Solution to gridlock

Solution to gridlock

Globalized production, combined with U.S. demand for low-cost goods, is taxing our ability to handle imports. Marine terminals cannot be expanded quickly enough to handle the staggering increase in import cargo, much of which arrives on mega-ships that discharge enormous volumes of containers.

Recent studies confirm that our freight-transportation system is fragile and nearing gridlock. The Department of Transportation has responsibility for the nation's freight-transportation system, yet there is no national leadership for a long-term response. The DOT's recent transfer of the Office of Intermodalism to the newly established research administration sends the wrong message on the national priority of freight transportation. We do not need more studies or commissions; we need leadership with a plan.

Our first response to the projected annual double-digit increase in freight container imports must be a Herculean effort to increase our freight rail system capacity. For shipments longer than 500 miles, rail transportation is much cheaper than truck transportation, and significantly reduces highway congestion and pollution. The growth in intermodal freight has united former modal rivals, with trucks now providing customer pickup and delivery to rail terminals.

Railroads are extremely capital-intensive. Most railroads are revenue-inadequate - they cannot earn enough revenue to meet the industry cost of capital. Expansion of rail infrastructure, the foundation of network capacity, is a high-risk investment and takes at least five years to complete. The huge federal budget deficit will not permit funding of new transportation initiatives. States will not be able to fund the expansion of our freight-transportation system. Most states cannot build highways unless tolls are used to finance construction. Innovative funding sources must be found.

My proposed solution is to establish a national freight-transportation infrastructure user fee, based on the size of the imported freight container. There are a number of precedents for transportation user fees. Airline passengers pay fees into the federal Aviation Trust Fund. The federal Highway Trust Fund is supported by the national fuel tax. Southern California's Alameda Corridor Transportation Authority charges a user fee for each container transiting the new rail corridor. Federal courts have ruled that a user fee on exports violates the constitutional prohibition on export taxes. Imports must bear the cost of expanding our freight-transportation infrastructure.

The proposed freight user fee would be $200 per TEU, regardless of its weight, number of intermodal transfers, or distance to the final destination. Freight entering Canadian and Mexican ports transshipped to the U.S. by rail, barge or truck would pay $100 per TEU. Based on the 2003 PIERS (Port Import/Export Reporting Service, a sister company of The Journal of Commerce) data for U.S. waterborne containerized imports, the proposed Freight Transportation Trust Fund would generate approximately $3 billion per year.

Projects funded by the trust fund will be mode-independent. They would include rail-infrastructure expansion, remote terminals for interline truck and rail transfer, rail shuttle or feeder trains, and improvements to marine and rail terminal efficiency, including intermodal connectors. While we await congressional approval of this proposal, we should begin development of a national 20-year freight-transportation model. Led by the DOT, with active participation of the transportation carriers, ports and terminals, states, regional governments and the military, the model will be used to evaluate and set priorities for funding requests. Priority will be given to projects that contribute to overall system improvement instead of fixing chokepoints, which often merely moves the problem to another location.

Most Americans do not understand our economy's dependence on freight transportation. The current status quo response to the long-term freight-transportation demand will result in near-term gridlock and long-term crisis. Congress should match the freight user fee with appropriations, because of the potential to free rail infrastructure for urban passenger transit systems and the dependence of the military on our freight-transportation system. This would send a strong message on the priority being given to improving our freight-transportation system.

The U.S. designed, funded and built the National Highway System - a 20-year project to meet a critical need. We are already late in the planning and funding for major expansion of our freight-transportation system. The mandate is clear if we are to avoid the projected crisis.

W. Gordon Fink is an independent consultant whose firm, Emerging Technology Markets in Annapolis, Md., specializes in transportation and public safety. He can be contacted at (410) 757-2001, or at