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Freight Facility Location Selection: A Guide for Public Officials (2001)

Chapter: Chapter 1: Introduction and Background

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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Suggested Citation:"Chapter 1: Introduction and Background." National Academies of Sciences, Engineering, and Medicine. 2001. Freight Facility Location Selection: A Guide for Public Officials. Washington, DC: The National Academies Press. doi: 10.17226/14594.
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Freight Facility Location Selection: A Guide for Public Officials 1 Chapter 1: Introduction and Background Inmanywaysfreightmovementmaybeconsideredthelifebloodof oureconomy.Over60milliontonsoffreightmovethroughtheU.S. freighttransportationsystemdaily,representingroughly$40billion ingoods.Efficientmovementoffreight(i.e.,modeselection,routing, and intermodal transfer) is necessary tomake thebestuseofour transportationfacilities,protecttheenvironment,andreduceenergy requirements,whilekeepingupwiththeever-increasingdemandfor goods. Thefreightenvironmentcontinuestobeachanginglandscape.Trade isincreasinglyglobal,andmanufacturingcontinuestomoveoffshore. Fuelpricescontinuetofluctuate.Governmentsatalllevelsseeknew waysofreducingcarbonemissions,congestion,andpollution.These, andotherfactors,placeincreasedimportanceonhowwemoveraw materialsandfinishedgoods fromplace toplace . . . fromorigin toultimatedestination.Greateremphasisonreliabilityandsupply chainmanagement increases the importanceofefficient localand regional freight movement whether ultimate shipping destinations areacrosstownoracrosstheworld. Thechoicesmadeaboutwheretheseactivities takeplaceandthe choices made by the carriers who serve these places, drive how transportationinfrastructureisused.Thelocationoffreightfacilities canhavebothpositiveandnegativeeconomicandsocialeffectson localcommunities,regions,andstates.Maximizingthebenefitswhile minimizing the impacts are sensible goals for any public decision making. In many ways freight movement may be considered the lifeblood of our economy. What is the purpose of this guide?

Freight Facility Location Selection: A Guide for Public Officials2 Economic development, planning, and other government entities and elected officials at the local, regional, and state level recognize that trade and freight activity result in employment and investment opportunities and so have increasingly sought new strategies for attracting freight-related activities to their communities. This guide for public officials has been prepared in concert with NCFRPProject23:“EconomicandTransportationDrivers forSiting FreightIntermodalandWarehouseDistributionFacilities,”published asNCFRP Web-Only Document 1(http://www.trb.org/Main/Blurbs/ 165743.aspx),andexploresboth: • Private sector supply chain and freight facilities, such as distribution centers andwarehouses, and howmarket, cost competitiveness,andotherfactorsshapeprivatesectorsiting decisionsand • Transportation facilities (public and private) that manage freightcarriagesuchasintermodalrail,transload,andports. TheresearchforNCFRPProject23wasconductedthroughaprocess of extensive review of existing literature, interviews with industry practitioners, and survey and analysis of actual freight facility locationsituationsandprocesses.Inadditiontodetailedinformation onfreightfacilitysitingfactors,thefinalresearchreportfeaturesa chapterofcasestudiesillustratingfreightissuesanddynamics.Some excerptsfromthosecasestudieshavebeenincludedinthisguideas well,tobetterillustratethematerialherein.Alistofprivatesector corporationswhoparticipatedintheinterviewsforNCFRPProject23 iscontainedinAppendixAofthisguide. Thepurposeofthisguideistoprovideinsightonlocationdecisions for freight facilities and suggest best practices for transportation, land use, economic development, and regional partnerships to public sectoragenciesandofficials consideringandresponding to freightfacilitydevelopmentandlocationdecisions.Theseagencies can benefit from a full understanding of the dynamics of freight movementandwhatfactorsaffectprivatesectorlocationdecisions so that theymaysuccessfullyplan for,attract, locate,andpartner withfreight-relatedactivitiesintheirjurisdictions. Much specific freight-related terminology is used throughout this guide.Althoughanattempthasbeenmadetodefinemanyterms,it mayalsobehelpfulforthereadertorefertotheglossaryoffreight termscontainedinAppendixB.

Freight Facility Location Selection: A Guide for Public Officials 3 Who should use this guide? Thisguidehasbeenpreparedforusebypublicofficialsatalllevels. Economicdevelopment,planning,andothergovernmententitiesand elected officials at the local, regional, and state level recognize thattradeandfreightactivityresultinemploymentandinvestment opportunities and so have increasingly sought new strategies for attracting freight-related activities to their communities. How transportationand freight facility requirements interactwith other economicfactorstoinfluencelocationdecisionsmadebytheprivate sectoristypicallysomewhatlessunderstoodbythepublicsector. This guide condenses and focuses research findings of NCFRP Project 23 with the specific aim of providing local officials with the background and understanding with which toexplore,attract,andprepare for expanded industrial and freight facility development in their jurisdictions as well as providingapracticalmanualfor understandingfreightissuesanddynamics. Economicdevelopmentagencieshavesometimesseentransportation infrastructureasakeydrivertomanysuchlocationdecisions.Some mayhavereadaboutintermodalsitesuccessstories,suchasColumbus Inland Port inOhio or Alliance Industrial Park in Texas, and their abilitytoattractnewbusiness.Lessunderstood,perhaps,ishowthe combinationoftransportation,economic,andotherlocationdrivers makesthemsuccessfulattractorsofbusinessandinvestment.

Freight Facility Location Selection: A Guide for Public Officials4 How to use this guide Theensuingchaptersofthisguidediscussinmoredetailtherequirements for both a good project and a good process in the planning and developmentoffreightfacilities(eitherpublicorprivate).Thisguide forpublicofficialsconsistsofsixchapters. Chapter 1: Introduction and Background providesbriefbackground astothepurposeanduseofthisguide,aswellasanoverviewoftypes offreightfacilitiesandtheirroleinfreightdistribution. Chapter 2: Evaluating Freight Facility Impacts and Benefits provides anoverviewofsomeofthekeyfactorsthatgointodecisionmakingin termsofcostsandbenefitstostates,regions,orlocalities. Chapter 3: The Critical Roles of Groundwork and Collaboration discusses how the public sector can prepare the way through successfulapplicationofplanningmethodsandtoolsandcancreatea collaborativeatmospheretobringaboutawin-winoutcome. Chapter 4: How the Location Selection Process Works providesan overviewofhowthe locationselectionprocessforfreightfacilities is conductedbytheprivatesector. Chapter 5: How Candidate Sites Are Evaluated contains a more detaileddiscussionofsiteassessment. Chapter 6: The Changing Landscape (Complicating Factors) provides an overview of ever-changing global factors in the development of freight facilitiesaswell as challenges tobe faced in theproject developmentandlocationprocess. The reader is reminded that theassociated research report,NCFRP Project 23: “Economic and Transportation Drivers for Siting Freight Intermodal andWarehouse Distribution Facilities,” and published as NCFRP Web-Only Document 1, servesas the source formuchof the materialinthisguideandmaybeconsultedformoreinformation.All of thesourceworkandreferencesfromthatdocumentapply to this guidealso.

Freight Facility Location Selection: A Guide for Public Officials 5 There are multiple types of facilities that interact with freight at differentpointsalongthesupplychain(thesupplychainstartswith unprocessedrawmaterialsandendswiththefinalcustomerusingthe finishedgoods). ThoughTables1a through1gdefine the functions ofvarious typesoffreightfacilities, theyessentiallydefinefreight facilitiesas “thosewhich freightpasses through (sometimeswitha layover).”However,itisimportanttonotetolocalofficialsthat,ina largersense,theterm“freightfacilities”canapplytoamuchlarger universeofusesandcouldbemorelooselydefinedas“facilitiesthat attractandproducetripsoffreight-carryingvehicles”or“facilities thatneedmaterialsandshipmaterials.” Sinceeachofthesetypesoffreightfacilitieshasadifferentpurpose and different location needs, it is worthwhile to understand the functionshousedineach,aswellastherolethatthefacilityperforms. Thefollowingtablesprovideasummaryoffreightfacilitytypesand theirrolesinthesupplychain. What do we mean by freight facilities? ...in a larger sense, the term “freight facilities” can apply to a much larger universe of uses... In this looser definition, facilities like truck stops, big box stores, rail yards, refineries, and manufacturing plants can all be considered freight facilities.

Freight Facility Location Selection: A Guide for Public Officials6 1a. DISTRIBuTIOn CEnTERS Distribution Centers (DCs) take several forms, but all fill the role of storing and facilitating the movement of goods to their final destination. • MostDCsarelarge,specializedfacilities,oftenwithrefrigerationorairconditioning,whereproducts (goods)areheldandassembledintodeliveriestoretailers,wholesalers,ordirectlytoconsumers. • Normallyoperatedbyasinglecompanyasapointinitssupplychain,mostDCsarelinkedtoa geographicserviceregionbutsomehavespecificpurposes,suchasthehandlingofurgentgoodsor imports. • DCsperformstaging,consolidation,andunitizingfunctions,canbeinvolvedinfinalstagemanufacturing (suchaspackagingandlabelingofgoods),andmaydoubleasanoperatingterminalforan associatedtruckfleet. • WarehousesarealesselaborateformofDC,focusedsimplyonthestorageofgoodsormerchandise. Theymaybemultiuserfacilitiesownedbyathirdpartyandleasedbyvarioussupplychaincustomers (whomaythenviewtheirportionsasDCs),placesforstorageservicesofferedbytrucklinesor householdgoodscarriers,orinventoryholdingpointsformanufacturersortraders. • ACross-Dock Facilityhandlesstagingwhereinbounditemsarenotreceivedintostock,butare preparedforshipmenttoanotherlocationorforretailstores.Cross-dockingsupportslowercosts throughconsolidatedshippingandcancreateapivotpointforchangingthespecificdestinationof goodsintransit.Thisfacilitybreaksbulkitemsintosmallerpacksfordeliverytowarehouse/DCsor finaldestination. 1b. PORTS (SEA AnD AIR) Ports are key facilities for domestic shipping as well as the importing and exporting of goods, providing interface to rail and road. • APortservesasapointofentryandexitforincomingandoutgoingshipments. • Mostcommonlyreferringtoairandseaportsengagedinforeignanddomestictrade,thetermport alsoembracespointsalongrivers,canals,andlakes,aswellaslandgatewaysstraddlingnational borders. • Portsmayhaveberthsorhangarsforvesselsoraircraft,terminalsandwarehousesforthemanagement ofgoods,stagingandaccessareas,andcustomsfacilitiesforthehandlingofforeigntrade. • Portsmayspecializeincertaintypesofcargo,suchascontainers,petroleum,bulkproducts,or automobiles,andtheymayalsobemilitaryfacilities. • ALoad Centerisaseaportengagedincontainertradethatactsasahigh-volumetransferpointfor goodsmovinglongdistancesinland,andprovidesservicetoitsregionalhinterland. • AForeign Trade Zone (FTZ)isageographicareainoradjacenttointernationalportswherecom- mercialmerchandisereceivesthesameCustomstreatmentitwouldifitwereoutsidethecommerce oftheUnitedStates.AnFTZprovides(a)cashflowtimingbenefitsforwarehousedproductspriorto distributionforsaleand(b)significantlyreducedimportdutiesifvalueisaddedviarefinementorsub- assemblyprocessespriortodistributionforsale. • AnInland Portisaphysicalsitelocatedawayfromtraditionalcoastalorlandborderswiththepurpose offacilitatingandprocessinginternationaltradeandtypicallyprovidesvalue-addedservices(such asassembly,kitting,orcustomization)asgoodsmovethroughthesupplychain.Inlandportsmayalso featureFTZs. Table 1. Facility Types and Their Functions

Freight Facility Location Selection: A Guide for Public Officials 7 1c. InTERmODAL TERmInALS Intermodal terminals, in the purest definition, include freight facilities that allow for the movement of truck trailers and marine, truck, or air containers between modes (e.g., road and rail, rail and maritime, road and air, etc.). • Thesefacilitieshandletransferbetweenocean-goingvesselsandinlandtransportorbetweenother modestotakeadvantageoftheservice,economic,orenvironmentalefficienciesofonemode(e.g.,rail) forconcentratedvolumesinlonghaulmovementvs.thespeedandreachofanother(e.g.,truck)for dispersedvolumesinlocalpickupanddelivery. • Physicalfeaturesmayincluderailsortingyards,containermovingequipment(permanentorportable cranes),containerandchassisstoragefacilities,warehouseorcross-dockfacilities,and–depending uponthemodesbeinginterfaced–othersupportfacilitiesforsea,road,orrailequipment. 1e. HuB TERmInALS A hub terminal is a carrier-operated facility whose principal function is the intramodal re-sorting and re-consolidation of inbound into outbound load sets for continuation in intercity linehaul. • Hubsarelocatedatcentralpoints,marshallingvolumestoandfromcityterminalswithinaregionand betweenhubsinotherregions. • Theyaretypicallylarge-acreagefacilitiesprocessingahighnumberofvehicles.Inthecaseofnational hubs(asareusedinairfreight),thelandandbuildingrequirementsareveryextensive. • Inless than truckload (LTL)trucking,ahubisacross-dockoperationtransferringgoodsfromtrailersat inbounddockdoorstoothersatoutbounddoors. • Insmallpackagetruckingandmail,sortandconveyormachineryareusedinthetransfer.A comparablesortingsystemisusedinairfreight,exceptthataircraftandaircontainerstaketheplace oftrailers. • Inrailroading,theterminaliscalledaclassification yard,withsetsofinboundandoutboundtracks,and includesthetransferofrailcarsfromarrivingtodepartingtrains.Forintermodaltrains,thetransfercan beoftrailersandcontainersfromrailcarsononetraintothoseonanother,aswellasthetransferof railcarsbetweentrains. • Hubsmayalsoserveacityterminalfunctionforlocalfreight,andmayincorporatedispatch,driver services,equipmentmaintenance,andequipmentstorage. 1d. BuLk OR TRAnSLOAD TERmInAL A receiving and distributing facility for lumber, grain, concrete, petroleum, aggregates, and other such bulk products is referred to as a bulk or transload facility. • Thesefacilitiessupportthedirectorindirecttransferofgoodsbetweenthecarryingequipmentof differentmodes. • Theyaretechnicallyanotherformofintermodalfacility,butinvolvethetransferofthegoods themselvesratherthanoftheequipmentthatbearsthem(e.g.,containers). • Physicalfeaturesmayincludestorageareasandtanks,cranesorbulktransfermachinery,warehouses, railroadsidings,truckloadingracks,andrelatedelements. • AnAuto Terminalisatypeoftransloadfacilityforfinishedmotorvehiclesmovingbetweenocean- goingvessels,railcars,andtrucktrailers.Vehiclesaredrivenundertheirownpowerbetweencarrier equipment,andthusthegoodsthemselvesaretheobjectsofintermodaltransfer.Suchfacilitiestypically requiresubstantialamountsofparkingandmovementspaceforthestorageandsafestagingof vehiclesandhaveparticularlyhighsecurityrequirements.

Freight Facility Location Selection: A Guide for Public Officials8 1f. CITy TERmInALS A city terminal is a carrier-operated facility whose chief functions are the intramodal (e.g., truck to truck) sorting and consolidation of load sets between intercity linehaul and local pickup and delivery, as well as the management of pickup and delivery services to customers. • Cityterminalsareendpointshandlingdistributionwithinametropolitanareaandbetweenthatarea anditshub.Acreageandvehiclevolumesformostfacilitiesaremoderatebutcorrespondtomarket size. • Carriersinbigcitiesmayhaveonemajorterminalorafewsmallerones. • Lessthantruckload(LTL)carriageoperationsinvolvecross-docktransfersofgoodsbetweensmallercity andlargerlinehaultrucks. • Forsmallpackageandmail,sortingequipmentmaybeutilized. • Inairfreight,thetransfersarebetweentrucksusedforlocaldistributionandaircontainerscarried insidetrucks. • Inrailroading,theterminaliscalledamarshalling or industrial yard,andthetransferisofrailcars betweentracksforlocalandintercityroadtrains. • Managementbylocaldispatchingofpickupanddeliverytocustomersandofrelatedequipmentpools isacrucialrole,andcityterminalsaresometimescalledservice centers.Privatetruckfleetsfrequently performthisfunctionoutoftheirparentcompany’sDCs,wheretheloadassemblyisperformedaspart ofcustomerorderfulfillment(andtheprincipalserviceislimitedtodelivery,notpickup). • Bulktruckfleetsrarelyusecityterminalsforloadtransferandinsteadutilizethemforcustomerservice andthecleaningandmaintenanceofequipmentbetweenloads. • Equipmentstorageandmaintenancearecommonatcityterminals,asaredriverservicesandalimited amountofgoodsstorageforcustomerandoperatingconvenience. • Cityterminalsoccasionallyhaveamixedcharacter:someactasmini-hubs,stagingloadsbetween smalltownterminalsandmajorhubs,andotherslocatedonairportpropertyactasintermodal terminals,transferringcontainerstoandfromaircraft. • ADrop Yardisasiteusedbycarriersforequipmentstorageandloadstaging,butwithnotransfer ofgoods.Alesselaborateformofcityterminalandsometimeswithlightersecurityrequirements,a dropyardcanbeassimpleasafencedparkinglotwith,perhaps,anofficetrailer.Usedbytruckload carriers,theyarehandoffpointsbetweenlocalandintercitydrivers–ordinarilytoimprovescheduling efficiency–andareservicingpointsforcustomerequipmentpools.Usedbyoverseasshippinglines, railroads,andequipmentowners,theyarecalledcontainer yardsandareusedforthestorageand managementofcontainersandchassis,aswellasstagingbetweenvessels,trains,andgroundside customers.DropYardsmayhavelocaldispatchingandsomedriverservices,andmayofferorsupport equipmentmaintenance.

Freight Facility Location Selection: A Guide for Public Officials 9 1g. InTEGRATED LOGISTICS CEnTER (ILC) OR “FREIGHT VILLAGE” A relatively new freight facility type, Integrated Logistics Centers are industrial parks or mixed use developments specifically constructed around high performance freight servicing facilities. • Knownsometimesas“freightvillages,”thereisfrequentlyanintermodalorhubterminalattheirheart. • Afullportfolioofactivitiesrelatingtotransport,logistics,andthedistributionofgoods,bothfornational andinternationaltransit,isoftenofferedbyvariousoperators. • Manufacturingandotherindustrialusesarethensituatedaroundthecoretransportationfacilities.In thisway,thetransportation-related“village”makeshighlyefficientuseofthecorecapabilities,suchas regularrailorintermodalservice. • ILCsrepresentexamplesof“SmartGrowth,”astheireconomiesofdensityandscopesupportefficient logisticswithinaconcisecommunityandenvironmentalfootprint.

Freight Facility Location Selection: A Guide for Public Officials10 Thekeystosuccessfulimplementationofafreightfacility,particularly onethathaspublicsectorinvolvement,usuallyinclude: 1. Understandingthesupplychain,carriagerequirements,and theflowofgoods. 2. Providinggoodconnectionstotransportationinfrastructure andoperatingnetworks(road,rail,port,etc.). 3. Appreciatingthecompetitiveadvantagesand disadvantagesamongsupplychains,amongfreightcarriers, andamongthefacilitiestheyuse. 4. Examininghowproposeddevelopmentscanaffecteconomic developmentandlocalconditionssuchastrafficflows,noise levels,orutilitycapacity. 5. Developinglanduseregulationthatallowsfordevelopment, efficientoperation,andtransportationconnectionswhile maintainingandpromotingsustainability. 6. Buildingpublicwillingnessandsupportoftheseprojects. Successfuldevelopmentofaneworexpandedfreightfacility dependsonhavingagoodproject,onethatmeetsthesiteselection needsoftheprivatesectorandisconsistentwiththegoalsofthepublic sector.Successalsodependsonhavingagoodprocess,oneinwhich the groundwork for success is in place and contingencies have at least been discussedandplannedfor.Asuccessful outcome isalsoone inwhich therehas beenbroadcollaborationsothatgoals have been identified and consensus established.Agoodprojectandagood processtogetherareessentialifsuccess is to be achieved. The best project can fail becauseof opposition or lack of community support,and themost collaborativeenvironmentwillnotyield success if the project does notmeet a privatesectordemand. Keys to freight facility development success

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TRB’s National Freight Cooperative Research Program (NFCRP) Report 13: Freight Facility Location Selection: A Guide for Public Officials describes the key criteria that the private sector considers when making decisions on where to build new logistics facilities.

A final report that provides background material used in the development of NFCRP Report 13 has been published as NCFRP Web-Only Document 1: Background Research Material for Freight Facility Location Selection: A Guide for Public Officials (NCFRP Report 13)

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