ENVIRONMENTAL BENEFITS OF

Building an Intermodal Hub in St. Louis

Sidra Naseer May 5, 2014

Research QuestionIs a rail and trucking intermodal hub the most efficient environmental solution for transportation development and economic wellbeing in the Saint Louis region? Efficiency—allocation of cargo movements between multiple modes where the surplus derived from these transfers is maximized in the form of reducing both operational cost and environmental damage

How do Jelly Belly Beans get to consumers?

Flow of Goods to Market for Jelly Belly Beans

Buyer places an

order with the seller

Product shipped from the seller’s

production facility in

California

Shipment sorted in the

seller’s distribution

center in Wisconsin

Shipment sent to

buyer’s main warehouse

to be sorted

Shipment sent to buyer’s local

warehouse

Shipment delivered

to the store

Why Should YOU Care? Transportation affects:

Consumer prices

Congestion

Infrastructure

Pollution emission

Economic well-being

DefinitionsIntermodal—Transfer of products involving multiple modes of transportation such as truck, railroad, or ocean

Intermodal Terminal—A railroad facility designed for the loading and unloading of containers and trailers to and from flatcars for movement on the railroad and subsequent movement on the street or highway

Intermodal Hub—Similar to an intermodal terminal but will allow multiple railroad carriers to run their tracks via separate lanes through a common location in order to capitalize on opportunities with various trucking carriers to transfer cargo across both short-haul and long-haul distances

Source: Intermodal Association of North America. (2013). Intermodal Glossary.

Saint Louis— Gateway to the West

More than one billion tons of cargo passes through St. Louis

60%

33%

7%

Cargo Traffic by Mode of Transportation in St. Louis

TruckingRailOther Modes

Source: Missouri Department of Transportation. (2014)

Ideal Location

Waterway 2003 2004 2005 2006 2007 2008 2009 2010 2011Atlantic intracoastal waterway 1.9 2.3 2.7 2.6 2.5 2.9 2.5 2.9 2.9Great Lakes 156.5 178.4 169.4 173.0 161.0 152.4 108.7 129.5 134.7Gulf intracoastal waterway 117.8 123.3 116.1 122.6 125.1 115.9 108.1 116.2 112.6Mississippi River system \1 676.8 699.8 678.0 702.1 699.0 681.6 622.1 663.2 672.5..Mississippi River main stem 478.0 496.9 464.6 497.7 500.5 486.8 447.7 483.2 499.0..Ohio River system \2 261.3 271.5 280.1 270.7 260.2 259.2 229.5 245.2 239.6Columbia River 47.2 53.5 51.5 52.3 58.1 54.8 46.0 54.7 54.2Snake River 5.3 5.7 5.3 5.2 5.4 3.7 4.4 3.4 2.7

Freight Carried on Major U.S. Waterways: 2003 to 2011(In millions of short tons)

Source: U.S. Army Corps of Engineers, Waterborne Commerce of the United States, 2011, November 2012, and earlier reports. Freight Carried on Major U.S. Waterways: 1985 to 2011.

Most U.S. cities available either same day or within two days by most modesEconomic hub of manufacturers

Current Situation

Environmental ArgumentsReduces carbon emissionsCreates positive externalitiesAddresses concerns about property rightsEqualizes marginal control and damage costsMaximizes net benefitsLeads to technological progress

Hub-and-Spoke Design

Source: Racunica, I. &. (2005). “Optimal Location of Intermodal Freight Hubs.” Transportation Research: Part B: Methodological, 39(5), 453-477. Figure 1.

ComparisonCONVENTIONAL

TRANSPORTATION

Origin Local Warehouse

Rail Terminal

INTERMODAL HUB

origin Intermodal Hub

Reduces Carbon EmissionsReduction in drayage eases congestion and lessens CO2 emissionsOn average, railroads are four times more fuel efficient than trucks. According to the Association of American Railroads, moving freight by

rail instead of truck reduces greenhouse gas emissions by 75% Highway gridlock costs the U.S. economy $121 billion per year in wasted

fuel and time.

A 2005 case study by Bas Groothedde utilizing avoidance expenditure valuation techniques found that: Average truckload shipping intensity is 125 grams of CO2 per ton mile Intermodal CO2 intensity is 70 grams of CO2 per ton mile

Assigns Property RightsEach rail and trucking carrier wanting to operate within the hub signs a contract with the local agency that monitors the hubContract defines the owner’s rights, privileges, responsibilities, and limitations for use of the landTransportation providers pay taxes and assist in damage clean-up costs

Internalizes External CostsHubs internalize external costs of accidents, noise, air pollution, climate change, and congestion

Source: Study conducted by Fedele Iannone comparing marginal external costs of transporting full and empty containers exclusively road and rail transport. “The Private and Social Cost Efficiency of Port Hinterland Container Distribution through a Regional Logistics System.” 2012. Transportation Research: Part A: Policy And Practice, 46(9), 1424-1448.

Intermodal Hubs Equalize Marginal Control & Damage Costs

Maximizes Net BenefitsFree markets with minimal regulation

Demand drives efficient allocation of cargo during consolidation

Private sector seeks to reduce marginal cost, and act as network planners to design cost effective solutionsHubs mediate the volatility in fuel prices

Forces partnerships among each other

Private rail companies will invest in the building of these hubs Governmental regulatory agencies to serve as the liaison in interstate

commerce

Attracts Economic & Technological developmentPrimary sites for the introduction of transition technologies Transportation as a whole accounts for 19% of global emissions Energy emissions from transportation are expected to grow by 50%

by 2030, and a 100% by 2050 from 2007 levels

In the U.S., trucking is expected to experience the fastest growth More than 60% increase in freight emissions from heavy-duty freight

trucks

Promotes new companies to locate in the region and regional investment

Source: Craig, A. J. (2013). Estimating the CO2 Intensity of Intermodal Freight Transportation. Transportation Research: Part D: Transport And Environment: 2249-53.

Opposing Business & Political ArgumentsTakes business away from trucking companiesWhat to do with existing rail terminals

Rebuttal: Forces companies to adopt innovative technologies to gain a

comparative advance Incentivizes trucking as a whole to explore fuel and energy

alternatives for operations Utilize land for other development purposes

Opposing Economic ArgumentToo much competition from surrounding Midwest intermodal hubsRebuttal:

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130.0

0.5

1.0

1.5

2.0

2.5

3.0

Exports (Billions of dollars)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130.0

5.0

10.0

15.0

20.0

25.0

Imports(Billions of dollars)

Source: U.S. Census Bureau, Foreign Trade Division, USA Trade Online. (2014). Table of U.S. Exports and General Imports of Merchandise by Customs District: 2002 to 2013.

Missouri in Comparison to Other States

Source: U.S. Census Bureau Data. ArcGIS Geospatial Online Maps. 2007 Commodity Flow Data.

Opposing Environmental ArgumentAttracts new companies, which will increase emissions

Rebuttal: Companies want to do business with companies that are

environmentally and socially responsible for both the direct and indirect efforts of their business operations

Intermodal hubs foster healthy competition among firms to provide the most environmentally sustainable supply chain solutions

Alternative Solutions for

St. LouisALTERNATIVES

Expand an existing rail terminal

Construct a port

Leave things as they are

PROBLEMS

Political issues—which one to expand?

Existing rail terminals are still far away from the locations of trucking warehouses

Expensive Demand does not justify full port

operations

Using scarce inefficiently Environmental issues persist

ConclusionBased on environmental economic arguments, the construction of an intermodal hub in St. Louis will promote environmentally, sustainable economic growth.Limited alternatives to the hub do not provide the optimal tradeoffOverall environmental opportunity cost is too high to not pursue the intermodal construction

Thank You! Questions?