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

Chapter: Chapter 2: Evaluating Freight Facility Impacts and Benefits

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Suggested Citation:"Chapter 2: Evaluating Freight Facility Impacts and Benefits." 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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Page 11
Page 12
Suggested Citation:"Chapter 2: Evaluating Freight Facility Impacts and Benefits." 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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Page 12
Page 13
Suggested Citation:"Chapter 2: Evaluating Freight Facility Impacts and Benefits." 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.
×
Page 13
Page 14
Suggested Citation:"Chapter 2: Evaluating Freight Facility Impacts and Benefits." 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.
×
Page 14
Page 15
Suggested Citation:"Chapter 2: Evaluating Freight Facility Impacts and Benefits." 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.
×
Page 15
Page 16
Suggested Citation:"Chapter 2: Evaluating Freight Facility Impacts and Benefits." 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.
×
Page 16

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Freight Facility Location Selection: A Guide for Public Officials 11 Chapter 2: Evaluating Freight Facility Impacts and Benefits Freightfacilitieschangetheflowoftraffic,bringjobs,impactlanduse developmentpatterns,andmayormaynotbringotherdevelopment opportunities. They may represent desired investment in the community, actively sought by economic developers and planners alike.Alternatively,thesefacilitiesmaybeseenasamixedblessing, withbothwantedandunwantedconsequences. Publicofficialsneedtounderstandthesepotentialchangesbefore considering how to attract or plan for freight facilities. Only by understanding and evaluating these costs and benefits can public officials properly evaluate how freight facilities match community goalsandprepareaccordingly. While cost reduction and productivity improvements drive most privatefreightfacilitylocationdecisions,thepublicsectorexperiences the benefits and drawbacks of freight facilities differently. The transportation,economic,andsocietaleffectsoffreightfacilitieswill varydependingonthetypeoffacility,themodesusedatthefacility, and the geographic perspective of stakeholders (local, regional, state,andnational). Significantresearchexistsonthetopicofeconomicimpacts,benefits, andcostsoffreightandmoredetailcanbefoundinNCFRPProject23 final research report available asNCFRP Web-Only Document 1 (http://www.trb.org/Main/Blurbs/165743.aspx) as well as U.S. DepartmentofTransportationreportssuchastheGuide to Quantifying the Economic Impacts of Federal Investments in Large-Scale Freight Transportation Projects from 2006. Impacts thus fall into several differentcategoriesandnotallofthemwillapplytoeachtypeof logisticscenter,buttheprincipalbroadcategoriesare: • EconomicEffects–includingconstructionimpacts,direct economicactivity,multipliereffects,andeconomic development/businessattractionand

Freight Facility Location Selection: A Guide for Public Officials12 • TransportationEffects–includingmodechoiceandtraffic volumes,directtravelimpacts,supplychainlogisticsimpacts, environmentalimpacts,andsafety/securityimpacts. Thefollowingtableillustratesarangeofeffectsfromseveralcase studiesofspecificfreightlogisticsfacilities. Table 2. Facility Impact by Case Study Note:VMT=vehiclemilestraveled. FACILITy TyPE CASE STuDy DIRECT AnD InDIRECT JOBS FREIGHT VOLumE TRAnSPORTATIOn ImPACTS InlandPort VirginiaInlandPort (FrontRoyal,VA) 17directjobs,over8,000 indirectjobs 33,600containers (2008) 5.4millionVMTreduction,$105,000 greenhousegasemissionsavings Intermodal Terminal Rickenbacker IntermodalTerminal (Columbus,OH) Approximately150direct jobsatIntermodalfacility, projectionof20,000jobs atfreightindustrialpark 250,000annual containermovements 49millionfewertruckmilesinOhio in10years–$2Minpavement maintenancesavings,$2.45million inaccidentreductions Bulkor Transload Terminal SavageSafeHandling (Auburn,ME) 100directjobs 500,000tonsperyear– 5,000railcarsperyear $619,500accidentreduction, $506,000pavementmaintenance fromusingrailovertruck Distribution Center FamilyDollar (Marianna,FL) 515directjobs;catalyst toanother155DCjobs 90trucks/day–32,000 trucksperyear 16.2millionintruckVMTperyear Warehouse MurphyWarehouses 20directjobs(per warehousefacility) 10,000+carloadsper year 1.3millionVMTreducedannually. 6,730fewergreenhousegastons emitted Integrated Logistics Center AllianceTexas(Fort Worth,TX) 28,000directjobs; 63,388indirectjobs 600,000intermodalrail liftsperyear N/A Hub Terminal OldDominion (Morristown,TN) 750directjobs 75to90trucksperday 21.5millionto25.9milliontruckVMT peryear Privatesectorinvestmentinbuildingsandequipmentandpermanent jobsata facility represents very real localand regionaleconomic gains that need to be balancedwith the potential traffic or other impactsthatmightresultfromsuchalocationdecision.Forexample, awarehouse locatedinaspecificareamayresult inpotential jobs andemployment,additionaltrafficservicingthewarehousewiththe inboundgoodsnecessaryforinventory,andtheoutboundtransportof goodstoreceiversandfinalusers. Thebroaderregionalpictureshouldalsobeconsidered.Inkeeping withtheexampleabove,theregionormetropolitanareasurrounding thenewwarehousesitemightalsoexperienceincreasedtrafficand jobgains,butcouldalsobenefitfrombetteraccesstogoodsthrough thedistributioncenter.

Freight Facility Location Selection: A Guide for Public Officials 13 Jobsandinvestmentmakeuptheprimaryeconomicbenefitresulting fromfreightfacilitylocationdecisions,andcommunitiesandcompanies often estimate jobs, income,wages, andproperty valueasdirect, indirectandinducedeffectsofafacility.Theseimpactsincludeboth theshort-termconstructioneffectsandlong-termoperationsaswell asthepotentialtoattractotherbusinessesnearafreightfacility. Theseimpactsmustbeconsideredandbalancedwithprojectedimpacts toevaluatehowdesirablethesefacilitiesaretothecommunityand region.Knowledgeofthetruecostsandbenefitsalsoprovidesthe publicsectorwithamuchbetterbasisfornegotiationsforincentives, credits,impactfees,andotherpublic-privatepartnerships. Near-Term Construction Effects Buildingthefacilityandproposedinfrastructureaswellasnecessary transportation connections requires short-term construction activity withbothdirecteffectsandbroadermultipliereffects. Ifdesired, these impacts canbemeasuredusing input-outputmodels, suchas IMPLANorRIMSII,whichallocateconstructionspendingtorelevant industrycategories. Direct Economic Activity at the Freight Facility Thedirectimpactsofthenewfreightfacilityincludethenumberof peopleemployedatthefacility,theirwagesandsalaries,changesin revenue(businessoutput),andanydevelopmentsdirectlyrelatedto thefacility.Freightfacilitiesalsogenerateincometothecommunity and state directly in the form of property tax, corporate income tax,salestax,andthevariouspermittingfeesthataccompanythe activitiesatthesite.Inadditiontothis,theregionandstatealsogain additionaltaxincomethroughtheincomeandpurchasingactivityof employeesandvendors. Multiplier Effects of the Freight Facility Operations Impacts beyond the direct impact of the facility itself are called multipliereffects.Forexample,anemployeeatthenewwarehouse receives wages that he otherwise would not have received. Put anotherway,thesalarypaidbyafreightcompanytoanemployee Economic effects

Freight Facility Location Selection: A Guide for Public Officials14 Transportation impacts accrue from changes in the movement of goods and can impact the community and region in a variety of positiveandnegativeways.Theseincludebenefitsfrommodalshifts (andremovaloftrucksfromtheroadways),increasesordecreasesin traffic,andpollution. Mode Choice Modechoiceand trafficvolumereflect changes in truck, rail, ship, and air volumes due to the selection of transportationmode. The primaryimpacttendstobetohighwaysasmostfreighttravelsby truckforatleastaportionofitstrip.Afacilitythatallowsforlower costormoreefficientmodechoicemayeitherreducetrucktraffic,or focustrucktrafficatthepointwheremodesconnect. Traffic Thelocationofthefacilitywillchangetrafficpatternsintheimmediate surroundingarea.Thismayresult in increasedtrucktrafficto/from thefacilitydependingonhighwayaccess,localtrafficpatterns,and Transportation effects isadirectimpact.Howthatemployeethenspendsthissalarylocally ongroceriesandhousingisamultiplied,indirectimpact.Theimpact ofthefacilitythusexpandsintothecommunity,state,andcountry. Economic Development/Business Attraction Freightfacilitiescanbeacatalystforeconomicdevelopmentthrough attractingothersuppliersorvendors toforman industryclusterof activity.Theymayalsospurnewdevelopmentorredevelopmentof existingproperties.Thesizeandtimingofeconomicdevelopment/ businessattractioneffectscanvarygreatlybyfacilitybasedonlocal landuseandzoningpolicies,economicdevelopmentincentivesand marketing, transportation connectivity benefits, and so on.  Effects include: • Redevelopment–Economicandfinancialgainsfromredevelopment of existing underutilized land, includingadditional job creation andincreasesinpropertyvalue. • NewBusinesses–Theeconomicandfinancialgainoflocatingnew businessesonpreviouslyundevelopedland. • ResidentialProperties–Includingtheadditionofnewhousesand theimpactsofincreasedpopulation.

Freight Facility Location Selection: A Guide for Public Officials 15 access.Facilitiesthatpromotetheuseofmodesotherthantruckmay helpkeeplongerdistancetripsonmoreefficientandcost-effective modes, thus reducingoverall truckVMT (vehiclemiles traveled)on local,regional,andnationalhighways. Congestion Congestiononroads,rails,airandseacancausecommunityconflict aswellasdelayingoodsreachingtheirdestinations.Congestioncan alsohavedirectfinancialimpactsasitincreasesshippingcostsand can lead to investment in infrastructure improvements to alleviate delays.Congestioncanalsohaveairqualityimpactsbasedonidling. Environment, Emissions, and Energy The pollution and energy usage that accompany freight facilities changes with the distance traveled and/or the modes used for transport.Changes in fuel consumption, emissions levels, noiseand vibrationarethemostcommonenvironmentalimpacts. • Air Quality – Fewer pollutants (NO 2 , CO, CO 2 , NO X , SO 2 , particulatematter, volatileorganic compounds)are released into the atmosphere with fewer vehicle miles traveled, as emissions are a product primarily of mode and distance traveled.Shiftstoamoreefficienttransportationmode(e.g., trucktorailviaanintermodalterminal,oranincreaseinthe distanceonrailversustruck)alsoresultinachangeinemissions. In addition, newer intermodal facilities are often equipped with technology improvements to reduce truck idling, leading tofurtheremissionsreductions. • FuelConsumption(EnergyIntensity)–Whilenotadirectpublic costorbenefit,shortertripsandlesscongestiontypicallyresult inbetterfuelefficiencyandlowerlevelsoffuelconsumption. Energy consumption per ton-mile varies by mode, with air havingthehighestconsumptionandmaritimethelowest.Better overallfuelefficiencyinthenetworkcanimpactacommunity’s energyprofileandhavebroader,longertermsocietalbenefits. Safety and Security Thelocationanddesignoffreightfacilitiescanalsohavesafetyand securityeffectsonthecommunityorregion.Theseincludethetraffic Impacts Transportation • Trafficvolumesbymode • Directtravelcosts • Supplychainlogistics • Environment,emissions,andenergy • Safetyandsecurity Economic • Construction • Directeconomicactivityatthe facility • Multipliereffects • Economicdevelopment/business attraction Costs • Capital • Infrastructure • OperatingandMaintenance

Freight Facility Location Selection: A Guide for Public Officials16 Asdescribedearlier, thecostsof freight facilitiesareoftenborne primarilyby theprivate sector ownerof freight logistics facilities. However, supporting public infrastructure (roadways, utilities, and publicservices)representsdirectcoststothecommunity.Additionally, itisincreasinglycommonforpublic-privatepartnershipstohelpfund facilitiesandconnectinginfrastructure.Thethreemaincategoriesof costare: • Capital–Thosecoststhatoccurwhenconstructingthefacility itself,includingdesignandconstruction.Thesecostsaretypically incurredbeforethefacilityisoperational. • Infrastructure – Costs necessary to improve the road or rail networksurroundingthefacilityinordertofullyaccommodate theincreasedvolumeofshipments. • Public Services – The community and region may also incur additional annual costs for firefighting, public safety, police, public works, and related services as a result of additional freightactivity. While all of these measures may not be applicable to every freightfacility,allofthesecostsandbenefitsshouldbeconsidered in undertaking an assessment of the economic and transportation effectsoffreightfacilities. Other public sector costs conflictsresultinginaccidentsduetochangesintruckVMT,aswellas criminalactivitiesaroundthefacilityitself. • Safety –Well-sited and designed facilities can reduce the numberoftrucksontheroadand/orthedistancetheytravel.This canbeexpectedtoleadtoareductioninaccidents,measured aspropertydamage,injury,andfatalities.Thecorollaryis also true–poorly sited facilities can result inan increase in hazardous traffic conditions and conflicts with pedestrian or localautotraffic. • Security–Thevalueoffreightcanattractcriminalactivity,but securitymeasures reduce this activity, thus reducing losses to shippersandreceiversandprovidingahigherlevelofsecurity inthecommunityaroundthefacility.

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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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