We can't manage what we can't measure

We can't manage what we can't measure

The U.S. freight transportation industry may be a model for the rest of the world, but its lack of data is shocking. We can estimate transportation's larger impact on the economy - 9 percent of all jobs are transportation-related, as is 6 percent of gross domestic product - but we have very little specific information about how the overall system functions. And without definitive, quantitative information, we have only anecdotal evidence and seat-of-the-pants instincts to inform our decisions.

The problem is symptomatic of how our government oversees transportation. Funding is controlled vertically by mode - and information is collected the same way. Individual providers and consumers track their own horizontal movements. Neither source correlates to the other.

Congress created the Bureau of Transportation Statistics in 1991 to better coordinate, compare and guarantee quality standards for transportation data. To date, this goal remains unrealized. The BTS describes itself as "one of the 12 modal administrations in (the) U.S. Department of Transportation." Its data collection seems to have fallen into the same silo mentality and seems to exist apart from other relevant data - with little resulting benefit to the industry.

Every five years, the BTS (along with the Census Bureau) conducts the Commodity Flow Survey on the movement of goods in the U.S. The most recent Commodity Flow Survey is 1997 (although preliminary data for 2002 is just emerging). While the flow survey provides general information on shipment data, it does a poor job of tracing shipments across modes. It also largely ignores international movement.

Independently, in 1999, the Federal Highway Administration developed the Freight Analysis Framework. The Freight Analysis Framework was meant to serve as a policy analysis tool to help policy-makers understand the geographic relationships between domestic and international trade flows and the nation's intermodal transportation system. The analysis framework has done an excellent job to heighten awareness of freight issues, but it struggles between mere data collection and actual integration of it.

Although the "macro" results of the Commodity Flow Survey and Freight Analysis Framework are fairly consistent with industry assumptions and generally accepted common wisdom, the possibility exists that the more granular data has been compiled from anecdotal evidence - if not fabricated completely. Much of the output seems to be ready for publication in the Journal Of Irreproducible Results. Volume information by itself is insufficient. Accurate data is needed on origin-destination, transit time, reliability and cost. Unfortunately, this information is often confidential and can vary based on the perspective of user and provider.

Although the BTS was created by the first major legislation that specifically identified intermodal, it has never focused on intermodal transportation. The measurement of intermodal volume is effectively precluded by modal focus, carrier handoffs and product intermediation. Individual carriers can report their volume in modal aggregations, but no control is in place to guarantee that a single, through shipment is not reported more than once - while empty repositioning may (or may not) be counted as a revenue load.

In an increasingly sophisticated logistics world, data collection shortcomings are compounded. Transportation outsourcing (and related intermediation) may result in an intact load being handled by more than one "carrier" - each of which counts the load as a unit of volume. "Loads" may also be disaggregated and reconsolidated between point of origin and ultimate destination.

Due to the political climate and funding choices, the Department of Homeland Security has done more to advance transportation information collection in one year than the Department of Transportation managed to do in almost 40. While the DHS has focused primarily on border protection and imports, it seems inevitable that it will eventually concentrate on internal movements. Because of its operational timeframe, the DHS will require real-time data collection - not the years-after-the-fact standard for the DOT. It also seems intuitive that the DHS is interested in cargo intermediation and domestic movement of prior and subsequent international shipments.

To prevent intrusive demands from the DHS, the private sector might consider participating in some sort of initiative - perhaps through their trade associations - that they might otherwise ignore from the DOT. Real-time data collection for the DHS also would support policy analysis requirements for the DOT. And for the first time ever, we might finally understand the true dynamic flow of our industry. After all, we can't manage what we can't measure.

Ted Prince is senior vice president of Optimization Alternatives Ltd. He can be reached at (804) 754-2291, or via e-mail at ted@oax.com.