – Colin, raise your hand – for weeks. And I would – I couldn’t go back to the office unless I at least used part of this, OK? So – all right. This is really good.
While members of Congress tend to focus on projects in their state or district, transportation investments are really all about boosting America’s global economic competitiveness and improving the quality of life for our country. Transportation projects about reducing commute times, increasing exports and making private sector more efficient. I don’t know if you noticed, but last month, American exports reached an all-time high – an all-time high.
We tend to talk about the direct jobs created by transportation investments. That’s important, but the real benefit – and, you know, people do work. It does take people to build roads, highways and bridges, but – I-495 just alongside the – (inaudible) – the city of Wilmington was tilting over – one of the bridges was tilting over the Christina river. We closed it, and within a couple of days, we had, like, a hundred and some people working there. So we had, like, immediate jobs there. So you had some immediate jobs. But you know, the other thing that was going on there – as we had all the traffic that usually goes on 495 and I-95 all of a sudden was all over on I-95. Did anybody get caught in any of that? And it impeded the movement of people, and also impeded the movement of a lot of goods.
So the true benefit for transportation improvements lies in the impact that world-class transportation system has on our nation. And not just putting people to work building these things, but actually helping us to move stuff. And that includes improvements to quality of life in their cities, towns and rural areas – less congestion – faster commutes and better access to the things that are important in your community.
It includes lower costs for businesses that rely on efficient and reliable transportation to get the raw materials and to get their goods to market at home and abroad. MAP-21 took many steps to reform our transportation programs, and we focus on these national goals. And in particular, it included a new focus on improving freight movement. As Ryan said, earlier this year, our committee on environmental and public works, chaired by Barbara Boxer of California, along – she and David Vitter from Louisiana, who is a ranking Republican, John Barrasso, a ranking Republican on the subcommittee that I chair – the Subcommittee on Transportation and Infrastructure. We actually worked together. We unanimously supported a bill without a dissenting vote, and we reported our six-year reauthorization plan to the Senate, where it awaits action. And we also await action, as you know, maybe, on another piece that’s supposed to be done by the Commerce Committee, a piece that’s supposed to be done by the Banking Committee, and the piece that’s supposed to be done by the Finance Committee to pay for all of the things that we’d like to have.
But Barbara Boxer did a great job leading that motley crew of the three of us and building on the foundation of MAP-21 to continue making improvements that will best support our nation’s social and economic well-being.
In particular, our proposal creates a new, fully-funded freight program and a new grant program for some of our nation’s biggest and most important projects. I’m going to briefly mention a little bit on this, and then I’m going to close. In our bill, there is a new formula-funded freight program with strategies to help target investments toward projects that can best help improve the efficiency and reliability of goods movement.
And as you know, freight often requires different types of project investments, and does passenger travel. And a program focused on freight can help to focus on those investments. One of the programs in the bill is $2 billion in new funding when fully implemented, and we also allocate about $400 million in new funding to projects of national or regional significance to offer programs for megaprojects that are – oftentimes have a hard time fitting into the existing formula program.
How many of you have ever taken the Northeast Corridor from Washington, D.C. to New York City? Anybody ever take the train? Some of you will recall, when you’re north of Baltimore but south of Wilmington, Delaware – you’re still in Maryland – you go over the beautiful rivers, beautiful bodies of water. Have you ever noticed that? And the – but you go through one area there for about six or seven miles between Perryville, Maryland and the Delaware line where you go from three tracks down to two. And much of that six miles or so is over water.
And you have the MARC trains, which provide the transit service – rail transit service south of Perryville down here to D.C. And between Perryville and Newark, Delaware, where the University of Delaware is, there’s – you go from three to two and there’s no MARC service. And in order to be able to provide that, we need to add another rail, go to a third rail, and then it would have, if you will, real transit all the way from Washington, D.C. up, I guess, almost to Boston, maybe all the way to Boston. But it’s hugely expensive. That’s the kind of project – that’s the kind of project that this bill is meaning to provide funding for.
OK, I’ve gone on almost long enough. And I want to say again to each of the panelists, it’s just an honor to be with each of you, and thank you for sharing your ideas and thoughts. I’ll probably get more out of this than anybody in the room. And I appreciate very much your being here and letting me be part of your panel, and for – the last word I would say is – Anne (sp) heard me say this a million times when I was governor – if things are worth having, they’re worth paying for. If things are worth having, they’re worth paying for.
The roads, highways, bridges, transit projects, these – (inaudible) – projects, they cost money. And they’re more than worth the investment, but we just can’t forever, you know, borrow it from the general fund. We can’t borrow it from China. At the end of the day we have to – you know, if it’s worth doing, we have to come up with the money ourselves. And for those of you who are in a position to urge my colleagues to do the right thing when we come back from – after the elections, we’ll do that and we’ll actually fully fund a six-year transportation plan for our country. Thanks so much. (Applause.)
MR. FITZPATRICK: Woops. OK, thank you, Senator – really appreciate you coming to join and speak with us, and also that you’ll be able to stay for some portion of our panel. I know you might have to leave at a certain point, but just let us know and we’ll try to get to as many topics as we can in the meantime.
So as the senator said, we’re really grateful to have a fantastic variety and level of expertise on our panel. And I want to go through for just a minute and introduce each person to you that’s going to be speaking to us.
So first, directly on my left, we have Dennis Berard from CVS. Dennis is the director of transportation at CVS Caremark Corporation, which delivers medicines through mail service, pharmacies and to 7,500 retail pharmacies. He’s in charge of that. Over the course of 20-plus years, Dennis has managed every aspect of CVS’ transportation needs. In a nutshell, he develops the strategies that keep CVS’ supply chain moving as efficiently as possible. Thanks, Dennis.
Next is Robyn Boerstling. Robyn is the director of transportation and infrastructure policy for the National Association of Manufacturers, NAM. She leads the organization’s transportation advocacy efforts to repair and modernize the nation’s infrastructure. Robyn previously served as counselor to the assistant secretary for transportation policy at USDOT and directed the U.S. Maritime Administration’s Office of Congressional and Public Affairs. Thanks, Robyn.
You met the senator. We can skip over.
Next we have John Drake. John is the deputy assistant secretary for transportation policy at USDOT. He’s responsible for overseeing the implementation of Secretary Foxx’s policy priorities, specifically on freight and safety issues. John also has been pivotal in developing the GROW AMERICA Act, which is the administration’s proposal for a multiyear surface transportation authorization. He previously served as director of government affairs for the Federal Motor Carrier Safety Administration and has also worked for the Senate Commerce Committee as well as the House Committee on Transportation and Infrastructure. Thanks, John.
And finally, on the end, we have Don Itzkoff. Don leads government affairs and policy for GE Transportation. That’s a GE company focused on logistics IT, locomotive technology and a variety of other transportation technologies and services. Don served as deputy administrator for the Federal Railroad Administration from 1994 to 1999, and earlier as senior counsel to the Senate Commerce Service Transportation Committee.
Thanks to all of our panelists. And instead of doing kind of an intro and presentation, I thought it would be best to just jump right in and start a conversation. And so the panelists know I might direct a couple of questions at someone in particular, but I’d love to have follow up. If anybody has it, feel free to chime in.
So the first thing I want to talk about, the senator mentioned of course we know that infrastructure investments, they’re good at creating construction jobs. We hear a lot about that. That’s usually a big selling point of these investments, at least one of them. Is anybody able to kind of expound on some of the additional or maybe more long-term economic benefits that we see from making sure that we have the most efficient and modern system for moving goods that might be in addition to those construction jobs? I’ll leave it open to the group.
ROBYN BOERSTLING: I’ll take a stab at that one first. And I don’t want to necessarily diminish the value of construction activity, because it’s really valuable to the economy. And just look at it from the lens of, for every dollar that’s invested in construction, manufacturing gets 40 cents back on that. So you think about what that generates for manufacturing. It’s pretty significant and big.
Also, you think about exports and our economy, and manufacturing industries account for 61 percent of all U.S. exports. We need the transportation system to be efficient, and I think the big concern from our members’ perspective – and we know this because we surveyed them last year – is they are very concerned about the current condition and quality of our infrastructure.
I think the survey came back: 70 percent said that infrastructure is in fair or poor shape. And I think of greater concern is we are not positioned to respond to the competitive demands of the economy, looking 10 to 15 years out. So I think the theme is we may be getting by today. It’s not great. But when we look ahead, it’s not so rosy for us.
DON ITZKOFF: Well, first, Ryan, thank you for hosting this panel. And, Senator, your support for infrastructure investment has really been heartening to all of us and we really appreciate your continuing commitment.
So for General Electric, at our business, and GE Transportation, we recently invested more than $200 million in a brand-new locomotive manufacturing facility in Fort Worth. And one of the key elements was adjacent to a rail line, right next to a major state highway one mile from the interstate interchange, less than 35 minutes from DFW. Another factor is that the Texas Motor Speedway is right there, so maybe that had something to do with it. But clearly, infrastructure and transportation access was one of the key elements, so that has created 350 ongoing jobs in Fort Worth, building locomotives and mining drive systems right now.
MR. FITZPATRICK: Does anybody else have any – I think it’s great to have anecdotes, to have these type of examples to really solidify the importance of these types of polices that don’t exist just in theory, that they actually could have serious impact. Is anybody else aware of any other projects of where there might have been decisions that – availability of efficient goods movement played a factor, and where to locate manufacturing or where to expand business?
DENNIS BERARD: Yeah, I think some of the success we’ve recently seen in Long Beach with the $4.5 billion project to improve, you know, the port there – and by “improvement,” it’s the efficient movement of goods in and out has helped a company like CVS create 600 jobs in the La Habra Distribution Center there. We can continue to – we can continue to compete in markets like that.
But from an economic standpoint, you know, when a company like CVS, where we’re spending some, you know, $350 million a year in a transportation spend – we opened up a distribution in Chemung, New York two years ago, which added 300 jobs to a – to a blue-collar community that, frankly, needed them. But in order to open up distribution centers like that, I mean, it’s an 80 (million dollars) to $100 million investment, so it takes capital to do.
So with the growing infrastructure challenges that we have, we – you know, we need to find ways of being efficient so we can develop and gain capital to open up other distribution centers to get us closer to our markets.
MR. FITZPATRICK: John, the senator mentioned exports and that we’ve recently hit a new record for exports. And that’s been something that the Obama administration has put a high priority on as part of our economic recovery efforts. What has the Department of Transportation’s role been in helping to, let’s say, grease the track for achieving that goal? What has been the initiative or the direction to get the freight network ready if we are able to accomplish that very important goal for exports?
JOHN DRAKE: Well, yeah, I mean – so that’s a very good point in the sense – I mean, it’s – the transportation network’s ability to move freight is fundamental to this entire discussion. And you know, first, you know, Senator Carper, thank you for your leadership on – especially with MAP-21 and with the MAP-21 reauthorization bill and putting in that freight component which really, I think, supports what was done in MAP-21 but also sort of helps support the administration’s efforts to move that conversation forward.
You know, for us what we think are sort of the key roles that the federal government can play in helping the export initiative is, one, further federal investment, right? And the other part is also helping to coordinate the decision making at the local and regional level so that communities that are thinking about whether they’re going to put a road in, whether they’re going to be putting a bridge or if they’re going to put a transit system in, that they’re doing those investment decisions thinking about what their freight needs are going to be.
So if – you know, if CVS is going to be placing a new store or a new transfer facility, that there are the roads that have been built up to accommodate the net increased potential truck traffic, to accommodate those additional movements. So I think that’s really where we think that we can – we can play a positive role because what we see a lot of times is that those decisions are oftentimes made at a local level were you have a lot of different players who are involved in that process.
And those decisions are not – they’re not organized. They’re – oftentimes it’s a very combobulated – or discombobulated decision making process. You have a lot of different interests that are involved in that process. Oftentimes they have – they have different roles in that and it’s not clear who’s supposed to be making the action decision.
So we think that for the federal government, really a good role for us to play or a positive role for us to play is to be inserting ourselves into – as a coordinating role of sorts so that we can really help organize the decision making and also provide the data and information necessary so that whatever decision comes out the other end is the most informed one.
MR. FITZPATRICK: Great. One other – I always wonder how much the cost of transporting goods, when we hear about cost of fuel going up – how does that translate into what consumers, all of us, pay for the items that we purchase? Because everything has to get – and didn’t just probably grow there at the store. How does that impact it? And I guess as a – representing a major retailer, Dennis, you’d be probably the best person for me to direct this to. Does it have – does it have an impact?
MR. BERARD: Yeah, you know, the last resort for retail is to try to go to market, try to go to our customers to make up margin. We have tried to take growing transportation costs that we’ve had year over year due to, you know, regulatory requirements, like hours of service, like emission standards. And we’ve tried to do things for a long time – that I could talk to you for a couple of hours about – in consolidating inbound freight and utilizing multimodes of transportation and having manufacturers co-ship into CVS. But we’re running out of alternatives. The well – the well is starting to run dry.
So you know, I mention the capital projects that we want to – we want to employ to continue to add jobs to our – and fuel our economy, to continue to open up stores and grow. But it’s – but it’s going to take capital and I’m – frankly, the well – the well is a little dry. I – going down this road, you know, if you ask me, you know, what does the future look like? I mean, the future – if the infrastructure issues remain the way they are and don’t – and aren’t touched, eventually it does lead to – lead to price increases. The – you know, we’re going to have to do that to be able to continue to grow. We don’t want to go there. We haven’t yet. We’re still trying to find alternatives. But again, the well’s running dry.
MR. FITZPATRICK: OK, thanks. If there are no other comments on this general topic area, I wanted to ask – (chuckles) – maybe so we can get a more optimistic viewpoint of how to move forward – what are some examples of things that we’ve done right? What have we done right with federal policy? And if there are things that we can – you know, direct effects that we can point to from – doesn’t necessarily even if it’s – even if it is some cooperation with state or if it was an entirely state policy. Let’s broaden out a little bit and find the best examples of times when policy made a difference and it actually had or will have an economic impact based on improvements made to the freight network.
MR. ITZKOFF: Well, I would just start out by citing the – Congress’ leadership, the Senate in particular, in getting the first federal credit programs for freight going with the Alameda Corridor back in the 1990s, which then has precipitated a whole series of very successful programs – TIFIA, the RFF (sp) program and then the focus on TIGER, which is for intermodal programs directly.
But another – second example that I do want to say that’s important to understand, that runs in parallel, is that the great railroad network, of course, is privately owned and invests private capital in enabling that network to function and prosper. And so balanced, enlightened federal policy about enabling the railroad to continue to be vital is just as important and as critical as the debate on federal, direct infrastructure investment in our highway system.
So these are the two pieces of the freight network on the surface side that fit together, have to work together, but there’s a different set of parameters on the freight rail side that are important too.
MR. FITZPATRICK: And are there any examples that come to mind of instances in which it wasn’t necessarily direct federal investment, but when there was other type of federal policy or if you can come up with, you know, state policy – (inaudible).
MR. ITZKOFF: Well, for example, I mean, going back to the Staggers Act in 1980 which deregulated the freight railroads, that was just huge. It enabled the freight railroads then to be investing in their networks. So we just need to maintain a balanced economic regulatory approach and also, you know, look at issues like safety and make sure that that is happening. So we say today – just now the Senate Commerce Committee is having that hearing on rail service issues. And that is being driven by shippers needing to have more. So making sure that we have that balance, you know, on the freight rail side is an equally important complement to highway policy.
MR. FITZPATRICK: So it’s not always about spending money and there are a lot of other elements or avenues for federal encouragement of this type of expansion or improvement of the system.
MR. ITZKOFF: Absolutely.
MR. FITZPATRICK: Anybody else have some –
MS. BOERSTLING: Yeah, I’ll chime in. I mean, we are very fortunate in this country in that we have a freight rail system that is the absolute envy of the world. I mean, I think Europeans come to the United States and say, wow, this is amazing that, you know, you have this freight network.
SEN. CARPER: So, like we are about their passenger rail?
MS. BOERSTLING: It’s exactly as we are about their passenger. (Laughs.) It’s kind of this inverse situation. And I think MAP-21 was a great success from a policy perspective. And I think there is broad consensus in both the Senate and the House and among Republicans and Democrats that the policy was right in MAP-21. And there’s certainly things that can be tweaked and added to. And I think we definitely would like to see more robust freight funding and greater emphasis on freight, but it – MAP-21 was a great start. And I think we ought to keep building on that as we approach this next authorization cycle – whenever that ends or starts, I’m not sure exactly how to phrase that – (laughs) – but –
SEN. CARPER: During your lifetime.
MS. BOERSTLING: OK, thank you. And so I think, if we look on the future, we want to keep our freight network system as – you know, again, as I said, the envy of the world. And we want to have more robust public-private partnerships. I think the United States can do better on that. But when we look out 20 years, we don’t want to see a system that’s fragmented or devolved.
And I think there are some in Congress who would like to see this all go to the states and put the states in control. That’s not a solution. I mean, this is really important that we have this interstate network and that it’s maintained. There is a national and federal role. We can quibble as far as what that role is, but there is a role and it’s very important to maintain that.
MR. FITZPATRICK: OK, great.
SEN. CARPER: You asked earlier about an example, and this is one that Colin (sp) and I have been working on for a while in Newark (sp). This is kind of an interesting rail project, freight project, passenger rail transit project, and intermodal in a couple different ways. If you’re coming north on train up the Northeast corridor and you look out and you’re coming across the Delaware line into Delaware, you’ll look off to the right and you’ll see what used to be our Chrysler assembly plant, which until four years ago employed 4,000 people. And we lost it and six months later we lost our GM plant, just down the road. It was very, very painful.
And so we had this like 250-acre piece of land with a lot of buildings on it. You know, what are we going to do with this? And we convinced our friends at Chrysler to sell all of that to the University of Delaware for a pretty low price, and the University of Delaware took down most of the buildings but kept one or two of them. And they decided they were going to use it to create a – what they call STARS (sic; STAR) campus, science, technology and research campus, and to bring it and use it as an incubator for a lot of higher – high-end technology jobs.
The – you might imagine an auto assembly plant right on the Northeast corridor received a lot of stuff by rail every day, you know, just in time, and there’s always a huge amount of – there’s a big rail yard there and a huge amount of traffic. But then when the plant closed, that traffic largely went away for Norfolk Southern. So now we’re trying to build this STARS campus, and we need transit, we need ability to eventually (remark up ?) from the south and (accept ?) it down from the north and provide transit service to the STARS campus, which we someday hope will employ thousands of people. It’s on its way right now.
The – we’re today doing a project where we’re literally building a passenger station, rail station, in the middle of Norfolk Southern’s rail yard, right alongside the Northeast corridor. And while the Norfolk Southern no longer serves the Chrysler plant, there’s a – about 10 miles away is a large oil refinery, and almost every other day huge numbers of tank cars come through, bringing Bakken crude right through that shipyard, right along the Northeast corridor, and it – to try to make it all work for Norfolk Southern, so we can keep the refinery going, for STARS campus, for the jobs that are going to be represented there, and have transit capability, and TIGER grants right in the middle of all of it to try to coordinate and make it – to make it possible.
MR. FITZPATRICK: Great.
MAP-21 has come up a few times – I’m shocked – in this conversation, and MAP-21 had a – an unprecedented, I’d say, unprecedented focus on freight. One of the things that it did was require a national freight rail – or freight – I’m sorry – national freight policy. We hadn’t had that in the past. And it also requires DOT to come up with a strategic freight plan, to designate what’s known as a primary freight network. There were a lot of things that are focused on freight in this legislation. And the senator was instrumental in getting that passed, and John is instrumental in getting it implemented.
So though there are a lot of – a lot of strong and positive beneficial aspects to the freight provisions within MAP-21, can you talk to us – if there are any, where are the challenges of implementing those freight provisions from DOT’s perspective?
MR. DRAKE: Well, I think, you know, it’s a problem you want to have, right, because there is quite a bit in there that you have to unpack. And it is pretty transformative in the sense that really for the first time there is a congressional directive that the department really needs to have a focus on freight that it didn’t have institutionalized to the extent that it had previously.
You know, what historically the department – really kind of the focus on freight really kind of followed the political leadership of the time. And so if you had a secretary and his senior leadership team – his or her leadership team that really felt that freight and ensuring that freight transportation was a priority that they needed to be focused on, then, you know, you were good. But then you had other administrations where that wasn’t necessarily the priority; there were other things that were the priority. And so what you would have is sort of this undulating sort of focus, if you will, on the needs of freight transportation, the goods movement industry.
With MAP-21 really kind of institutionalizing that focus and putting in place a very broad policy that focuses really specifically on a lot of key concerns that I think a lot of different stakeholders have, as well as putting in place a number of directives that help to implement that policy – specifically, the freight transportation strategic plan is a very big tool that allows us to kind of plan five years out and – you know, and just think about how we want to be evolving the federal role and also looking at the freight conditions and performance requirement where we have to take a look at what’s – what’s the system telling us; I mean, how is it able to kind of grow with the economy and grow with the traffic that we’re seeing as the economy continues to rebound.
I think, you know, a tough nut for us to crack at this point is a provision there that established a national freight network. And this was a provision that I think very rightly tried to identify a federal role in – a federal involvement in the transportation system so that where we knew freight was moving – like, for example, where it was coming into the Port of L.A./Long Beach and then moving on to St. Louis before it was going to Chicago and so on – it’s good to be thinking about those types of movements.
But the national freight network, as it’s constructed, is a highway-only network. And that really doesn’t take into account that if you are a shipper who’s moving high-value goods, typically you’re going to be using the airlines. You’re going to be using the airlines to do that. If you are a coal shipper, you’re going to be using the railroads to do that.
So for a lot of these folks, you know, they don’t look at the highways as their primary freight network. They look at other modes as their primary freight network.
So how do we, you know, develop a system within the constraints that were outlined in under MAP-21 that’s really sort of inclusive of frankly just what the reality of it is out there; that, you know, a lot of – a lot of goods will have one or two – will have at least one movement before – you know, they might go from truck to rail or from rail to truck – and how do you take that all into account when you are trying to develop a federal role in planning for these types of decisions and prioritizing what is limited federal dollars so that you can, if not encourage, then support the types of movements that need to be happening, especially over the long term?
MR. FITZPATRICK: Thanks.
So we are running low on time, but I wanted to ask one last question to the group, and it gets towards the fundamentals of this. We know there are a lot of challenges. It’s going to be expensive, and it can be a politically challenging process to get the freight network to a place where a lot of us would like to see it, especially folks that use it the most – manufacturers, retailers, agricultural producers – and political capital and actual capital are in limited supply in Washington. How do we – how do we work with that? How do we make sure that people understand – both people here in the capital and people back home – that they understand the importance of improving the freight network in order to grow the economy? How does that message get carried, and who are the right people to carry it who might not be carrying it right now?
MR. DRAKE: Let me – so I’ll start off and I’m sure these smart folks will have a better answer.
But you know, I think the first part of this is like, you know, I think when folks say “freight,” you know, it means lot of different things to folks, right? Like, you know, when I say “freight,” that could mean something entirely different from what Robyn’s thinking of when she thinks of freight. And it really kind of has this sort of universal connotation that kind of loses its meaning as a result.
And so we really need to, like, bring that down to the level where everyone understands that. You know, when I was growing up, I spent a lot of time out in Kansas, helping my grandfather farm, and one thing that he would say oftentimes is, like, people don’t know where their food comes from anymore, right? And I think the same is true for how, you know, the – how CVS gets its good on its shelves; you know, how – like, I mean, so I’ve got two kids at home, right? So I’m always at CVS getting diapers, you know, at the last minute, and I’m, you know – but we don’t think about how, like, you know, that truck that’s driving by you on the way up 395 or wherever you’re coming in from work is oftentimes loaded with stuff that we’re using in our everyday lives.
And so we need to – you know, I think part of this is re-establishing that connection that, you know, this is all stuff that allows us to live the lives that we lead on a – that we take for granted on a daily basis and then also getting, you know, the folks who we – you know, I think the communities kind of think about in terms of Main Street, you know, the – I mean, it’s good to have the trade associations weighing in, but I think you really need to hear from the businesses and the people who really have a huge investment in this at the local level to be weighing in as well. That’d be the –
MR. IRZKOFF: Well, Ryan, I think you hit on a key point and, first of all, it is great that you have both, you know, Robyn here on behalf of the manufacturing community but also, you know, CVS just saying, hey, here’s a business that everybody goes to all the time but they are focused on the need to have a decent distribution system to get the stuff that we buy. So getting the business community to begin to weigh in on the decision-making process here and move this from just logistics to something really critical is going to be important. But then the second piece is also (phrase not ?) in isolation, so this is part of the broader investment in infrastructure and that’s the dialogue about our highway system and our overall mobility (that ?) the average voter can begin to understand. And that’s something that we’re going to have to grapple with.
MR. DRAKE: Pressure’s on CVS.
MR. FITZPATRICK: Well, I was actually going to maybe turn some pressure on to Dennis. I was going to say, you know, do you think that there is a more vocal role, do you think that there are people in the industry, people from these household name companies like CVS that will speak up, even if it does come with a less politically attractive consequence, like we have to get revenues from somewhere, we need to make difficult decisions? Is that possible?
MR. BERARD: Yeah, there has to be an obligation from leaders like myself, from bigger organizations, to educate our leaders at the local level and our – and our congressional leaders at every opportunity we get. There are – you know, there are organizations out there where retailers have pulled together to educate them, like RILA, like CSCMP, like NasTrack (ph) and, you know, the ATA, but it – but it – it’s time to get our voice, I think, as the – you know, in the business community, out there about the impacts that infrastructure has on our business. And, you know, we see infrastructure as it is – it’s something we’re willing to pay for. I mean, you know, we’ve got to do – we’ve got to do the analytics on it, but we realize this may not come for free and it’s a price of doing business and it’s that important to us that we’re willing to think hard about things like fuel taxes and do analytics to see what it would mean. Because, you know, we just talked about just in time delivery and, you know, a day of inventory to CVS is $30 million dollars. So an investment in a fuel tax makes sense for us because I think, I mean, you know, we’re going to do the – we do the analytics around it and I think you’d see some benefits.
MR. FITZPATRICK: I think that’s a great place for us to wrap up. I know I promised to get folks out of here at 4:30. I wish we had some time –
SEN. CARPER: (Inaudible) – let me say one thing, as a politician who has to try to convince other politicians to vote for this stuff. The – eight years that Ann and I helped to lead the state of Delaware, she was transportation secretary and me as governor, three times we asked the legislature to raise the gas tax and they only did it once, but the – we only ask a couple of cents each time. When I ran for reelection at the end of my first term, this was an issue, you must raise your gas tax. I got 70 percent of the vote. And when, about five years ago, George Voinovich and I submitted to the Bowles-Simpson Commission, when they were gathering ideas for how to balance the budget, reduce the deficit, we suggested a penny increase in gasoline tax over 25 months, penny per month, 10 cents to go for gas reduction, 15 cents to go for infrastructure, and they – one of my Republican colleagues said to me the day after that leak to the press that we’d asked for a – he said, you’ve just written your first 30-second TV commercial; it will be used against you in your next campaign for reelection. He was right and it was – the theme, really, to the extent there was a theme in my opponent’s campaign, that was it, and we won reelection with 70 percent of the vote.
And what I say to my colleagues, you know, take a chapter our of not just what I’ve done, but look at what I’ve done and been able to say again and again and again, we need to fund infrastructure, need to pay for it. Lamar Alexander, he’s so much smarter than me. Lamar, when he was governor of Tennessee, would say to the voters of his state, wouldn’t it be great to make transportation infrastructure investments so we could attract the auto industry, the auto industry to Tennessee? He goes, that’s a great idea, that would be great, like, but how are we going to pay for this? And he said, or Lamar would say, well, let’s sit down and we’ll figure that out. Then they’d raise the gas tax and then, like, he’d have another vision a couple years later. People said, god, that’s a great vision for transportation, but how are we going to pay for it? Same deal. And it was like, you know, “Peanuts”, do you know, Lucy pulling a football on Charlie Brown? But he would always have a great vision and then, how do we end up paying for this? Well, (you know ?), do you want to use your fee?
The – what we’ve done in our state this year is literally do a, what we call a kind of a road trip, where we took the press and folks around their state to different transportation projects and said, this is the vision. This is the vision, it needs federal money and it needs state money and if we actually come up with that, we can have X, Y and Z. And you actually see it. It’s not just, well, let’s raise the gas tax. No, it’s like, this is the vision, and if we want to have that vision, want to realize it, here’s what we have to do.
MR. FITZPATRICK: Thank you. Well, I pulled the football away, too. I said there’d be time for Q & A but we are a little bit over now so if you have any burning questions, you want to run up here and tackle one of our panelists to see if they can get to them before they leave, I welcome you to do that. But short of that, I just want to thank everybody for coming. Thanks to our panelists, thanks to the senator, and to his staff, Colin Peppard and Andrew Shine for helping put this together and to folks at Third Way, especially Jessica Harris, for helping organize on our side. So, thank you. (Applause.)
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