Global Gateways Development Program Finds Movement Of Goods Must Be Addressed...Now

Building upon the momentum of the Governor's transportation initiative, Senate Concurrent Resolution (SCR 96) by Sen. Betty Karnette (D-Long Beach) was enacted. Under SCR 96, the California Department of Transportation (Department) and other cooperating agencies were requested to develop a proposal for a Global Gateways Development Program (GGDP). As developed with extensive input from goods movement industry representatives and other stakeholders, this report provides an outline of policy options and technical background for further discussion of actions to enhance the capacity and improve the efficiency of California's global goods movement system.

The Importance of Goods Movement: Improving goods movement is critical to the California economy, where more than 1 in 7 jobs are tied to trade and the value of international trade exceeds $350 billion annually. Goods movement improvements reduce congestion and delays for California businesses result[ing] in lower transportation and inventory costs, and enhanced productivity, profits, growth, and competitiveness. Improvements to the goods movement system will also benefit California consumers by lowering insurance costs, reducing congestion, improving safety, and enhancing community livability and the environment through reduced air pollution, noise and energy consumption.

The benefits of goods movement improvements extend nationwide. California's global gateways, such as the Ports of Los Angeles, Long Beach, and Oakland, international airports at Los Angeles, San Francisco and Oakland, and its trade corridor highways, rail lines and border crossings, represent the largest trade transportation complex in the United States. The rest of the nation heavily relies upon this system, particularly for access to the Pacific Rim.

Goods Movement Challenge: The California goods movement challenge is both substantial and immediate. Congestion and delays are mounting. The development of the State's gateway facilities and freight transportation infrastructure has not kept pace with economic and trade growth. As a result, congestion, delays, accidents, and freight transportation costs have increased. This transportation deficiency, if not remedied, threatens to grow much worse as the shift to just-in-time production and inventory, the growth in research, manufacturing and retailing industries, and the expanded role of e-commerce increases goods movement demand. Port container traffic and air cargo volumes are expected to triple by 2020, while overall goods movement volume is projected to jump 56 percent, between 1996 and 2016. Failure to address the growing demand could have dire impacts on the State's ability to remain competitive economically and could drastically hamper California's ability to create new jobs and retain existing businesses.

Priority Gateways & Improvement Needs: Among California's top priority global gateways are six ports (Long Beach, Los Angeles, Oakland, Hueneme, Sacramento and Stockton); five international airports (Los Angeles, San Francisco, Oakland, Ontario, and San Diego); and two border crossings (Otay Mesa and Calexico). Key international trade corridors identified includes eight interstate highways (5, 15, 40, 80, 405, 238, 805, 880), as well as substantial portions of seven others (8, 10, 105, 205, 380, 580, 710). Four U.S./State Routes (11, 60, 152, 905) and sections of eleven others (7, 50, 58, 78, 86, 94, 99, 101, 111, 120, 125), as well as the main lines of the Burlington Northern Santa Fe (BNSF) Railway and the Union Pacific (UP) Railroad are also identified. These support the key gateways in the origin and receipt of international trade, including the Los Angeles, San Francisco, Central Valley, and California/Mexico International Border regions.

For the State's seaports, the most serious landside transportation problem is truck delays. Congestion, terminal wait and turnaround delays, limited warehouse pickup and delivery schedules, hours of operation restrictions, and inadequate parking cause severe and growing problems for the trucking industry. Valuable time is lost, and idling trucks generate pollution. Channel depths and harbor dredging are also significant problems for some ports.

For the international airports, truck access is a critical problem, especially at Los Angeles, Oakland, and Ontario airports. San Diego also has operating constraints, and runway and land-use limitations. Expansion of California's largest airports is hindered by urbanization, ground access limitations, air quality restrictions and local opposition. Sufficient air transport capacity needs must be addressed, which balances mobility needs, security concerns, and community impacts in providing an integrated system of airports in California.

Both the BNSF and UP railroads also face capacity, environmental and community-related problems. Capacity constraints are most acute in single-track passes and near the Ports of Long Beach and Los Angeles, where space for intermodal transfers and equipment storage is scarce. Railroad grade crossings pose challenges such as congestion, emergency access, safety, noise and air pollution.

At the Mexican border, goods movement traffic has increased dramatically since passage of the North American Free Trade Agreement (NAFTA). Mexico is the United States' second largest trading partner and California's first largest trading partner. Moreover, 98 percent of California's trade with Mexico is transported by truck. In 2000, more than two million trucks crossed the border. By 2020 cross-border truck and auto trips are projected to double, potentially resulting in even more delays unless action is taken.

Funding Strategies: Most stakeholders believe that funding to improve California's gateways and goods movement system will need to come from both innovative public-private partnerships programs, and modifications of existing State and federal programs. The State of California provides ongoing funding through the STIP, the State Highway Operation and Protection Program (SHOPP), and the California Aid to Airports Program (CAAP). The State also has a number of innovative financing programs including the TCRP, State Highway Account (SHA) Short-Term Loans, Grant Anticipation Revenue Vehicles (GARVEE), the Transportation Finance Bank (TFB), and the California Infrastructure and Economic Development Bank (CIEDB). However, these programs need to be modified to be fruitful funding sources.

The federal government, through TEA-21, provides funding that can be used for goods movement projects. This includes the National Highway System (NHS) Program, Surface Transportation Program (STP), and the Congestion Mitigation and Air Quality (CMAQ) Program. However, in practice only very limited amounts of these funds have been used specifically for goods movement projects. TEA-21 contained two new credit programs, the Transportation Infrastructure Finance and Innovation Act (TIFIA) and the Rail Revitalization and Improvement Funding (RRIF) Program. It also provided two related discretionary grant programs called the National Corridor Planning and Development Program (NCPD) and the Coordinated Border Infrastructure (CBI) Program. However, Federal programs often feature restrictive eligibility requirements, rules, and other limitations.

Stakeholder Options for Goods Movement Improvements: The stakeholders, both through committee meeting discussions and survey responses, offered the following options for policy makers to consider to improve the flow of goods movement through California's gateways:

The State, RTPAs and other local agencies should take an aggressive role in planning, funding, developing, operating and maintaining critical public portions of the goods movement transportation system. In the proposed 2002 STIP, the Governor has nominated 23 projects totaling over $225 million to improve goods movement in the State. RTPAs and other local agencies should also financially support needed freight projects with regional and local funds. Super-regional airport authorities, with the ability to plan for more efficient and balanced use of existing and new airport capacity, should be developed to bring about a more integrated system of airports in California. Finally, strategies and performance measures should be developed to ensure the full consideration of goods movement projects in the federal, state and regional transportation planning and programming.

The State should take the lead in securing federal cooperation in meeting California's goods movement needs. During the TEA-21 reauthorization process in 2003, the State should seek a stronger goods movement emphasis and greater funding flexibility in the use of traditional federal transportation funding programs. The State should lobby the federal government to allow the use of Airport and Airway Trust Fund monies and Passenger Facility Charges for ground-access projects beyond airport boundaries. Finally, to compete effectively for goods movement funding, a statewide coalition should be created, modeled similar to the Washington State's Freight Mobility Strategic Investment Board (FMSIB). The coalition should work closely with California's congressional delegation, the National Freight Partnership, the U.S. Department of Transportation and its FHWA Office of Freight Management and Operations in seeking the necessary policy, program, and funding changes to improve goods movement in California for both state and national mobility, economic and quality-of-life benefits.

The State should actively pursue improving the operating efficiency of the State's major gateways. California should actively pursue the implementation of Intelligent Transportation System (ITS) applications and should also work as a leader, negotiator, broker, and partner to bring about other efficiency improvements. This includes the promotion and facilitation of expanded seaport operating hours and shipper/receiver dock hours to balance the truck traffic flow on congested access routes.

The State should provide greater flexibility in the use of state funds . A portion of the State sales tax on jet fuel could be redirected to air cargo access projects. The Transportation Finance Bank could be capitalized with federal or other funds at a much higher level. Finally, goods movement projects on or off the state highway system could be made eligible to receive below market rate loans for projects that provide significant mobility, economic, community, and environmental benefits.