[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
OVERVIEW OF THE UNITED STATES FREIGHT TRANSPORTATION SYSTEM
=======================================================================
(113-13)
HEARING
BEFORE THE
PANEL ON
21st-CENTURY FREIGHT TRANSPORTATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 24, 2013
__________
Printed for the use of the
Committee on Transportation and Infrastructure
Available online at: http://www.gpo.gov/fdsys/browse/
committee.action?chamber=house&committee=transportation
U.S. GOVERNMENT PRINTING OFFICE
80-577 WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina ELEANOR HOLMES NORTON, District of
JOHN J. DUNCAN, Jr., Tennessee, Columbia
Vice Chair JERROLD NADLER, New York
JOHN L. MICA, Florida CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana STEVE COHEN, Tennessee
BOB GIBBS, Ohio ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York JOHN GARAMENDI, California
DANIEL WEBSTER, Florida ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida JANICE HAHN, California
JEFF DENHAM, California RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky DINA TITUS, Nevada
STEVE DAINES, Montana SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
VACANCY
------ 7
Panel on 21st-Century Freight Transportation
JOHN J. DUNCAN, Jr., Tennessee, Chairman
GARY G. MILLER, California JERROLD NADLER, New York
ERIC A. ``RICK'' CRAWFORD, Arkansas CORRINE BROWN, Florida
RICHARD L. HANNA, New York DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida ALBIO SIRES, New Jersey
MARKWAYNE MULLIN, Oklahoma JANICE HAHN, California
CONTENTS
Page
Summary of Subject Matter........................................ iv
TESTIMONY
Frederick W. Smith, Chairman, President, and Chief Executive
Officer, FedEx Corporation..................................... 10
Charles W. Moorman, Chairman, President, and Chief Executive
Officer, Norfolk Southern Corporation.......................... 10
Derek J. Leathers, President and Chief Operating Officer, Werner
Enterprises, Inc............................................... 10
James I. Newsome, III, President and Chief Executive Officer,
South Carolina Ports Authority................................. 10
Edward Wytkind, President, Transportation Trades Department, AFL-
CIO............................................................ 10
PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS
Hon. Janice Hahn, of California.................................. 50
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Frederick W. Smith............................................... 53
Charles W. Moorman............................................... 59
Derek J. Leathers................................................ 64
James I. Newsome, III............................................ 76
Edward Wytkind................................................... 84
SUBMISSION FOR THE RECORD
Hon. John J. Duncan, Jr., a Representative in Congress from the
State of Tennessee, request to submit the formal invitation
letter sent to members of the Panel on 21st-Century Freight
Transportation from Hon. Bill Shuster, a Representative in
Congress from the State of Pennsylvania and Hon. Nick J.
Rahall, II, a Representative in Congress from the State of West
Virginia....................................................... 46
ADDITIONS TO THE RECORD
A.L. Lotts, Director, RAIL Solution:
Report entitled ``The Steel Interstate System: a 21st-Century
Railroad Network for the United States''................... 99
Appendix A: Proposed Multimodal Feasibility Study of the
Valley Corridor Organization and Criteria.................. 155
Hon. Judy Chu, Hon. Grace F. Napolitano, and Hon. Adam B. Schiff,
Representatives in Congress from the State of California, joint
written testimony.............................................. 177
Kurt J. Nagle, President and Chief Executive Officer, American
Association of Port Authorities, written testimony............. 180
[GRAPHIC] [TIFF OMITTED] 80577.001
[GRAPHIC] [TIFF OMITTED] 80577.002
[GRAPHIC] [TIFF OMITTED] 80577.003
[GRAPHIC] [TIFF OMITTED] 80577.004
OVERVIEW OF THE UNITED STATES
FREIGHT TRANSPORTATION SYSTEM
----------
WEDNESDAY, APRIL 24, 2013
House of Representatives,
Panel on 21st-Century Freight Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The panel met, pursuant to notice, at 10:00 a.m. in Room
2167, Rayburn House Office Building, Hon. John J. Duncan, Jr.
(Chairman of the panel) presiding.
Mr. Duncan. Good morning, and welcome to the first hearing
of the Panel on 21st-Century Freight Transportation.
Rule 18 of the Transportation and Infrastructure Committee
rules allows the chairman, with the concurrence of the ranking
member, to designate a special panel to inquire into any matter
within the committee's jurisdiction. Chairman Shuster and
Ranking Member Rahall have designated this panel to examine the
current state of freight transportation in the United States,
and how improving freight transportation can strengthen the
United States economy--in other words, how we move this country
into the 21st century, transportation-wise.
I am honored to have been selected to chair this special
panel, and I am excited to be working with my friend
Congressman Nadler from New York, as the panel's ranking
member.
The safe and efficient movement of freight throughout the
Nation impacts the day-to-day lives of every American, from the
clothes you wear to the car you drive to the food you eat--the
freight transportation system impacts all aspects of everyday
life. In 2011, the U.S. transportation system moved 17.6
billion tons of goods valued at over $18.8 trillion.
In the past, the conversation about freight transportation
is focused on specific modes of transportation. However, given
the multimodal nature of freight movement, it is important to
examine the system as a whole. Goods frequently move back and
forth between ocean vessels, highways, railroads, air carriers,
inland waterways, ports, and pipelines. Bottlenecks arising at
any point on the system can seriously impede freight mobility
and drive up the cost of the goods impacted. For this reason,
improving the efficient and safe flow of freight across all
modes of transportation is critical to the health of the United
States economy and the future of the Nation's global
competitiveness.
The purpose of this panel is to provide recommendations to
the committee on ways to modernize the freight network and make
the United States competitive in the 21st century. I am excited
about the work we will do over the next 6 months, and I am glad
that we have such a talented, diverse group of Members serving
on the panel.
I had previously chaired three of the largest subcommittees
on this committee, and Chairman Shuster came to me and asked me
to serve as vice chairman of the full committee, and I tried to
help him coordinate and work to bring the work of all the
specific subcommittees together, because when one subcommittee
does something it affects the other subcommittees, as well. And
so, that is what we are talking about.
This special panel is patterned after something that
Chairman Shuster did for the Armed Services Committee in the
last Congress and he is very excited about this. He feels that
the panel that he headed up for the Armed Services Committee,
although a little smaller than our panel, achieved some very
good results.
And certainly we have an all-star panel of witnesses here
today, and I will say more about them in a few minutes. But I
am also very pleased that we have such an outstanding roster of
Members. Chairman Shuster told me that he was going to give me
a group of some of the more active members of the full
committee, and that is what he has done. And also I think that
Ranking Member Rahall has done the same with the Democratic
members of this special panel.
We are setting up an event some place in the Los Angeles
area for the end of May, and we will be going also to Memphis
and Louisville and New York and various other places because he
wants us to take this panel around the country as much as
possible.
But before I introduce the witnesses that we have here
today, I would like to call on the ranking member, my
colleague, Mr. Nadler, for any comments that he wishes to make.
Mr. Nadler. Thank you, Mr. Chairman. Mr. Chairman, let me
begin by thanking Chairman Shuster and Ranking Member Rahall
for convening this panel to examine freight transportation in
the United States. I can think of no greater policy challenge
facing this committee than addressing the needs of the Nation's
intermodal freight network.
Mr. Chairman, we greatly look forward to working with you
to develop freight policy and funding recommendations for
consideration by the full committee. Facilitating interstate
commerce is a fundamental role of the Federal Government, and
one of the essential responsibilities of this committee. This
panel will enable us to focus on how best to strengthen the
freight network across all modes of transportation to meet
current and future goods movement demands, whether it be grain
shipments on the Mississippi, or 2-day Amazon.com deliveries to
a New York City apartment.
The safe and efficient movement of freight is critical to
the Nation's economy and global competitiveness. Our economic
competitors are rapidly upgrading their transportation networks
to meet the needs of the global economy. Unfortunately, we have
not. And our transportation systems cannot efficiently meet the
changing demands of the 21st-century economy. This panel has a
real opportunity to address how we, as a Nation, and as a
Congress, prioritize our efforts to strengthen our economy.
With regard to freight transportation, this requires that
we look beyond just highways. We need to consider the critical
roles that our ports, inland waterways, intracoastal waterways,
airports, and freight railroads play in the movement of freight
and commerce. Planning and prioritizing freight investments for
the future requires an integrative and strategic assessment.
This panel is a great starting point for that process.
This panel must ensure that we have the freight policy,
strategy, programs, and funding necessary to meet these
changing demands. Although the committee has made some progress
in freight issues over the years, there is much work to do.
In 2005, the committee, with my strong support, developed
the Projects of National and Regional Significance program, the
original intent of which was to address major freight
bottlenecks and congestion around the country. To that end, the
SAFETEA-LU program provided dedicated funding and advanced
critical freight megaprojects, including the Cross Harbor
Freight Movement Project in New York, CREATE in Illinois, the
Alameda Corridor-East in California, and the Heartland Corridor
in Virginia, West Virginia, and Ohio.
Although the Projects of National and Regional Significance
program funded a discrete set of critical freight projects,
these types of projects continued to face significant hurdles
to funding under Federal-aid Highway Programs. In 2008, the
Government Accountability Office, GAO, found a series of
continuing barriers to funding freight projects, including:
freight projects face competition for public funds and
community support in the planning process; a lack of
coordination among Government entities and private-sector
stakeholders in advancing freight projects; and limited or
restricted availability of public funds available for freight
transportation projects.
In 2012, Congress took some steps to begin addressing the
needs of goods movement in the context of our current surface
transportation programs. But many of the same barriers GAO
identified in 2008 continue to exist.
MAP-21 authorized some incentives to encourage States to
develop highway freight plans and strategies, and required the
Federal Highway Administration to designate a national freight
network. Although MAP-21 recognizes the important Federal role
in creating a strategic vision for our freight system, there
remains much work to do to expand this vision to include all
modes of freight transportation--highway, rail, water, and
air--to ensure that the resources are available to implement
this vision.
Unlike SAFETEA-LU, MAP-21 does not provided dedicated
funding for national freight projects under the Projects of
National and Regional Significance program. In addition, MAP-21
requires that almost all surface transportation funds be
provided to States by formula. Although this State-based system
accommodates State and local surface transportation projects
well, it is poorly suited to address or to fund critical
transportation infrastructure projects such as major freight
projects which provide broadly dispersed benefits, but impose
substantial localized costs. Such projects are critical to the
health and welfare of the national economy, but difficult, if
not impossible, to fund through traditional State highway
formula apportionments. Therefore, MAP-21 did not address what
are arguably the most challenging aspects of implementing
freight policy: what to pay for, and how to do it.
How best to fund and advance the freight transportation
system over the long term is an overarching and critical
question facing this panel. We need the vision, the plans, and
the means to address the Nation's goods movement needs, and
strengthen their economic competitiveness. The recommendations
of this panel must lay the foundation for policies and
resources to meet the future needs of our intermodal freight
network. We should not be constrained by looking only at the
transportation network we have, but rather, we should explore
and evaluate policies that will develop the network we need for
the future. That is our charge. And working together, we can
meet these challenges.
I look forward to hearing from the witnesses, and to
working with my colleagues to develop a strategic vision for
modern and competitive freight transportation--freight
infrastructure system that we can recommend to the full
committee. I look forward to working with you, Mr. Chairman,
and with the Members from both parties, and I thank you and
yield back the balance of my time.
Mr. Duncan. Well, thank you. Thank you very much, Mr.
Nadler. As I mentioned, this panel is patterned after one that
Chairman Shuster did for the Armed Services Committee, and that
panel was smaller and the chairman thought we should keep this
panel small. But we had so many Members on both sides who
wanted to serve on this panel, that we did end up expanding the
membership.
Ordinarily, under our rules that we are operating under
this year, we have opening statements just from the chairman
and the ranking member. But because this is the first meeting
of this special panel, I have asked each Member to give a brief
2-minute opening statement. And ordinarily, we go by when they
arrive at the hearing. But for these opening statements, I am
going to go by seniority. So I will now call on Mr. Miller.
Mr. Miller. Well, thank you, Chairman Duncan. And I want to
thank you for also coming down to my area next month, which
is--I remember you coming there 14 years ago. Met at the
Ontario Airport, which, I hate to say, is an extremely
underutilized airport today. I know Congresswoman Hahn and I
have discussed transferring authority back from LAWA to Ontario
because they have just taken--stripped all the flights.
But if you look at the Port of Long Beach in Los Angeles,
they make up the largest U.S. container port complex in the
United States. And some people think that the economy has been
down. But if you look at the Port of Long Beach in 2010 they
actually set a record, all-time high for movement coming
through our area. And this panel plays an important role in
safe and efficient flow of freight across the country.
I am excited to be on this panel. It is a huge issue in our
region, because much of the development growth of commercial in
our area has been because of the rail and truck transportation
throughout southern California coming from our ports. Colton
Crossing is a great example, if you look at Union Pacific and
BNSF. That is a major, major connection of rail throughout the
United States from--coming in from the Long Beach and the L.A.
Harbor.
But California's trade corridor is huge when it applies to
cargo coming in from Asia. The freight arrives in southern
California ports, gets transferred by rail and truck and stored
in warehouse and distribution centers throughout southern
California. And if you go down there, you will see when you
drive on the freeway the impact of rail. You see it at grade
crossings, and the impact of truck traffic going to those
warehouses that store the goods that come to the United States
from Asia, specifically, and are transferred throughout the
United States.
Ontario National Airport is a hub for UPS also, and this
sequestration has had a major impact on them being able to ship
goods back and forth. And that is something this panel, I
think, needs to address also.
Southern California estimates that the next 30-year freight
movement will increase by three times throughout our region,
and this panel needs to address that and look to that. And I
thank you for your time and yield back.
Mr. Duncan. Thank you very much. Mr. Sires.
Mr. Sires. Thank you, Mr. Chairman, for holding this panel,
this meeting, and I want to thank Chairman Shuster and Nick
Rahall for thinking forward.
You know, I represent a district in New Jersey which has
all the topics that we are going to talk about. We talk about
rail, we talk about ports, we talk about shipping, we talk
about highways, we talk about pipelines, which was the latest,
going through Jersey City into New York, which was a big issue.
And the concerns that I share with members of the committee
is that the district that I represent is very congested. And we
have an issue now where, as the Panama Canal is being finished,
we have to raise the Bayonne Bridge so we can get the super-
tankers in to the district and move the merchandise out.
Eighty percent of the merchandise that comes through the
Port of Elizabeth and Port of Newark is basically consumed in
the region. So we have to move it in the region. And it seems
to me that everything that we move is around the New Jersey
Turnpike. So we have to make sure that moving freight is not
just through trucks, but to use every single mode of
transportation so we can alleviate the congestion in areas that
are like mine.
So I am really looking forward to this panel. I think we
will be able--representing the districts that we represent, we
will be able to make some real good suggestions. I just hope we
take some of this up in the future.
You know, I know I speak to the Port Authority constantly.
And the growth that we expect in our area is immense, because
of the new--the expansion of the canal. And obviously, our
biggest trading partner, Europe. So--and obviously, also, the
region that is just so large, in terms of consuming goods.
So, I look forward to serving on the panel, and thank you
very much for putting me on this panel.
Mr. Duncan. Thank you very much.
Mr. Miller. Mr. Chairman, might I point out one thing?
Mr. Duncan. Yes, Mr. Miller.
Mr. Miller. In my opening statement I ran out of time, but
I am glad to see FedEx is here, because they have a hub in
Ontario Airport also, and tremendously being impacted right now
by sequestration.
Mr. Duncan. All right. Well, thank you very much. Next on
our side is Mr. Crawford.
Mr. Crawford. Thank you, Mr. Chairman. I want to thank all
the witnesses for joining us here today. And all of you
represent critical interests throughout the freight
transportation. Each of you can offer this panel a unique
perspective into how our committee can encourage economic
growth and job creation through improving our Nation's freight
transportation network.
I represent the First Congressional District of Arkansas.
And we are blessed with a variety of transportation modes. My
district contains hundreds of miles of rail lines and highways,
and the entire Arkansas border of the Mississippi River. Each
of these modes of transportation offer unique benefits to the
businesses that set up shop in my district. Farmers in the
district will regularly rely on a combination of trucks,
barges, and trains to move their crops throughout the country
and overseas.
Just across the river from my district is the headquarters
of FedEx, which just celebrated its 40th anniversary--
congratulations, Mr. Smith. FedEx helped pioneer intermodal
transportation, and continues to advance the industry today,
delivering packages through the air, by ground, and by sea. In
just 40 years, FedEx has expanded their operation from
delivering 186 packages on their first night to 4 million
pieces of freight per day. I am glad to have the founder and
CEO of FedEx, Fred Smith, here today, and look forward to his
testimony.
I will just--on a brief, personal note, I have a good
friend that has worked for FedEx for, I guess, going on 20
years. And I texted her as we were coming into the hearing. I
said, ``I have got your boss in front of us,'' and she said,
``That can't be, my boss is with me today.'' And then it dawned
on her who I was talking about. She goes, ``Oh, you are talking
about Fred Smith.'' So I just got that text. I think the light
went on, and she knew who I was talking about. Thank you for
being here.
Our Nation's freight system attracts businesses to the
United States, strengthens local economies, and puts Americans
to work. However, all of these advantages will disappear if we
fail to maintain and strengthen our infrastructure. I am
honored that Chairman Shuster has selected me for this special
panel, and I look forward to working with my colleagues on this
panel over the next 6 months to gather the best recommendations
for the committee to improve our freight network. Yield back.
Mr. Duncan. Thank you very much. Ms. Hahn.
Ms. Hahn. Thank you, Chairman Duncan, Ranking Member
Nadler. I am really happy to be part of this panel. And I am
really looking forward to the work that we are going to
accomplish. I also want to give a shout-out and congratulate
FedEx on your 40th anniversary. It is a great story that Fred
Smith started in 1973, with 14 small aircraft from Memphis
delivering 186 packages to 25 cities around the world. We know
that you are a global company today. Congratulations.
For me, I live with the Port of Los Angeles in my backyard,
in San Pedro, California. And so freight policy is always on
the forefront of my mind. When I came to Congress from the Los
Angeles City Council, I was concerned that I didn't think there
was enough dialogue about our Nation's ports and our freight
policy. So I cofounded, along with Congress Member Ted Poe from
Texas, the Port Caucus. And we believe that we are going to
finally bring the kind of attention on our Nation's seaports
that needs to happen. I was excited when the President, I think
for the first time, mentioned ports in his State of the Union
Address.
With the Panama Canal, numerous ports across the country
are trying to dredge to be able to take the Panamax and the New
Panamax ships. At the Port of Los Angeles, we just completed
our dredging project, but this isn't true for other ports. We
need to examine spending of the Harbor Maintenance Trust Fund.
We collect these funds at our ports, but they are building up a
surplus in the trust fund. I think we should be able to access
these funds and ensure that all the ports that contribute
receive an equitable share of those funds.
When I discuss our Nation's competitiveness I always say it
is not just how deep our ports are, but it is the quality of
our land-side infrastructure that is going to matter. We
wouldn't be here today on this panel if we didn't recognize
that we all have major freight infrastructure needs: the
quality of our highways, bridges, grade separations,
interchanges. But we can't just fix one region's freight
infrastructure and not another, because, as we know, it is a
national system.
For example, the goods that leave the Port of Los Angeles
take 48 hours to arrive in Chicago, and then another 30 hours
to travel across that city. That bottleneck means that our
Nation is at an economic disadvantage. We have higher cost for
consumers, more congestion, more pollution, and less jobs. We
need to stop this piecemeal system and develop and invest in a
strong national freight system. And I know that the
recommendations that this panel comes up with are going to be a
huge step in solving that problem in our country. Thank you.
Mr. Duncan. Thank you very much. None of the other Members
on our side want to make an opening statement. Mr. Lipinski, do
you have any statement you would like to make at this time?
Mr. Lipinski. Thank you, Mr. Chairman. I want to thank you
for--and Chairman--and Ranking Member Nadler for holding this
hearing. And I am pleased that Chairman Shuster and Ranking
Member Rahall created this panel, and honored to be a member of
it.
We know that all of us here in this room understand that we
have to overcome the silos that we have here in the committee
and develop a plan to deal with our multimodal freight network
that is absolutely critical to our economic prosperity.
I had the privilege of serving as Illinois' most senior
member on the committee, and as the sole democratic
representative from the Midwest on this panel. Our region--in
particular, northeastern Illinois, is critically important to
the movement of people and freight. That is because from
highways to aviation to railroads, pipelines, inland waterways,
to Great Lakes shipping and beyond, we are at the heart of our
Nation's transportation system.
Unfortunately, we all know that northeast Illinois'
transportation network is antiquated and can't meet current,
much less future, freight growth. I know that that has already
been mentioned by a number of the Members here, on the panel.
And I am hoping that this panel will visit the Chicago area,
northeastern Illinois, to see firsthand its importance in the
challenges that we face.
In order to begin meeting our needs, I secured $100 million
seed money for the CREATE rail modernization program under
SAFETEA-LU. It is an important public-private partnership that
will reduce congestion of the Nation's rail hub, and will
improve our transportation system's reliability, and more
efficiently move goods to and from cities such as New York, Los
Angeles, and Seattle. We have gotten off to a good start on
CREATE, but we still have a ways to go.
An important question for this panel is how to advance
large-scale projects like CREATE. I think one of the answers is
to bring back the Projects of National and Regional
Significance program, which I know Mr. Nadler had mentioned.
So I am looking forward to working on this panel over the
next 6 months to develop solutions and to make our freight
network more efficient and, today, to hear from our witnesses.
Thank you.
Mr. Duncan. All right. Well, thank you very much. And I
want to introduce our panel at this time. This is my 25th year
on this committee, and some of the veterans around here will
remember that many years ago we had some hearings that lasted 7
or 9 or 10 hours and nobody would be here to hear the
witnesses, none of the Members, and the hearings would drag
out.
And so, when I started to chair the Aviation Subcommittee
back in 1995, I said my ideal hearing was one with a panel of
five witnesses, and we would not have hearings that drag out
for a long, long time. We had many other people who wanted to
testify on this panel today, and maybe we will be able to get
to them, get to some of them at later hearings. But each one of
our witnesses today was chosen for a very specific reason,
because they all represent different parts of our
transportation world.
And our first witness, I am very honored to have Fred Smith
from FedEx. Some people have already mentioned that FedEx is
celebrating a big anniversary, and that it started with 186
packages on its first day and now delivers more than 9 million
daily and more than 300,000 employees and connecting 220
countries. I would guess that Mr. Smith is probably amazed at
how his company has grown over the years. But great success,
and certainly Mr. Smith is one of the most respected men in
Tennessee. He is almost 400 miles from me in east Tennessee,
but we are proud of him, nonetheless.
Next we have Wick Moorman from Norfolk Southern. Norfolk
Southern is one of the greatest companies in this Nation with a
long history, a Class I railroad. Railroads carry more freight
than any other mode of surface transportation and operate on
more than 200,000 miles of tracks throughout the Nation. And
last year--and this always has impressed me--the freight
railroads spent almost $14 billion of their own private capital
to improve and expand their tracks.
Next we have Derek Leathers, president of Werner
Enterprises. Werner operates one of the largest trucking fleets
in the world. More than 250 million trucks carry freight on our
highway system each year. Many of the small communities don't
have a railroad or an airport or a waterway nearby, but people
live and work and shop along the Nation's 4 million miles of
highways and roads. And, as a result, many consumer goods are
often transported on the highway system, most of them for at
least part of its journey.
I am very pleased also to have Jim Newsome. Jim Newsome has
had a very distinguished career. He is the president of the
South Carolina Ports Authority, which operates the port in
Charleston, South Carolina. But he also has extensive
experience as a senior executive in the container shipping
industry. And as such, he can offer a unique perspective on
maritime transportation issues.
And last, but certainly not least, we have Mr. Ed Wytkind.
And Mr. Wytkind is joining us from the Transportation Trades
Department of the AFL-CIO, where he is president. He has been
before this committee on several occasions.
Transportation workers play a key and very important role
in the performance of the freight system. And I am glad that he
is here today to discuss their role in improving our freight
transportation system.
Just before we start the testimony I would like to call on
my colleague, Mr. Cohen. Mr. Cohen is not a member of the
panel, but he has made a special effort to be here this morning
to welcome one of our witnesses.
Mr. Cohen. Thank you, Mr. Chairman. I appreciate the
volunteer courtesy. It is indeed my honor to be here, and to
congratulate the panel on its work and its selection of its
first testifier.
There could be nobody better in this country--and with all
due respect to the other members of the panel, who are highly
esteemed experts--to give the opening remarks on the 21st
century than Fred Smith. Because the 21st century started in
1973, when he started FedEx, and that was the 21st century of
transportation. Knowing Fred, he is already in the 22nd
century. He is a forward-thinking man, and Memphis is proud to
have had people that were innovators and shook the world, from
Kemmons Wilson, who learned how to do the motel industry and
the hotel industry, to Elvis Presley, to Fred Smith.
[Laughter.]
Mr. Cohen. There is nobody that represents their company,
probably, as intimately and as recognized as such as Fred Smith
and Federal Express. And what he has done for the country, in
volunteering as a Marine and serving in Vietnam, in serving on
the World War II committee to put together the funds and the
planning for the memorial on the mall, and for his work on the
Energy Security Subcommittee, which is so important to our
country's security in the future, and to my city, where
anything involved with our city that is important, whether it
is the FedEx Forum, or whether it is the zoo which I visited
just last week with its beautiful Teton Park tribute to the
grizzlies and the wolves and the photography of all that area
which I visited and appreciated.
Fred Smith knows transportation. And my father told me that
in his time, ``What was good for General Motors was good for
the country'' was a credo. I think today what is good for
Federal Express is good for the country. I welcome Fred Smith
and I am proud that the committee has allowed me to introduce
him. Thank you, sir.
Mr. Duncan. Well, thank you very much. Mr. Nadler turned to
me and he said he believes this is the first time Elvis Presley
has been mentioned at one of our hearings, and I think that is
true.
[Laughter.]
Mr. Duncan. Again, I would like to welcome our witnesses,
and thank them for being here. And I ask unanimous consent that
their full statements be included in the record.
Ordinarily, we ask our witnesses to limit their testimony
to about 5 minutes. Because of the importance of the subject
matter, if you go 6 or 7 minutes we are not going to worry
about it too much.
But, Mr. Smith, you may begin.
TESTIMONY OF FREDERICK W. SMITH, CHAIRMAN, PRESIDENT, AND CHIEF
EXECUTIVE OFFICER, FEDEX CORPORATION; CHARLES W. MOORMAN,
CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER, NORFOLK
SOUTHERN CORPORATION; DEREK J. LEATHERS, PRESIDENT AND CHIEF
OPERATING OFFICER, WERNER ENTERPRISES, INC.; JAMES I. NEWSOME,
III, PRESIDENT AND CHIEF EXECUTIVE OFFICER, SOUTH CAROLINA
PORTS AUTHORITY; AND EDWARD WYTKIND, PRESIDENT, TRANSPORTATION
TRADES DEPARTMENT, AFL-CIO
Mr. Smith. Thank you very much, Mr. Chairman and Ranking
Member Nadler. I appreciate being invited to appear here to
represent our 300,000 team members around the world. I
appreciate the kind remarks of our Congressman Cohen, who works
very hard to represent our area so well. I want to apologize to
the southern Californians for our Grizzlies who are going to
finally beat the Clippers later this week, although we have
struggled a little bit with that in the preceding days.
As has been mentioned, FedEx covers an awful lot of the
transportation spectrum. And I want to commend you, Mr.
Chairman and Chairman Shuster and Ranking Member Rahall of the
full committee for setting up this panel. It is very important.
Having had a career in transportation that spans now 40 years,
I have watched the important effect that the leadership in the
Congress in both Democratic and Republican administrations have
had on the well-being of this country through far-sighted
transportation policy.
When I first began in transportation, logistics measured as
the cost of transportation, inventory, carrying cost, and
warehousing were about $.15 out of every dollar in the economy.
And because of the substantial improvements in the Nation's
infrastructure, and the deregulation that took place beginning
in the early seventies through 1994, logistics costs were
reduced to about 9 percent. And that is a huge increase in
national wealth and productivity and well-being.
It is essential, however, for the Congress to recognize
that those productivity increases will begin to go the other
way, unless we can modernize a lot of our transportation
infrastructure.
As has been noted, FedEx Corp. has four operating
divisions: one, the original Federal Express, which is a
worldwide operation of 660 aircraft, 47,000 trucks serving 220
countries, and moves about 4 million shipments a day. In
addition, we have FedEx Ground headquartered in Pittsburgh,
which is the second-largest ground parcel company, and FedEx
Freight, which is located in Memphis, and its operating
headquarters is in Arkansas, which is the largest less-than-
truckload operation. Plus we have our trade networks unit which
moves intermodal goods by rail and sea. And, all told, the
FedEx systems move, as you noted, Mr. Chairman, about 9 million
pieces a day.
In the air side of the business, the fundamental issues are
twofold. Number one, we have to move forward and get a Next
Generation air transportation, air traffic control system. We
waste millions and millions of gallons of fuel a day, impede
the productivity of our Nation's commerce and the traveling
public by not modernizing our air traffic control system to a
satellite-based system that allows much more flexibility and
efficiency.
The second key element in improving our air transportation
system are more runways. We built one in Memphis in 2000, a
worldwide-capable runway that now allows the FedEx Express
777's to fly nonstop from Memphis to points in Europe and Asia
and the reciprocal.
In the ground transportation business I think the issues
are equally as straightforward. Number one, we need a funding
mechanism in the form of a revised fuel tax, or a vehicle
mileage tax, which the user community almost universally
supports in order to fund additional infrastructure,
particularly in the congested areas of the country like D.C.,
the Northeast Corridor, as been mentioned, and New Jersey, and
southern California.
The second thing which we feel very strongly about and is a
very easy and quick solution, is to permit the use of longer
vehicles in the sectors of the industry that use twin trailers.
Today those are limited to 28 feet each. And the reality is, in
the ground parcel business, the vehicles are significantly
underutilized because the traffic being generated by the e-
commerce world, the direct shipping, and the lighter weight,
smaller packages, the vehicles are not very well utilized. They
pull approximately 22,000 to 24,000 pounds in the two 28-foot
trailers.
In the less-than-truckload industry the same thing applies.
On there the cube weight ratio will get between 26,000 and
28,000, generally. So, if the Congress permitted the use of
somewhat longer vehicles, our recommendation is 33-foot
vehicles. You would have very quickly vast improvement in
national efficiency because you would burn hundreds of millions
of gallons of fuel less, with the attendant reduction in
emissions. You would increase the productivity of the national
transportation system, making it more efficient and less costly
to the consumers. And the third thing that would happen is that
you would have significantly enhanced safety because fewer
vehicles on the road at the end of the day is the most
important element in reducing the number of accidents.
So, we feel that, as I mentioned in the air transport
sector, the Next Generation air transport--air traffic control
system is essential. Continue building more runways. A new
funding mechanism for our infrastructure. And the permission to
use longer twin vehicles, not--it does not require any weight
increase, which puts more pressure on our infrastructure, in
terms of repairs and things of that nature.
I would also note that FedEx, as I mentioned, is a very
heavy user of intermodal services, including the excellent
services of Norfolk Southern, who just built a big intermodal
yard just east of Memphis. And we move a significant amount of
goods through the ports of the United States. So, clearly, the
efficiency of our rail and our port system is equally important
to the other sectors that I just mentioned. But I think the
solutions there are very specific, very straightforward, and
really not subject to a lot of debate, since the effect of
these measures would be so profound.
Thank you very much, Mr. Chairman.
Mr. Duncan. Well, thank you, Mr. Smith.
Next we have Mr. Moorman.
Mr. Moorman. Thank you, Chairman Duncan, Ranking Member
Nadler, panel members. I certainly appreciate the opportunity
to discuss America's freight rail system. And I want to say it
is my honor to do so on behalf of our 30,000 customers, our
32,000 shareholders, our 39,000 suppliers, and our 8,700
customers, which include FedEx, Werner Enterprises, and the
South Carolina Port. So, gentlemen, I thank all of you, as
well.
I will be using a few images today, so if you would take a
look at the screens, first is our tribute to FedEx.
[Laughter.]
Mr. Moorman. I thought I would tell you a little bit about
our business. Norfolk Southern is the fourth largest privately
owned U.S. railroad. We transport about 7 million shipments a
year. Our tracks primarily serve the eastern U.S., but with our
connections to ports and other modes we effectively access the
world. And while my comments today highlight Norfolk Southern,
I do want to say that America's 7 Class I railroads and 550
short lines do operate as a network, and we share the
opportunities ahead.
Last week the Wall Street Journal happened to say that
railroads--and I quote--``make headlines only when calamity
strikes.'' Well, that may be true, but because of our
tremendous safety records, calamity strikes very rarely in our
business. And we generally work in the background, safely and
economically moving this Nation's raw materials, intermediate
products and finished goods wherever they need to go.
In our company's case, we have been doing that for 186
years--not 186 packages, I noticed--and we are planning at
least for that many more. And because we think like that, it is
important to understand that in railroading we have to make
very expensive, long-term bets, and then hope to make adequate
returns on them, even though our crystal ball is often cloudy.
Our locomotives last for more than 20 years. Freight cars
last a lot longer than that. New tracks can carry traffic for
decades. And big terminals--we are expanding one in Bellevue,
Ohio, now--serve, literally, generations of customers. We had a
bridge over the Ohio River that just turned 100, and our chief
engineer promises me faithfully that if we continue to invest,
it will be there another 100 years.
One example that we have a slide of is what we call the
Crescent Corridor. It is an example of strategic investment
that will improve infrastructure, reduce transit times,
increase capacity, and provide a much better transportation
alternative for the enormous amount of freight that currently
moves by highway from New Jersey to Louisiana. And we had a
slide up, I think, that showed the new terminal that Mr. Smith
just mentioned outside of Memphis.
The Crescent Corridor is a 10-year project, $2.5 billion
cost shared by NS and partners, and we have a screen that shows
just the benefits for a single State. Messrs. Duncan, Hanna,
Nadler, and Sires are familiar with the corridor's importance,
because your district includes many of its components. And
also--and Mr. Lipinski pointed this out--Ms. Brown and Mr.
Lipinski have been leaders for years on the CREATE project and
the high-speed rail projects that will serve Chicago. They are
massive projects and your efforts are appreciated. They are not
small, they are not inexpensive, but they will serve
generations to come.
We are getting ready for traffic from the Panama Canal
expansion. We are moving crude oil today. We are serving the
domestic natural gas industry. We are hiring a lot of military
veterans and Reservists. And with leaders from labor
organizations like Mr. Wytkind, we are training tomorrow's
workforce, we are reducing our carbon footprint, and improving
technology to use fuel. We are contributing to the goal of
increasing exports. In fact, we are partnering with Mr. Newsome
and his team, developing the South Carolina Inland Port. It is
a great opportunity.
I will show you another slide here of what we have done
with a similar project in Virginia at Front Royal, and you can
see all of the industry that flocks to these locations when we
build these facilities.
So, what can Government do? First, support and then
ardently resist any attempt to alter freight rail's continuing
ability to earn adequate returns and invest in our companies.
For every revenue dollar we earn, we return $.40 to
infrastructure and equipment. Just through--from 2010 through
the end of 2013, we, Norfolk Southern alone, will invest $7.5
billion in private capital. That sustains jobs. In the last 3
years we have hired more than 9,000 people, and will hire 1,200
this year.
And this is critically important because industry's jobs
and taxes want to go where the railroad is. Last decade, we
have located 1,021 new and expanded facilities along our lines,
which represent almost $30 billion in customer investment, and
about 50,000 jobs. And that is just one railroad.
The second thing, if you can do it, put the economy on a
sound footing, because we are all creatures of the economy. To
the extent that we have a stable economic environment for long-
term growth, and can see a clear path forward, it helps all of
us.
And then, finally, find sensible ways to allow the private
sector and our partners to invest in projects that will serve
the economy of tomorrow. And in the regulatory arena I will say
that the longer it takes us to steer through regulatory
hurdles, the longer we all wait for economic growth. Promote
regulations that reflect today's conditions and today's
technology, so that they enhance, rather than deter, safety,
productivity, and investment.
Private-owned railroads are not only a barometer of the
economy, but they are an essential element in solving this
country's freight transportation problems. We are planning on
growing, and we are investing for the future. And we hope that,
working with you, we can all look ahead and do everything
possible to make that happen. Thank you.
Mr. Duncan. Thank you very much, Mr. Moorman.
Mr. Leathers.
Mr. Leathers. Chairman Duncan, Ranking Member Nadler, and
members of the panel, thank you for the opportunity to testify.
My name is Derek Leathers, and I am the president and chief
operating officer of Werner Enterprises. We are a diversified
logistics company with nationwide and global services,
providing truckload freight management and intermodal services
to our customers. I point out the multimodal nature of our
business, because I think it is that kind of collaboration that
we do every day with gentlemen on this panel, as well as others
across the Nation, that help deliver Americans goods.
Mr. Chairman, we look forward to working with this panel to
craft a reauthorization bill that makes the necessary spending
decisions, and puts into place the reforms which will allow the
trucking industry to move the Nation's freight more safely,
more cleanly, and at a lower cost to our customers and,
ultimately, to the end consumer. While I am testifying on
behalf of Werner, my statement is consistent with the position
of the American Trucking Association, of which we are a member.
Unlike other modes which control their capital investment
decisions, the trucking industry is wholly dependant on Federal
and State and public agencies to spend the $33 billion in
highway user fees the trucking industry contributes annually in
a way that provides the industry with good return on our
investment through the improvements and highways and
infrastructure on which we operate.
With MAP-21's addition of performance measures, and the
creation of a new freight program which includes identification
of a highway freight network, Congress took significant steps
toward improving the Federal-aid Highway Program. We encourage
the committee to build on this progress by dedicating resources
to projects that address major freight network bottlenecks.
Highway bottlenecks cost the trucking industry $19 billion
each year in lost fuel, wages, and equipment utilization. We
also recommend a much greater investment in the National
Highway System, which comprises just 5 percent of highway
miles, yet carries 97 percent of truck freight and 55 percent
of all traffic. The ATA supports dedicated Federal spending for
last-mile highway intermodal connectors whose generally poor
condition affects the efficiencies of all our modes.
It will be difficult, however, to make these strategic
infrastructure investments without more revenue. As the
committee is well aware, the Highway Trust Fund will be in
serious financial straits in 18 months from now. We cannot
continue to rely on the general fund to bail out the program
year after year. And reducing the size of the program to match
current user fee receipts is simply untenable, in our view.
It is time for Congress to make the difficult but vital
decision to raise and/or index the fuel tax, or do both, to
ensure stable funding is available to address the costly
deficiencies facing our highway network. Alternative funding
and financing arrangements such as tolls, vehicle miles taxes,
in our view, are of limited utility and are a far-less
efficient source of project funding than fuel tax and other
traditional revenue sources.
Mr. Chairman, it is critical that we make the most of our
limited highway capacity. The growth in an automobile and truck
travel continues to greatly outpace new lane miles of highway,
and that trend will continue. Current Federal policies prevent
the trucking industry from operating its cleanest, safest, and
most efficient equipment. The United States has the lowest
weight limits in the industrialized world. This makes our
domestic industries less competitive, and acts as an artificial
tax on the American people, by unnecessarily raising the price
of consumer goods.
More importantly, these regulations force the trucking
industry to operate more trucks than are necessary, increasing
crash exposure and causing trucks to burn more fuel, which
increases emissions. There are hundreds of studies and decades
of actual experience with these higher productivity to support
giving States greater authority to increase their limits and to
modernize Federal length standards without a detrimental impact
on safety or the condition of the highway infrastructure.
Finally, while we are bullish on the future of intermodal,
and actively work with our customers on modal conversion,
claims that these changes will have significant impact on modal
share, in my view, are overstated. Seventy percent of all
freight moves by truck today. And although intermodal volumes
are growing rapidly, intermodal's 1.8 to 2.2 percent share is
unlikely to change, even in the most bullish projections.
We will continue to do our part working with the rail
industry and our partners at NS to find opportunities for
intermodal conversion. But that will not change the capital
investments still necessary to maintain and improve the
Nation's highways that are still required to support the
remaining 70 percent of freight movement. Thank you for the
opportunity to testify, and I look forward to your questions.
Mr. Duncan. Thank you very much, Mr. Leathers.
Mr. Newsome.
Mr. Newsome. Chairman Duncan, Ranking Member Nadler, and
members of the panel, I am honored to have the opportunity to
testify here today.
The container shipping industry has been instrumental in
the significant growth of globalization over the last 50 years.
U.S. shippers enjoy a very competitive market for ocean
transportation services. The service provided for containerized
cargo is remarkably reliable, and has supported the
establishment of complex import and export supply chains
routinely utilized by major U.S. corporations in their global
transactions.
It also should be noted that ports face significant
competition. Ocean carriers have a choice of where to call and
when. If a port is unable to provide an efficient and cost-
effective option, its customers will go elsewhere. The prospect
of heightened competition has been mentioned here this morning
between east and west coast ports as a result of the Panama
Canal expansion, and it is well-chronicled in industry
dialogue.
Globalization and the offshoring of significant amounts of
manufacturing have led to significant trade growth, a lot of
which was import-related. In the last 5 years, however, the
prevailing trend has been an exporting and manufacturing
renaissance from the United States. We have some commentary on
this on some slides that we are showing while I am giving this
testimony.
The idea of doubling exports, as articulated by the Obama
administration, seems to have been a worthy and timely goal. A
German company which manufactures in South Carolina, BMW, is
now the largest single exporter of automobiles from the United
States. The global shipping industry, especially the container
carriers, has responded with significant investment in new
vessels. This year we will see the largest injection of new
container capacity into the global container fleet in the
history of containerization. Eighty percent of the container
ship capacity on order is bigger than can go through the Panama
Canal today. And by the time the Panama Canal is expanded in
2015, 50 percent of the container ship capacity and operation
will be post-Panamax in size.
These large ships bring dramatic improvements in both
economic and environmental efficiency. They require reliable
ports at origin and destination to realize these benefits
capable of handling such ships productively, and with minimal
waiting due to depth or height restrictions.
Ports across the country have made and continued to make
significant investment in order to satisfy such requirements.
For example, the South Carolina Ports Authority is investing
$1.3 billion in the next 10 years in existing and new
facilities to handle mainly cargo growth.
The State of South Carolina is additionally investing $700
million in port-related infrastructure. In view of the
uncertainty with regard to the availability of Federal harbor
deepening appropriations, the State of South Carolina has set
aside the entire $300 million cost of our deepening project,
both the State and the Federal share. Our deepening project is
designed to provide a 50-foot harbor comparable to others
already authorized on the east coast, allowing the handling of
ships at 48 feet of draft without title restriction, and at
half the cost of other comparable deepening projects in our
region. These investments are indicative of the strategic role
that ports play in the economic development of the southeast
region and our country.
Going forward, it is vital that a viable strategy and
process is established at the Federal level to bring the port
capability in line with the handling requirements for such
large ships. This is a prime responsibility of the Federal
Government, as these are Federal harbors.
The process for studying and funding harbor improvements
and other restrictive infrastructure issues such as low bridges
has neither been timely, predictable, nor well funded. These
issues should be addressed in a water resources development
act, such as the legislation being contemplated this year by
this committee. However, there have been only two WRDA bills
signed into law since the year 2000, one in the year 2000 and
one in 2007.
The legislative process for approval and funding of major
port projects has been--also been made more difficult by the
demise of the Federal earmark, which is a traditional source of
funding such projects. Accordingly, the funding is woefully
short of the requirement and commitment needed to modernize the
U.S. port network, and is an impediment to future freight
mobility.
The good news is that the shortcomings of the harbor
freight improvement process seem to be well-recognized and some
improvements are at hand. The U.S. Army Corps of Engineers has
proactively developed new process guidance to speed up the
study of such port infrastructure projects. They have issued a
first paper relative to formulating a cogent strategy for
prioritizing harbor improvements.
But sustainable improvement will only be realized when a
private sector-type capital budgeting approach is taken to such
port improvement projects entailing the following major
components: the establishment of a significant and predictable
capital budget to address U.S. harbor shortcomings over
multiple years; the development of a clear system of
prioritization for such projects relative to cost benefits and
the capability they provide; a rule-based authorization system
for ports, which takes the place of individual authorizations
when a cost benefit hurdle is met; the recognition, potentially
painful, that all ports cannot be deepened with the current
Federal resource constraints, and that there will be winners
and losers in the prioritization scenario; and longer term, the
need to potentially find a user fee system to cover harbor
improvements does not exist for harbor maintenance.
I earnestly commend the attention of this panel and the
full committee to this important infrastructure priority,
without which the benefits of exporting and manufacturing
growth cannot possibly be realized. Thank you.
Mr. Duncan. Thank you very much, Mr. Newsome.
Mr. Wytkind.
Mr. Wytkind. Thank you, Mr. Duncan and Mr. Nadler. And I
want to thank Mr. Shuster and Mr. Rahall for not only forming
this panel, but for giving transportation labor the opportunity
to help you launch the work of this panel. I commend the
committee. It has always been a leader in trying to advance
national debates on these important issues, and I am honored to
be a part of this process.
I am also honored to offer the perspective of
transportation workers. Whether they work in the freight rail,
port, maritime, aviation, highway, or trucking sectors, they
together make up a transportation system for America that works
and that delivers for the American people and American
businesses. They are also members of the 33-member unions of
the Transportation Trades Department, AFL-CIO, that I am the
head of.
This is an industry that has always supported middle-class
careers. In no small measure, these good jobs have been the
result of the collective bargaining rights that many
transportation employees have secured. These are the types of
jobs that support our communities and, in turn, drive our
economy but, unfortunately, continue to allude too many
Americans that are still out of work.
We appear today to urge the committee to make more
strategic investments in freight transportation. They are a way
to boost our economy and our shrinking middle class.
Our freight rail members operate and maintain a powerful
and efficient network that has become an important driver of
our economy. For every freight rail employee hired, another
five Americans are gainfully employed. Our maritime, longshore,
and warehouse members are employed on vessels and at docks
along the east, west, and gulf coast, Hawaii, Alaska, the Great
Lakes, and major U.S. rivers. Their work enables the U.S. to
export and import goods and fuel the world's most powerful
economy.
Our transportation construction unions represent workers
who build much of the infrastructure that lies at the center of
the freight transportation debate. Boosting investments in
freight transportation will create thousands of construction
jobs at a time when unemployment in that sector is still
stubbornly high.
Our aviation members operate, maintain, and support air
carrier operations, both all-cargo carriers and commercial
passenger carriers that, combined, carry millions of tons of
freight, domestically and across the globe. The Nation's
aviation employees, both air carrier employees and those who
work in and maintain our air traffic control system, who we
also represent, play a pivotal role in our freight
transportation network.
Our members combined help to move what this panel has
identified as over 17 billion tons of goods valued at over $18
trillion. The DOT, for its part, says that freight tonnage
nationally will grow by 70 percent by 2020, with some freight
gateways experiencing a tripling of volumes. That single--and,
we believe, daunting--fact alone should inspire Congress to
make the case for new investments in freight.
We all know the facts. No matter which analysis you read,
the conclusion is the same. Our infrastructure is falling
apart, and the world's strongest economy is forced to function
with an infrastructure that barely cracks the world's top 25.
When channels are too shallow to receive large vessels, or
railroads are located miles from ports or the aviation system's
technology improvements are stalled, unnecessary delays and
congestions slow our commerce. Those inefficiencies, in turn,
choke the economy and impose costs on businesses that, in turn,
undermine our competitiveness and job creation efforts.
There are solutions, plenty of good ideas, that, if
implemented, give us a chance to turn this around and to keep
pace with an expanding economy. What is missing is the
political will in Washington to invest in such a system.
Misplaced obsessions, in our view, with austerity crowd out
investments in long-term infrastructure and transportation. And
we know that those investments are urgently needed. And while
the private sector always plays a large role in investing in
freight transportation, the Government cannot abdicate its
responsibility to provide public funding.
Here are some concrete steps. We agree that the Harbor
Maintenance Fund needs to be reformed. We support bipartisan
legislation to unlock the funds in the account, and to finally
invest in our Nation's ports and channels. We are a big
endorser of that legislation and hope it gets completed by this
committee.
The surface transportation funding crisis needs to be
solved. The Highway Trust Fund is broken, it is facing
insolvency by 2015. For 20 years it hasn't seen its buying
power go up, and it is now down 33 percent. There is a
straightforward way to do this. It requires the political
leaders in Washington to tell the truth to the American people
and to businesses. Unless we increase revenues flowing into
this collapsing fund--yes, by raising the gas tax, I said it, I
will say it five more times--our highways, bridges, and public
transit systems will fail us and our economy will crater.
In aviation, the FAA is in the midst of transitioning to a
satellite-based air traffic control system that will increase
efficiency, expand capacity, reduce congestion, and, yes,
enhance safety. But Congress must appropriate the funds and
stop subjecting the FAA to the fits and starts of funding that
we have seen over many years, the most recent one being the
sequester nightmare that is canceling thousands of flights,
that is idling thousands of FAA workers and subjecting them to
furloughs, and yes, is having a rippling effect in the air
cargo industry.
Finally, public-private partnerships and the role of
innovative finance will continue to be debated. We understand
the role of the private sector needs to be robust; we have
always supported that. But I hear from the private investment
world that without a robust role of the public sector there is
no private capital out there to tap into. So, without the right
reforms, without a long-term plan to fund these needs, the
private capital that is out there, waiting to invest, will not
come to the table as robustly as I think this committee would
like to see.
We are pleased to join my colleagues here on this panel for
this first panel meeting; it is an honor to help you try to
develop a policy on freight transportation. We look forward to
playing our role in making the process a success and in
bringing forward very strong and robust proposals. Thank you.
Mr. Duncan. Well, thank you very much, Mr. Wytkind. Great
testimony from all of the witnesses. I am going to yield my
time first to my Members and start with Mr. Miller.
Mr. Miller. Thank you, Mr. Chairman. I really appreciate
all of your testimony.
Mr. Wytkind, you talked about the impact on FAA workers,
and I absolutely agree. I am looking at Mr. Smith, and how your
hub facility in Ontario is being impacted by that right now.
And I am concerned--the DOT's--considering national freight
corridors.
And I guess my first question is going to be to Mr.
Leathers and Mr. Smith. And I have a concern because when you
consider highways that are impacted, that possibly works in
some regions because you might only have one major highway or
two, but it doesn't work in southern California.
If you look from the Long Beach and L.A. Harbors, all the--
it is like a corridor. It is not a system, it is an actual
corridor that is impacted. If you look coming from the harbor,
you might impact the 5, 105, and then it expands dramatically
past that to the 91, the 60, the 10, the 210 that have huge
impacts on Ontario Airport. And, Mr. Leathers, you see that
with your drivers right now in the same way.
And my concern--and I am going to introduce legislation I
know the chairman will agree with me on--that we need to look
at freight corridors because if you look at just a highway
system of 27,000 center line miles, and you don't take into
consideration the corridor that is really being impacted, I
think we are going to make a huge mistake. And if the DOT were
to account for only one pathway for goods movement on a
national freight network, and failed to adequately address the
complex highway system we have in southern California, I think
it is going to have a major impact on our supply chain.
Mr. Smith, do you have any comments on that?
Mr. Smith. Well, I concur with what you said. I mean, you
have to look at these things, particularly in major
metropolitan areas, as a holistic region, as opposed to just an
individual project. And that has been one of the issues in the
past, when you would have a particular project here without
regard to the consequences in the entire system. So, all I can
do is to concur wholeheartedly with what you said.
Mr. Miller. Yes, I have got a hub on the rail system in
Colton, but I have also got--it is like a warehouse hub for the
region. And Mr. Leathers, can you address how it would impact
your drivers? And Mr. Wytkind, the same way. You know what your
drivers are facing from the harbor going out. You see all the
problems we are facing with intermodal systems, especially on
our highway systems, trying to get to these warehouse hubs. How
would that impact you, if we weren't considering a corridor,
rather than just a highway system?
Mr. Leathers. Well, I would concur with the general
statement that there will be points of greater bottlenecks or
points of greater tension in the network. And so, as we talk
about investing in the highway system, obviously we have an eye
towards all of the ton-miles that we traveling with our trucks.
Clearly, however, there are smaller, more--or not smaller, but
there are more congestion points of pain in some of these
corridors, as you mentioned, that I think we would have to have
an eye towards, and we would have to make certain that we had
the sufficient funding where the pain was at its greatest
extent.
And so, for our drivers, clearly there are areas, and I
mentioned intermodal-connected final-mile issues, where we
might find ourself more congested than not, that we would
certainly expect and hope that we could put attention where the
pain is, and you have indicated such in your comments.
Mr. Miller. Mr. Wytkind, do you have a comment on that?
Mr. Wytkind. Yes, thank you. Mr. Miller, look, I view this
as a simple proposition. We have a freight network that is
complicated. There are some metropolitan areas, like yours,
that are incredibly congested.
My concern is that if we just have a policy discussion
that, say, dedicates new policy initiatives to push for sort of
an intermodal freight strategy, if we don't get new resources
directed at those projects----
Mr. Miller. That is what we are talking about.
Mr. Wytkind [continuing]. Then we are just going to get
into a policy exercise--my problem is that no one has yet put a
proposal on the table that is actually going to expand the pie,
as opposed to divvying up the pie differently, which, as we
know, is collapsing.
Mr. Miller. We are talking about--DOT is talking about
focusing dollars----
Mr. Wytkind. Right.
Mr. Miller [continuing]. On these--which is similar to what
you are saying. But my concern is we don't focus in on
corridors and, appropriately, we are going to have a problem.
And I know--Mr. Wytkind and Mr. Leathers, I got involved in
a situation that made some of you happy, some of you unhappy.
Some people think because of the issue that rose at the Port of
Los Angeles, where Antonio Villaraigosa, mayor of L.A., who is
a friend of mine, wanted to make it where you can only have
employee drivers use the facility, rather than independent
owner-operators. And for some reason, Mr. Wytkind, many of your
friends think I am anti-union, but every member of my family is
a union except me. I just think everybody should be treated
equally.
And the problem I had on that decision made by, say, Los
Angeles, was we eliminated 90 percent of the truckers that were
hauling goods from that port to other groups out there. And,
Mr. Leathers, can you--would you like to comment on that?
Mr. Leathers. Our primary----
Mr. Miller. I know I make some people mad in this, but I
have got two guys here that this country needs. I have got
union operators and nonunion operators. And one thinks I am
their enemy, which I am not, but I am looking at how do you
protect 90 percent of the people who use that port.
Mr. Leathers. Well, I mean, obviously, we think that, as it
relates to the port and some of the rules that were coming out
relative to clean air in the ports, we are fully in support of
that. And I think our industry has proven our ability and our
willingness to invest in equipment that would have and can
continue to support those initiatives. I think that is separate
from the labor implications and changing people's labor
classification in an effort to clean air, because I don't
believe those two are linked.
Mr. Miller. I don't, either. And I think we all--everybody
at this group, we need to work as a group here on
transportation. Mr. Wytkind, yes.
Mr. Wytkind. I would just add that, first of all, I would
love to offer the opportunity for Mr. Leathers' employees to be
members of a union.
[Laughter.]
Mr. Wytkind. So maybe you can bridge those issues for us.
Mr. Miller. But many people want to own their own truck and
be----
Mr. Wytkind. Right. I don't want to get into a long debate
about it, either. But the issue involving that particular area,
there are a lot of working condition issues that involve those
drivers. There is a lot of misuse of how we classify a lot of
workers in our economy. It is not unique to the trucking
industry, it has been all over the place.
Mr. Miller. My comment was----
Mr. Wytkind. So my point is it is a longer discussion,
but----
Mr. Miller. I am----
Mr. Wytkind [continuing]. There is a lot of problems that
these drivers have experienced over their careers.
Mr. Miller. I am not anti-one against another, I am saying
we need to work as a----
Mr. Wytkind. Understood.
Mr. Miller [continuing]. Unity in this country to move
goods and services, and that is our focus. Thank you. I yield
back.
Mr. Duncan. All right. Thank you very much. Mr. Nadler.
Mr. Nadler. Thank you, Mr. Chairman. As I said in the
opening statement, freight projects face significant barriers
in securing funding under Federal-aid Highway Programs, and the
State-based system is poorly suited to fund large, critical
freight transportation projects, because the benefits extend
far beyond the borders of a single State, while the cost may be
focused in a single area.
Moreover, given the significant backlog of maintenance and
reconstruction needs facing States, freight investments,
particularly large, multijurisdictional projects, are not
likely to fare well in a flat-funded, State-based formula
system.
So, my question is, is there a need for a strong, Federal
role in advancing intermodal freight projects? And do you agree
that the Federal Government is better suited for setting a
strategic freight vision for the Nation, and, in some
circumstances, partnering to fund intermodal freight
transportation projects? Mr. Smith, Mr. Moorman?
Mr. Moorman. Well, we do believe, in the railroad industry,
that there is a role----
Mr. Nadler. Talk into the mic, please. Yes.
Mr. Moorman. We do believe, in the railroad industry, that
there is such a role. And you have mentioned the Corridors of
Regional and National Significance program before. Our company
worked with the Federal Government and the State governments on
such a program, the Heartland Corridor, which will greatly
reduce transit times out of the Port of Hampton Roads into the
center of the country.
And I think that what needs to be done is to have these
corridors identified, and they are--the corridors are all out
there, clearly, to be worked on, and then to have a process in
which there is public investment and private investment--and we
have made significant private investment--to further those
corridors. Because, as you say, they cross State lines, but
they are important to the Nation.
We have other examples of that. Certainly in terms of
project regional significance, I will go back to the CREATE
project, which is absolutely important to the transportation of
goods in this country, but really only is Chicago-centric. It
just so happens a third of all rail freight passes through the
city of Chicago. Our Crescent Corridor, which I mentioned, is
another great example where there was, in addition to an
enormous amount of Norfolk Southern money, TIGER grant money,
and which helped, amongst other things, fund a terminal
Memphis.
So, we very firmly believe that, as the public--as the
private sector thinks about freight flows, which we think about
on more than a State-by-State basis, we need to partner with
the public interest to make sure that we are investing
appropriately for the future.
Mr. Nadler. I will come back to that in a moment. But let
me just ask now. How do we ensure that we have a well-
articulated national vision for freight policy, and a program
of projects underway to support and work toward a national
vision?
Mr. Smith. Well, I think it can only come from one place.
It has got to come from the Secretary of Transportation. I mean
that is the reason we have a Secretary of Transportation.
Mr. Nadler. Or Congress?
Mr. Smith. Well, of course, Congress is the boss of the
Secretary of Transportation, per se, along with the
administration. So Congress can certainly provide an enormous
amount of leadership. I mention in my remarks what I witnessed
up here over a period of time when the Congress took the
leadership in terms of deregulating the transportation sector,
and it was hugely important. Absent that, there would not be a
large amount of the economic activity that we have in the
United States.
But when you start talking about the specifics of how to
deal with the Southern California Corridor, or how do you deal
with the area in the Metropolitan New York/New Jersey area, it
requires a lot of staff expertise, a lot of particular
knowledge that is resident in the Department of Transportation.
So, the Secretary of Transportation, with the Congress, it
seems to me, has to develop the national policy.
Mr. Nadler. Thank you. Before my time runs out, let me ask
Mr. Moorman a question. Following up what we were talking about
a moment ago, freight railroads this year are planning to
invest $24.5 billion in the rail networks throughout the
country.
Those investments are commendable, but the Federal
Government also plays a role in funding some critical freight
rail projects, primarily through Projects of National and
Regional Significance grant programs, and the TIGER grant
program. These projects include CREATE, which we have
mentioned, Alameda Corridor-East, the National Gateway
Corridor, Heartland, and the Crescent Corridor. Several of
these, as you well know--of these critical investments involve
Norfolk Southern.
Some Members of Congress believe Federal funding should not
be provided for such projects. Not an appropriate Federal role.
My question is, what role has the Federal investment played in
moving these projects forward, and what are the benefits of
these projects that would be realized from the Federal
investments, and what would happen to these projects if we
weren't doing them? If--not if we weren't doing them. If the
Federal Government weren't involved in them.
Mr. Moorman. Well, I think it is important, first of all,
to say, as I said before, that in all of these projects,
certainly those that our company has participated in, we
understand that, as we receive benefit from these projects, it
is incumbent upon us to make the investment appropriately, and
that is what we do. We invest significant amounts of money,
recognizing that that is appropriate when we are going to
receive benefit.
But I think the more important thing, from the public's
standpoint, to recognize is there are huge public benefits, as
well. The Crescent Corridor, which I mentioned, is a poster
child for a Project of National and Regional Significance, in
that it will take a lot of truck traffic, over a million trucks
a year, eventually, off some very overburdened interstates
between the South and Northeast, Interstate 81 and the like.
So, I think as we move together in partnership, if we have
a process, which we have had with some of the programs you
mention, in which it is appropriate that there is a partnership
in which the public invest, public investment is made with
clearly defined and articulated public benefits, as well as
private investment with those benefits to the private sector
defined, and investments made proportionately, that is good
transportation policy, in our view.
Mr. Nadler. Thank you. My time has expired.
Mr. Duncan. Thank you very much. Mr. Crawford?
Mr. Crawford. Thank you, Mr. Chairman. Mr. Smith, again,
congratulations on 40 years. In your testimony, you mention how
critical air traffic control systems are, the safety and
efficiency of your operation. How has the recent decision by
the FAA to furlough air traffic controllers impacted FedEx?
Mr. Smith. Well, the decision that was made to furlough the
air traffic controllers has had a well-documented deleterious
effect on air transportation in general, more the passenger
carriers than us. But even so, it is adversely affecting our
operations.
And, as I think probably most of the people on this panel
know, the Airlines for America, which is the industry trade
association which represents all of the passenger carriers as
well as FedEx and UPS, the two largest cargo carriers, has
filed suit to make the Department of Transportation and the FAA
allocate its resources differently than has been the case or
the position taken by the Department of Transportation.
And so, we will see what happens on that, but obviously, it
is an enormous impediment to commerce to have these delays.
Very significant.
Mr. Crawford. Let me shift gears on you. Memphis has
embraced their airport, and they have adopted the label of
America's Aerotropolis. Can you provide some more details on
how placing this emphasis on their infrastructure has affected
the city? And could you see possibly the aerotropolis model
being an effective plan for other cities to adopt?
Mr. Smith. Well, the aerotropolis model was developed by a
very well-known academician, Professor John Kasarda from the
University of North Carolina in Chapel Hill. And Professor
Kasarda studied the effects of aviation hubs on economies. And
I think, in reality, it is a back-to-the-future observation. I
mean Liverpool was the aerotropolis of its days in an era of
sailing ships.
So, if you go to Memphis, there are thousands and thousands
of employees that are employed by companies that are there to
avail themselves of the FedEx Express hub, of the Norfolk
Southern intermodal hub, the intersection of all of the
interstate highways that connect there in Memphis. And so it is
an initiative to try to look--not dissimilar to the southern
California issue--at the region holistically. What are the
infrastructure projects that need to be done? What areas need
to be revamped and reclaimed that might have gone to seed to
promote the location of these businesses and jobs next to our
distribution centers? And, specifically, our airport.
The Memphis Airport provides about 25 to 30 percent of all
the jobs in the Memphis area. If you look in Atlanta with
Delta's hub there, it is a huge economic engine. United in
Chicago and Newark. So that is what it is all about.
Mr. Crawford. Sir, thank you. Mr. Leathers, your testimony
you raise some concerns over tolling existing interstate
highway capacity. Could you talk about what some of the
negative effects might be on your industry, and what companies
like yours do to handle tolling?
Mr. Leathers. Sure. I mean I guess it starts with this. I
mean you are here today, and I am here today, essentially in
approval of raising our fuel tax and saying we believe that is
the most efficient, most effective way to raise funds for the
highway system.
Simply stated, when you use the existing fuel tax network,
the infrastructure that already exists, the mechanics of
collecting the money that already exists, about 1 cent on every
dollar goes to the administration of that program. If we were
to convert that, by contrast, to tolling efforts or vehicle
mile traveled technologies, it is our estimation--and most
studies have concurred--that it is somewhere in the
neighborhood of $.23, all the way up to $.50 on the dollar goes
to the administration of those efforts.
So, simply stated, as a businessperson trying to operate
and invest in our own infrastructure in this country, I would
like to invest in the way that is most efficient. So we are
here before you saying that we are open to increased fuel
taxes, which means that we are open to paying an increased tax
rate, as long as those dollars, then, are turned around and
invested into the very highway system that they are being
raised for.
The collaboration across our different modes is, I think,
much more significant than people realize already. So when we
talk about congested corridors, or we talk about geographic-
specific issues, I can assure you that our collective business
teams work constantly to find modal conversion opportunities
to, surprisingly, take trucks off the road, even though I am in
the trucking business. Because the fact of the matter is there
is going to be 65 percent freight growth over the next 10
years. And the only way the existing infrastructure will
support it is if we work together. And if you look at our
business, the three fastest growing portions of our business in
our case at Werner Enterprises are our cross-border business,
our port business, and our intermodal business.
And so, we are on board with it, we just would like to not
see tolls as the mechanism to raise the money to invest back in
the infrastructure because, frankly, folks, one thing to keep
in mind is trucks have wheels, and that means they drive
alternate routes. They will take alternate roads. And I don't
want to see that. I don't think that is what is best for this
country, I don't think it is what is best for safety. And I
don't think it is what is best for the American truck driver.
And we have to keep that in mind for all times.
Mr. Crawford. Thank you. Yield back.
Mr. Duncan. Thank you very much. Ms. Brown.
Ms. Brown. Thank you, Mr. Duncan. And before I begin, I
hope that you give me my 2 minutes back. I want to reclaim them
for my opening statement and my questions. So I need a total of
7 minutes, I think.
Mr. Duncan. You go right ahead.
Ms. Brown. Thank you, sir.
[Laughter.]
Ms. Brown. And let me just say I want to thank Chairmen
Shuster and Rahall for putting together this task force, and I
want to thank you for your leadership, Mr. Nadler. Because I
think, really--and I guess I am biased, since I am the ranking
member on rail--is that rail is the engine that put America to
work. And I want to thank all of you all for the work that you
do.
I have a lot of quick questions, and I guess I will start
with Mr. Newsome. We have not passed a WRDA bill in 7 years.
That is a major problem throughout. And, you know, the port,
and we are getting ready for the Panamax ships, and it is a
major problem. Look, it is not just the earmark part of it. The
fact that we haven't passed a bill, we can't get the Army Corps
to do what we need to do in just small technical things.
What is it, do you think, we need to do to move a WRDA
bill? And keeping in mind when we set up that agency it was a
memo directive. We tell them what projects, and we can call in
the different committees and tell them what we want to see
happen. Can you give me some insight as to the--what we can do,
as a Member of Congress, to get out the way and move us
forward?
Mr. Newsome. That is a good question, Congresswoman Brown.
I mean we--the first 8,000 TEU container ship was built in
1999. And we sit here in 2013 looking at feasibility studies
taking over 15 years for deepening projects. And I think to do
this effectively, we need a strategy and a network thinking for
our port system, in terms of deepening.
We have traditionally looked at harbors as individual
projects without relationship to each other, and that is really
a flawed way of viewing things. And perhaps the best example of
that is the east coast of the United States. There is no port
on the east coast of the United States that cannot succeed
without the raising of the Bayonne Bridge in New Jersey,
because 40 percent--40 million people live in New Jersey, and
the east coast service has to go to New Jersey or New York to
be successful.
So, we have got to really develop a strategic plan for our
port system, network thinking. Put a capital budget aside,
identify the size of the problem, and then really rack and
stack with some prioritization harbor projects. We will not
deepen all the harbors in this country today at Federal
Government expense. And I think that is the important component
in what would be different in a water resources development act
this time, as opposed to one in the past.
Ms. Brown. Just about the trust fund that is just sitting
there. Can you talk about that?
Mr. Newsome. Well, I don't know if it is sitting there or
not. I mean it is----
Ms. Brown. Well, we use it at, like, the deficit----
Mr. Newsome. Well, it is----
Ms. Brown [continuing]. So we are not using it where it
needs to be.
Mr. Newsome. Yes, ma'am. So I think we have to make some
definition of terminology here. There is harbor maintenance,
which is funded by the Harbor Maintenance Trust Fund, and there
is a plan behind that. The unfortunate part of that story is
that only half the Harbor Maintenance Trust Fund collections
are spent on harbor maintenance. The rest of the fund vaporizes
into other uses.
On the other hand, we have the need to deepen harbors,
certain harbors. Not all harbors, but some harbors need to be
deepened. There is infrastructure in other harbors: Gerald
Desmond Bridge in California, the Bayonne Bridge, needs to be
addressed. So they have to be addressed differently.
I think the operating maintenance of harbors has done
pretty well. There is a plan behind it, more money needs to be
spent on it, because there is a deficit everywhere.
On the deepening side, there is really no strategic plan,
there is no allocation of a capital budget, what I would call a
capital budget, in the private sector. Maybe that is $10
billion, $20 billion, whatever. So this is the amount of money,
these are the meritorious projects. We are going to rank them,
in terms of cost and benefit, and in terms of providing the
requisite capability. There is no sense to deepening a harbor
that is not going to be able to handle an 8,000 TEU container
ship. It doesn't make sense.
Ms. Brown. That is right, absolutely.
Mr. Moorman, let me ask you a question. The RIF loan
program. We have been--Mr. Shuster and I and many of the
Members would like to not fix it, but make it more useable. You
know how long it takes to apply for it. And how do you think
improving that program would help the infrastructure and the
localities working together to improve the infrastructure?
Because we do need additional revenue coming into the system.
Mr. Moorman. The RIF loan program, as you say, has not been
used extensively for any number of reasons. I would say that
from the perspective of the Class I railroads, we always have
availability of funding, and we are able to borrow, we all are
very solid credit metrics. So it is less of an issue to us.
And, of course, as you know, we have been spending an
enormous amount of money on infrastructure enhancement and
infrastructure maintenance. And one thing I would tell the
panel is that you hear a lot about America's crumbling
transportation infrastructure sometimes, and a lot of it is
hyperbole. I will tell you that the rail freight network,
physically, is in the best condition it has been in--certainly
in the last 50 years. And that is because of the money we have
spent.
I think that in terms of the RIF program and its usability,
there are clearly cases where, if those funds are available,
there will be railroads that will want to use them. Probably
not so much the big Class I's, but then the smaller railroads.
If there is a way to make it more usable, it might even
ultimately be attracted to us. But, as you say, it is going to
have to be changed in some ways to make it more user-friendly
before we would have any interest at all.
Ms. Brown. I guess my last question, this committee used to
be one of the most bipartisan committees in the House of
Representatives the entire time I have been here. We have a
major shortfall with revenue. And what would you all, each one
of you, do to recommend what we can do to get the--you said it
is not a major issue, but the Association of Engineers give the
United States a D-minus as far as bridges and infrastructure
and the things that we need to do and the investments we need
to make to put America back to being number one, as far as, you
know, our competitors and moving forward. And I start with Mr.
Smith.
Mr. Smith. Well, the most important thing is, as Mr.
Leathers said, is to increase the fuel tax back up to an
appropriate level. It has been allowed to----
Ms. Brown. Is that a tax you are talking about, or just
revenue enhancement? What would you call it?
Mr. Smith. Tax.
[Laughter.]
Ms. Brown. See, my colleagues, they are--you know, they
can't stand that word, tax.
Mr. Smith. Well, I--the--as I mentioned in my remarks, the
combination of the leadership of the Congress in deregulating
transportation and the funding mechanism that was put in place
to build our transportation infrastructure was very important
to the economic prosperity of this country.
Beginning in the middle part of the 1990s, the primary
funding mechanism for the highway system has been allowed to
atrophy. And it is particularly unfortunate, because we have
had enormous improvements in efficiency, in terms of both miles
per gallon of both private automobiles and the equipment that
we all operate. So, the net effect on the traveling public, or
the shipping public, is not unmanageable.
So that is the easiest, quickest, most effective way to
solve the problem, is to put in a fuel tax to fund
improvements. And then, on the aviation side of the house,
there are already mechanisms there to do the same thing. But
you can't wish these things will happen; they have got to have
the money to fund them.
Ms. Brown. Thank you. Mr.----
Mr. Moorman. I agree with everything that has been said by
the panel, in terms of you are going to have to have more
revenue. This is no longer a question of when people can just
say, well, the Government is somehow inefficient in maintaining
the highway system. We are at the point where we are
approaching a crisis. The Interstate Highway System was
designed with a 50-year life, and it was built about 50 years
ago.
So, unless something is done to bring in more revenue, we
are going to continue to go downhill. And I think the panel is
quite right in saying the most effective and efficient and
quickest way to do that is through the current mechanism, which
is user fees in the form of gasoline and fuel tax.
Mr. Leathers. We think fuel taxes are the quickest, most
readily available way to raise revenues and provide revenues.
And the only caveat would be with the specific and intended use
for the infrastructure of the United States; for the highway
system and the freight system of the United States. Not for
alternative uses, not for diversions to other projects, but for
the intended use. We, as an industry, are willing and able to
subject ourself to a higher tax with that private-public
partnership and agreement that that is where the money goes.
Ms. Brown. OK.
Mr. Newsome. I may have covered a--I mean we have to
recognize that maintenance and deepening are different, and we
have to look at them accordingly. And I think we have to see
that the Army Corps of Engineers has made a lot of progress
recently in terms of shortening the timeframe to do projects,
and going down the road to making some or identifying some
priorities. And we have to be comfortable with that. I think
they are very effective in doing so, and we have to move the
projects faster.
Mr. Wytkind. Thank you, Ms. Brown. I agree with what has
been said. The Harbor Maintenance Tax funds have to be reformed
with a bipartisan bill. I agree with Mr. Newsome, that we need
to get the deepening of our channels funds into the system, and
get the process streamlined so it doesn't take half-a-
generation to get it done.
We think the fuel tax needs to be raised. We have had that
position for many years. It is the purest form of a user-fee-
based system. If you use the system, you pay a fair share, and
it is the way to do it.
And I think we can't lose sight of the fact that our
aviation system continues to operate under fits and starts of
funding. And those trust funds are in trouble, too. And we
subject the agency to these Washington-like fights that you
only see in Washington that makes them start, stop, start, and
stop. And then things that Mr. Smith and others care about, and
flying airplanes in the sky, they don't get done. And when they
do, they get done too slowly.
Ms. Brown. Thank you, Mr. Duncan. Thank you.
Mr. Duncan. Well, thank you, Ms. Brown. I let your part go
11\1/2\ minutes.
[Laughter.]
Mr. Duncan. Corrine and I are long-time friends. I have
seen her get mad in here before, but she has never gotten mad
at me, I don't think. I hope to keep it that way.
[Laughter.]
Mr. Duncan. Mr. Hanna?
Mr. Hanna. Thank you, Chairman. Thank you all for being
here.
The elephant in the room that people just spoke about is
how do we pay for all this? I come from New York, one of the
highest gas-tax States in the country. We pay sales tax on
every gallon. And it is a real issue, with all the economic
issues that New York has, otherwise, and, of course, the
country at large. But yet the ATA, I think to their credit, has
been consistent in their desire to have their own taxes raised.
However, Mr. Moorman from the railroad side may say that
they don't want their taxes raised enough. I believe you are
about $.15, Mr. Leathers, is that correct? That is roughly what
you would like to see the diesel tax raised?
Mr. Leathers. Yes, roughly.
Mr. Hanna. Roughly $.15?
Mr. Leathers. Indexed to something.
Mr. Hanna. So, we all want our taxes raised. Mr. Wytkind is
comfortable having taxes raised on your very, very large
member, taxes which will affect each and every one of those
members, and I understand that.
Mr. Smith is comfortable having taxes raised on every
gallon of gasoline that he buys. And I mean we have unanimity
there.
Yet in Congress, we seem to have a real problem even
breaching the subject. We have an efficient system that has
worked in the past that--and to be honest, we have had a
Democratic administration where all three branches were held by
a Democratic side, and yet we were unable to raise taxes. And,
of course, you know the dynamics now in Congress are so much
different it is even--it seems more difficult now than ever to
do that.
So, do you think a--vehicle mileage use traveled is a
particularly onerous thing. We don't have a way--a mechanism to
do it right now. So in the short run--and I will get to a
question--is there a way for--that any of you think about that
could allow us to include CPI and CAFE standards, in terms of
raising the gas tax, if that is where we wind up? And
apparently we have unanimity on that.
And for Mr. Moorman, specifically, to level what you would
call the playing field, how much would you like Mr. Leathers'
taxes raised?
[Laughter.]
Mr. Moorman. I love Mr. Leathers, but substantially.
[Laughter.]
Mr. Moorman. Let me address that point specifically,
though. As I think most of you on the panel know, there have
been any number of studies in the past that show that in terms
of the amount of wear and tear that large trucks cause to our
highways, they pay--while they certainly pay fuel taxes, the
amount they pay is disproportionately low, compared to the
damage they do to their highways. And we certainly strongly
advocate that there should be a level playing field.
And so, in that regard, the committee--the T&I Committee
has now commissioned another study to look at the impact of not
only current truck size and weights, but the proposals that
have been made for even more significant truck size and
weights. That report is due out, I believe, next year. And if
it shows what, as I say, most studies have shown before, it
would indicate that diesel highway fuel taxes should certainly
be higher. And in the case of heavier trucks, substantially
higher. We will see where that study goes.
And I am not coming in here to advocate that you should
raise Mr. Leathers' taxes today. We work in partnership, as he
has said, with a lot of trucking companies, and--because rail
and highway together make a better solution in many situations.
But in the future, all we advocate is a level playing field.
Mr. Hanna. So it is safe to say we have unanimity on
raising taxes for gas, largely because it is a system we have,
it costs 1 percent to raise, and everyone here understands--
and, Mr. Newsome, you mentioned you would like to have a tax
raised user fee on harbor fees, and I understand that. So I
just wanted to get everybody--have everybody a chance--get a
chance to say that.
Mr. Leathers, maybe you would like to respond, though.
Because I have heard $.95, Mr. Moorman.
Mr. Moorman. It is probably a little low, but go ahead.
[Laughter.]
Mr. Leathers. A couple of things. I think the issue of
indexing is going to be important, and something we will have
to study to come up with the right index over time. What we
don't want to do is have an index as it relates to fuel tax
that is volatile, which causes volatility, ultimately, in the
economy. Because as we fuel our trucks and have those costs, if
that index is moving violently, it has downstream unintended
consequences. But we do think it should be indexed.
So, whether that is a CPI Index or, as you mentioned, a
CAFE Index--the CAFE one concerns us a little, just in terms of
the fact that there are jump moments in that index that would
then translate to sudden and abrupt changes in the tax.
As for whether we do or don't pay our fair share, I think
that will be much to be debated. In the meantime, what I do
know is that over 70 percent of everything delivered to every
American in this country is delivered by truck. So whatever
wear and tear we may cause is probably wear and tear that
people are proud to have us do so they can have the goods and
services they enjoy every day.
So we will continue to work with the rail, and we will
continue to work within our modal solutions on longer length of
hauls. But at the end of the day, unless we are going to put
rail tracks behind our homes and businesses or dig canals for
barges, I suggest that we continue to focus at the task at
hand, which is how do we invest in the American infrastructure
so we can deliver the goods and services to its people.
Mr. Hanna. Thank you. I yield back.
Mr. Duncan. You wanted to add something, Mr. Newsome?
Mr. Newsome. I was just going to say the port situation
maybe is a bit different. On the one hand we have got a
significant bucket of money, all of which is not spent on
maintenance of harbors. On the other hand, we have got this
need to deepen harbors, and there is no predictable way to
determine how that is going to be funded. So we have got,
really, two different issues, and they are separate and
distinct.
I think the good news is that ports are now visible. The
Obama administration has moved that forward with the ``We Can't
Wait'' initiative. But now we have got to find out how to
authorize deepening, and how and what money is going to be
appropriated for it.
Mr. Wytkind. Mr. Duncan, if I could add one point?
Mr. Duncan. Yes, sir.
Mr. Wytkind. I think, Mr. Hanna, you make a lot of very
important points. But one of the things that is lost is at the
State level, in the absence of Federal leadership, these
initiatives to raise transportation revenues are passing. The
vast majority are passing. The voters are voting for them,
which is the purest form of democracy. You put a proposal on
the table, you put it on a ballot, and you vote for it.
And so I think the voters are actually further along than I
think a lot of Members of Congress realize. It is just not
translating into action in Washington, and I think that is one
of the big problems we have.
Mr. Duncan. All right. Thank you very much. Mr. Lipinski.
Mr. Lipinski. Thank you, Mr. Chairman. Mr. Wytkind, if--I
think there is a lot of things we can look at and say that it
is not translating to action in Washington that we should be
doing.
I want to apologizing having to jump in and out of this
hearing--I am the ranking member on a subcommittee that was
having a hearing--because I want to emphasize that I think that
this is a very important panel, it is a very smart thing that
has been done to--the chairman and ranking member did to put
together this panel, because we really need to examine freight
across all modes, since we all know that freight is multimodal.
And having Chairman Duncan to lead us, and Ranking Member
Nadler also, is--I think we are going to have a very successful
panel here. And I thank all of our witnesses for your input
today.
I am glad that Mr. Smith and Mr. Wytkind mentioned NextGen.
I think that is critically important. And hopefully we won't
lose that in--on this panel here, to mention NextGen and how we
can more efficiently get NextGen moving along, because it has
been fits and starts with NextGen.
Also, something else I want to mention is our inland
waterways. I want to make sure that those are not forgotten and
lost on this panel.
I want to ask Mr. Moorman a couple of questions. I would--I
was trying to figure out some way that we can work our love of
cycling into this, but I don't think we move much freight on
bikes here in this country, fortunately.
But I want to look at talking again about CREATE. I
mentioned how important it is to northeast Illinois and to the
entire country. I enjoyed working with you over the years to
advance the program, where there is about $1.3 billion in
Federal, State, local, and private dollars that have been
invested so far into projects in CREATE. As you know, we still
have a long way to go to see the program through to its
completion.
I would like to ask Mr. Moorman if you could describe what
northeast Illinois means for Norfolk Southern, specifically,
and why you believe CREATE is important, from a national
perspective?
Mr. Moorman. Thank you, Congressman. And I will say that we
don't haul a lot by cycle, either, but we still enjoy it.
As I mentioned earlier, approximately a third of all rail
freight that moves in this Nation moves through Chicago. And
that is because, historically, the infrastructure was routed
that way. So it is absolutely critically important. It is the
single most important point in the North American rail network.
And I can tell you that when things don't go well in Chicago--
an example being the blizzard that we experienced up there, all
of the freight rail networks start to slow down. It is just
that simple.
If you look at our operations into Chicago, it is our
single most important link. We run about 100 freight trains a
day in and out of Chicago. And once you get into Chicago,
because it is infrastructure that was built over a long period
of time accretively, the routes are not particularly efficient.
And there is a lot of work that needs to be done.
Now, at the same time, that inefficiency of moving traffic
through Chicago results in significant delays to the community
because of grade crossing congestion. And it presents serious
problems for Metro. So it is, of all of the things that--and
all the locations that matter not only to Norfolk Southern, but
to the North American rail network, Chicago is always number
one. And that is the significance of CREATE.
And you mentioned that you were talking to this
subcommittee about going to look at Chicago. It is something I
would encourage at some point, just to get an idea of the scale
and the scope, and how complex the rail network is there.
Mr. Lipinski. Thank you. It is something that I think
people need to see in order to understand, the issues there. I
mean we are looking at at least $1.9 billion, maybe more, to
complete CREATE right now. I think that it is not just CREATE,
there are a lot of choke points in Chicago no matter what mode
that we are talking about. We talk about choking in Chicago,
it's not just the Cubs.
[Laughter.]
Mr. Lipinski. It is rail--I am a Cubs fan, I can say that,
even though I am a Southsider--rail, freight, the roads, road
network, we talk about aviation. So that is very important. And
I think the project, as--Mr. Nadler has been a champion of
this--I think the Projects of National and Regional
Significance, having that funding mechanism available is
critical for these problems across the country, so that we can
look comprehensively and act comprehensively on some of these
choke points that occur across the country.
But my time is up. There is a lot more I could go into
here, but I am going to yield back.
Mr. Duncan. Thank you very much. Mr. Webster.
Mr. Webster. Thank you, Mr. Chairman. Thanks for doing this
panel. And it is a very important thing to our economy and to
our growth of this economy, is infrastructure. And we certainly
appreciate all of you coming today.
I had a question about something that--it is not to Mr.
Leathers, but he said that--which I think he said correctly--
that the trucking industry doesn't have the ability to
determine their right of ways or access. They basically are
determined by the building of roads, and then they run on those
roads. But I heard you mention a couple of times, Mr. Moorman,
about the--I think it is the Crescent Corridor. Could you tell
me--because I am not familiar with how this takes place--how
did you determine the--how was that determined, as far as
developing that corridor? Is it a partnership with Government,
or can you do it on your own?
Mr. Moorman. Thank you, Mr. Webster. I noticed, by the way.
Are you a Georgia Tech graduate?
Mr. Webster. I am. I am an engineer.
Mr. Moorman. Good. I love the Yellow Jackets, how about
you?
So the Crescent Corridor was identified primarily as we
started to look across our network and started to see on the
highway system an enormous amount of freight flow traffic, 5 to
6 million trucks a year, which essentially move from the South
and the Southwest, up into New York, New Jersey, New England.
And it was the largest such freight corridor which has never
really had effective rail intermodal service. But it matches up
very well to our routes.
So, we started to develop a plan to start to add terminals,
such as the one at Memphis, one at Birmingham, several in
Pennsylvania, to add infrastructure, in terms of capacity, and
to enable us to run higher speeds, to be able to provide
service to folks like Mr. Leathers and his customers that would
be competitive with the truck and offer a better economic
solution.
Our--it took us a lot of planning. And where the Federal
dollars made a lot of difference for us--although most of the
investment is ours--is it allowed us to accelerate a lot of
projects that we might have done over a 10- or 12-year period,
but instead we could do them in 3 or 4 and realize those public
benefits, as well as the private benefits, much faster. The
Crescent Corridor has about $2 billion in public benefit built
in, which has been very carefully analyzed by outside agencies.
So it was the culmination of a big project on our part. But
as we approached both Federal officials and State officials and
told them what we were doing, and told them the impact it would
have on highways like Interstate 81, it was enthusiastically
embraced by a lot of people.
Mr. Webster. Well, I guess, then, was there a necessity to
acquire new right-of-way?
Mr. Moorman. Only in very limited instances where we might
have to expand from one track to two. It was essentially our
existing infrastructure, but a lot of money spent to enhance
it.
Mr. Webster. Do you--is there condemnation rights that are
vested in someone, maybe even the Government? Or how does that
work?
Mr. Moorman. The railroads do have--historically, have
always had condemnation rights for rights of way. But it is
something we employ very, very rarely. And to my knowledge, did
not ever employ in this corridor.
Mr. Webster. So this basically followed an existing
corridor, except it was just expansion or rail improvements,
or----
Mr. Moorman. Exactly, exactly. And the good thing, from the
Norfolk Southern standpoint, is our route structure really
matched the freight flows.
Mr. Webster. Great. Mr. Chairman, I would like to at least
make one comment about Florida. We very strategically use tolls
to produce an expanded, limited-access highway system. And we
have chosen to do that, and it has been very effective. As far
as the cost, I don't think it gets into the $.20 to $.50 for
every dollar. It doesn't. It is--and I know this, that every
dime that is collected goes back into transportation projects.
We have a long turnpike enterprise system, which is over 600
miles. We have another 150 miles in a local--in several areas,
including Tampa, Orlando, Miami-Dade County have toll systems.
And we have just recently, in the last several years--I
think they started off as Lexus Lanes then they were called
Taurus Lanes, and now they are Price Management Lanes to make
the--maybe mitigate the fact that everybody can use them. But
they are used--they are basically a--we use them from Miami up
to Fort Lauderdale on I-95 for--in a sense they are price
management, in that the tolls collected are varying tolls,
depending on how much better the traffic is flowing on those
lanes, versus the other.
I could contend that that, more than anything, is a user-
pay system that works. I understand gas tax. We have a
supercharged--maybe it is a turbo tax--turbo tax system in
Florida, where our gas tax is indexed. But for the most part,
most of our new roads have been built by toll. And I would
commend that to this committee.
Mr. Duncan. Well, thank you very much, Mr. Webster. I
remember when you were speaker of the house in Florida, and you
certainly saw things from a statewide basis. But while you were
making those comments, I remembered the comment from my friend,
Joe Scarborough, when we were doing the highway bill. He told
Bud Shuster that he wouldn't want any highway money, even if
they built the Joe Scarborough Memorial Highway clear from
Pensacola to Miami. And I told Chairman Shuster that, ``You
give me his money, then.'' I would take it.
[Laughter.]
Mr. Duncan. Mr. Sires.
Mr. Sires. Thank you again to the panelists. This has been
very informative.
I was just wondering. For those people that move freight
internationally, do you and your customers see a large
difference between the U.S. infrastructure and that of the--of
your international trading partners? And where are the gaps, if
there are gaps?
Mr. Smith. Well, I think it varies around the world. If you
go to China, they have a fantastic infrastructure of airports
and ports and rail that have been put in place in the last 30
years. In Europe, it varies from country to country. I think
the European subsidization of passenger rail systems and all
makes it so it is hard to compare with the United States.
But our transportation system, up until the last decade or
so, I think, was a model for the world. The problem is it has
been allowed to atrophy. We were spending, in the 1960s, about
4 percent of GDP on infrastructure. We are down to 1 percent
now, and as been mentioned several times during this hearing,
it is very difficult to simply raise the fuel tax on an
inflation-adjusted basis, back to where it was in 1994, despite
the fact that the fuel efficiency of personal automobiles and
over-the-road vehicles and all is significantly greater. And I
think the reason for that, quite frankly, is that we have had a
vast increase in fuel taxes that have been imposed by OPEC, by
the price of fuel. So people are very sensitive to the fact
that today they are paying, you know, close to $4 a gallon,
$3.50, and when we started this decade they were paying less
than a fifth of that.
FedEx Express, I remember in the spring of 2001, was paying
$.67 for a gallon of jet fuel. And today it is $3.30, $3.40,
something. You know, it is not a little bit. It is five times.
So the average family in the United States is now paying
between $2,500 and $3,000 more for gasoline per year than they
were 10 years ago. That is why you have had such a hard time,
it seems to me, increasing the gasoline tax, because it just
adds to that.
But it still doesn't mitigate the fact that our
infrastructure is aging, and our entire economy, as Chairman
Duncan said in his opening remarks, you know, depends on this
transportation and logistics infrastructure. And we either fix
it, improve it, modernize it, and expand it, or we will have a
lower standard of living and a lower national income. That is
just absolutely 100 percent predictable.
Mr. Sires. Well, thank you very much. I am glad--I have a
few minutes, so I just want to talk a little about your
comments. You know, I know that you mentioned that you spent
$300 million, your authority, to deepen in the ports. Was that
the right amount?
Mr. Newsome. We haven't spent it yet, Congressman, we put
it aside in an account with the anticipation of spending it on
our deepening project.
Mr. Sires. But, obviously, there is no help. And you have
to put the money aside and the people of South Carolina have to
pay for that.
Mr. Newsome. That is correct. I would say we are probably
the only port and State that has done that. And we do that
simply out of the uncertainty of funding for a very strategic
project for our State.
Mr. Sires. OK. What I am getting at is that I do believe
the Government has to--you know, has a role to participate in
some of these areas, because some of the best jobs that we have
in this country comes from the ports. And I think the freight
is going to grow enough where it is not just the Port of Newark
or the Port of Elizabeth, but all the ports on the east coast
are going to be able to take advantage of the growth that is
coming in the future.
Unfortunately, we don't participate, as a Government. So,
therefore, it is the people who eventually wind up paying for
it. The reason I say that is because in New Jersey, you know,
you talk about the Bayonne Bridge. Surely we were able to get
the Port Authority to put the $1 billion that is needed to
raise the port, the bridge, which impacts about 250,000 jobs in
the region, all jobs related to the port. But, again, at a
cost.
You know, you try to go through the Lincoln Tunnel today
into New York, it is like $13, and it is going to go into, I
think, $14 or $15, because somebody has to pay for the ports--
for the ships to be able to go through the ports to keep those
good-paying jobs in New Jersey. And I always--I remind you
there was a gray billboard going into the Lincoln Tunnel and it
was put together by the people who do park-and-ride. And the
billboard read, ``President Lincoln. Great President, Lousy
Tunnel.''
[Laughter.]
Mr. Sires. OK? The reason being is that, you know, you go
into New York City, and you have to pay this expense. And we
are now working on another tunnel, supposedly the Allied
Tunnel, to move freight. But all that stuff, if we don't
participate as a Government, all those good jobs are going to
be impacted because, you know, it has got to come from
someplace.
Mr. Newsome. Well, Mr. Sires, they are Federal harbors. And
it is not correct that the people of the State of South
Carolina have to pay the entire cost for deepening. And we hope
that is not the case. We are optimistic with what we see
happening in the activities of this committee, that it will
somehow not be the case.
Mr. Sires. How many jobs, good-paying jobs, are related to
the ports?
Mr. Newsome. In South Carolina, direct and indirect jobs,
about 1 out of every 10 jobs in the State are related to----
Mr. Sires. Incredible. And if you don't deepen, you know,
these big ships coming through the canal now are not going to
be able to dock in South Carolina.
Mr. Newsome. We have to deepen. And it is not--it is a
regional priority. There are four ports within 400 nautical
miles. We are not in big cities like Los Angeles or New York.
And they serve an entire region, the fastest-growing region in
this country, the Southeast, and we need a 50-foot harbor. It
is a priority, because four other harbors are already
authorized to be at that depth today.
Mr. Sires. Thank you, Mr. Chairman.
Mr. Duncan. Well, thank you, Mr. Sires. I think it is--I
have been told that 42 percent of the House, I think it is, is
new, just in the last 2 elections. But the only representative
we have of this year's freshman class, a large freshman class,
is Mr. Mullin. Mr. Mullin, you may begin.
Mr. Mullin. Thank you, Chairman. And I do like the
opportunity to speak to everyone and tell you thank you.
It is a frustrating thing, as a business owner. We have not
near the size of fleets that you have, but in Oklahoma we run
about 80-plus trucks every day on the road, my company, which
is my wife and I's. And the frustration, the lack of common
sense that we see that comes out of this place all the time is
literally what drove me here.
And so, for this panel to be put together--when Chairman
Shuster said that he was putting this panel together, we jumped
at the opportunity, knowing that we were still a little wet
behind the ears. But we were welcomed by the chairman to join
the panel. And to see that we are bringing in the industry
leaders and actually listening--what I hope we do is actually
take your advice, too. Because for politicians to think that we
are going to fix the infrastructure is an absolute joke. We
have to take the suggestions of those that are sitting in front
of us.
And so, thank you for taking your time. And I do want you
to know it is not a waste of your time, that you are sitting in
front of us today. I truly believe this panel of 11 has the
interest. You can tell that most of us all agree that we have
got to do something with our infrastructure. The infrastructure
is the backbone of our economy. It is how we get around. At the
same time, it is one of our biggest expenses, too. When we
drive on roads that beat our trucks up, we have got to repair
them. It slows us down, and it slows our production down, too.
So, with that being said, thank you. Thank you so much.
Seventy percent of Oklahoma's freight actually travels
through the State, 70 percent of it. We are the center of the
country. And it is vitally important that we invest in the
infrastructure getting around it. So at the same time we have
one of the largest, if not the largest, inland water ports in
Catoosa, which is in our district. The chairman had the
opportunity to come--Chairman Shuster had the opportunity to
come visit it Friday. And he literally made a comment of,
``This is in Oklahoma?''
And I said, ``Yes, it is right here,'' because it doesn't
look like it belongs in Oklahoma. But we have invested in the
infrastructure, or the generations ahead of us saw the future.
And what you guys are suggesting is part of the future, too.
And I have a couple questions for Mr. Smith, first of all.
In your statement you said you was wanting to increase your
tandem trucks from 28 to 33 feet. Is that correct? What type of
increase would you see, as far as the number of trucks you
would see coming off the road in your production that you would
build, the efficiency that you would build to deliver the
products?
Mr. Smith. Well, as I mentioned, Congressman, the parcel
and the LTL business, the less-than-truckload business, which
are both network businesses, as opposed to the truckload
business, which is more point-to-point, pick up in one----
Mr. Mullin. Right.
Mr. Smith [continuing]. Location and deliver it to another
location. The problem in the less-than-truckload and the ground
parcel business, where we are represented with FedEx Ground and
FedEx Freight, is that you cube out long before you weight out.
In the truckload business, depending on the type of
commodity that you are carrying, you may well have a truck that
is very heavy.
Mr. Mullin. Right.
Mr. Smith. But in the parcel business, and in the LTL
business, you are way underutilizing the pulling power of the
vehicle. So it is about an 18-percent pickup in productivity.
And over time, you would have roughly 18 percent fewer
vehicles that are involved in LTL and ground parcel in over-
the-road transportation by making that one change. They are
safer. We have tested them in Florida and so forth. We have
had, I think it was, the University of Michigan look at it.
They are more stable. And so, with fewer vehicles on the road
you burn less fuel, fewer emissions, and you have a safer
operation.
Now, the reality, the way the transportation system is
evolving, is truckload transportation built around the 53-foot
unit is the standard unit, as well, for intermodal. And Mr.
Moorman was kind enough to put that picture of the FedEx PUPs
up there, the 28-footers. But in reality, the majority of our
rail transport are 53-foot trailer-on-flat-cars. And over a
period of time, I am very confident they will transition to
containers, because they are more efficient for the rail
transportation.
So, we would say that one of the simplest ways to improve
the Nation's productivity is simply go to a 33-foot PUP
standard and keep the 53-foot truckload intermodal standard.
Mr. Mullin. That is a commonsense approach, and I do
appreciate it. And Chairman Shuster pointed out to me one time,
though, that common sense is a rarity and doesn't belong in
D.C. But hopefully we can bring that on.
Mr. Leathers, you had made mention about the weight
increase. What is it that you would like to see the weight
increase to from where it is at to where you would like to go?
And is there a stopping concern?
Mr. Leathers. Well, first off, let me state that at our
organization we may be unique in the sense that we are a
truckload carrier that goes from A to B, as Mr. Smith just
indicated, but we also cube out before we weigh out about 80
percent of the time. So one in five of my customers would have
a benefit for a heavier weight.
My position on it, though, is that we ought to allow, as
technology has continued to advance--and, for instance, our
current truck spec has the same stopping distance--the trucks
we were bringing into our fleet today has the exact same
stopping distance at 88,000 pounds on five axles that it did in
the past, or historically, with 80,000 pounds over five axles.
So, when I made the comment that I think there ought to be
exceptions and States should be given the authority for longer
dimensional vehicles as Mr. Smith has requested, or where
appropriate, heavier weight vehicles, where the application is
designed appropriately, that is really what we are speaking to.
I will tell you in my own network, in my own organization,
it would not be something that would benefit us. But I think
the purpose of the panel is to talk about it in broader terms
than that.
Mr. Mullin. Mr. Chairman, if I could quickly say just one
more thing to the panel--and I am sorry about taking time
here--but would you prefer to see a flat tax increase, or a
percentage increase? And just quickly, you guys can either--I
don't really care who starts with that.
Mr. Wytkind. I might. We have taken the position that both
options would be fine, although we have said straight flat-tax
increase. But I do think indexing is important. I agree with my
fellow panel members, getting it indexed, so we don't have to
keep falling behind, the way we are. We are now at our 1993
budget in 2013.
Mr. Mullin. Right. Everybody agree with that? Thank you.
Appreciate your time, thank you.
Mr. Duncan. Thank you very much, Mr. Mullin.
Mr. Smith. Mr. Chairman, could I?
Mr. Duncan. Yes, sir.
Mr. Smith. Congressman Mullin, I just had a note here that
the effect of going to 33 foot, in our ground and freight
operations, would take 600,000 truck trips per year off the
road.
Mr. Mullin. Wow.
Mr. Duncan. All right.
Mr. Mullin. Thank you.
Mr. Duncan. Thank you very much. We always try to save the
best for last, Ms. Hahn.
Ms. Hahn. Thank you, Mr. Chairman. Thank you for hanging
around, you and Ranking Member Nadler, with me.
This has been, really, a fascinating discussion. I am again
so pleased that I am able to be on this panel, as I do think we
are going to be able to create a national freight policy that
is common sense, but really begins to address this issue like
we never have before.
Being the last person, obviously most of my questions were
already asked and answered. I do just want to say again how
pleased I am that we are talking about the Harbor Maintenance
Trust Fund. I just think that is a problem in search of a
solution. There is $9 billion that is surplus that is not being
used for the intended purposes.
And again, I think when we collect a tax, as was said, I
think people--and the industry is OK with that, as long as we
continue to use the tax for the purpose it was intended for.
And I think we really lose the public's trust when we continue
to ask for taxes, raise taxes, and don't use them for the
intended purpose.
L.A./Long Beach, of course, is the donor port in that
Harbor Maintenance Tax. We only get .1 percent back of what we
give. And maybe for another topic I would really like to do a
deep dive into the Harbor Maintenance Trust Fund, and talk
about are we willing--are we ready to achieve some sort of
equity? I would like to see that money go back to the ports
where it was collected. I know, though, the smaller ports in
the country are nervous about that solution, because many of
them are on the receiving end of that tax. So I really don't
feel like we have the time here to deep dive into that.
One of the things I have not heard us talk about today,
which I do think is a--is going to be a problem that we need to
address, and that is the environmental impacts of our expanded
transportation projects and initiatives. And wondering if that
is something that we need to actually look at and address in a
commonsense way when we come up with a national freight policy.
I know in Los Angeles, in Long Beach, we have had to
address environmental mitigation as we have grown our ports. We
do have the Clean Truck program. We are now expanding the
ships' ability to plug into shoreside power in our port. We
have an intermodal project, BNSF, that I fear is--will be held
up because of the environmental impacts of that project, even
though it is a good project, it makes sense, it is going to
help our transportation system. You know, unless we address the
impact that we are going to have on neighborhoods, I think many
of our projects that we are going to talk about may be stalled
until they are better.
Curious to know. Are we moving towards cleaner, greener
fleets with FedEx or rail? Are we closer to any kind of real
cleaning or electrifying of our trains, our trucks? I know we
are not close to having an electric drive system that actually
can work for a long haul. But where are we, and should we, as
we talk about a national freight policy, should we address this
in a proactive way so that any kind of expansions or, you know,
more investment in infrastructure projects, we address this at
the same time so as not to have a conflict with environmental
mitigation? I would like to hear all of your comments on that.
Mr. Smith. Well, I will start and simply say that the
easiest and best way to reduce emissions and pollutions is
through, one, making our transportation infrastructure more
efficient. Everything that we have talked about today, Next
Generation air transportation, corridor improvements,
infrastructure funding by increased fuel taxes, as long as that
money is spent on infrastructure, it will reduce the number of
vehicles or activities, and there will be a commensurate
reduction in emissions. It just follows one to the other.
As I mentioned, in FedEx Ground and FedEx Freight, just by
making the change in the twins to a 33-foot limit takes in our
company alone 600,000 trips. So it is a fantastic improvement.
The second is technology is allowing us to do what we do
more efficiently. We are buying new 777 airplanes, 18 percent
more efficient than the airplanes that they replace. Our new
lighter pickup and delivery vans for FedEx Express are almost
40 percent more efficient. The quickest way for the Congress to
reduce emissions in the transportation sector is to change the
corporate tax rate and make it more advantageous to invest in
capital assets in the United States and modernize them.
Those two things, you don't have to worry about efficiency
and emissions, you know, getting better. They will happen as a
natural coefficient of what you have done.
Ms. Hahn. Well, we found that to be true in the Alameda
Corridor. We got rid of 200 grade--at-grade crossings. And what
started out to be just an efficient way to move cargo turned
into being an incredibly environmentally sound project that
reduced emissions with cars, of course, waiting for--at the at-
grade separations. So thank you for that.
Yes, I would like to hear from the rest of you.
Mr. Moorman. Let me go very quickly. There is an enormous
amount--and I concur with everything Mr. Smith said. There is
an enormous amount the rail industry is doing, in terms of
reducing emissions. We already have a approximately threefold
advantage, in terms of fuel efficiency versus the long-distance
highway transportation. So we are generally viewed as the
cleaner form of transportation. But we have--in addition to
that, we have got lots of programs to reduce emissions and
increase fuel efficiency all over.
The other point I would build on, though, in terms of what
you can do, and what the Congress can do, is that all of us at
this panel, I know, believe in being good corporate citizens
and good environmental stewards. But one of the things that
happens--and you pointed out a great example of it--is that
quite often there are very good projects out there with
significant environmental, as well as economic, benefits that
just get snarled up in layers and layers of not only Federal
regulation, but State and local regulation, and can add years
and years to the time when we can accomplish these projects and
realize the benefits.
And to the extent that this panel thinks about that, and
thinks about how we can streamline processes to get a lot of
this important work done, I think that is an important thing to
keep under consideration.
Mr. Leathers. I also will try to be brief. I echo the
sentiments. The single biggest thing I think we can do to
positive impact the environment is to take away the congestion
that otherwise results from inaction.
There was an A&M study in 2011 that said the cost of
congestion on our Nation's highways was $121 billion. Trucks
bore the brunt of that in the term of $29 billion. But the real
issue is as those trucks are--and cars and other vehicles are
congested, is the emissions and pollutants and environmental
impact that may happen.
As for our industry, we have invested heavily. We have
reduced the particulate as well as NOx emissions of the Next
Generation trucks that we now run by 90 percent over the last 5
years. And so, one of the untold stories is that the average
truck going down the road today, you would need 60 of them to
have the same emissions as one truck would have had in 1985. So
tremendous progress has been made, and we are going to continue
to go down that path. But eliminating congestion and allowing
us an environment whereby we can invest with a better tax
structure, so that we can invest in alternative technologies as
they come available, would be huge.
We are experimenting with natural gas, both compressed
natural gas and L&G liquified natural gas. But in both cases it
is a very expensive technology. And so, having appropriate tax
environment that allows us to take those risks would be
beneficial, as well. And we will continue our part, you know,
in our organization. You know, we have eliminated 860,000 tons
of carbon emissions, just in the last 5 years, through some of
these techniques, and we are going to continue to do so. But it
is really an industrywide effort to try to run cleaner and
safer at all times.
Mr. Newsome. The international and domestic container
shipping industry, I think, has been on the forefront of
environmental efficiency. The very building of large ships is
environmentally efficient. We are going to carry more cargo on
the same number of ships, accommodating our growth in much more
fuel and environmentally efficient ships.
You mentioned shore power. I think the main benefit in
harbors is going to be from the North American Emission Control
Area, which was implemented in the U.S. in August, and will
ultimately reduce sulphur content and maritime diesel fuel from
about 4 percent to .1 percent by 2015. So it is a dramatic
reduction across all ships in the harbor.
We have a Puerto Rico carrier that is building L&G ships
today. And I think the ports have stepped up to the plate, in
terms of retrofitting engines, more efficient diesel engines,
electrifying cranes, and, in our case, even funding a truck
replacement for the oldest of diesel trucks.
Mr. Wytkind. If I might add one small comment, first of
all, NextGen in the aviation system has proven to cut fuel
consumption, and will reduce the footprint of the airline
industry. Reducing congestion is good environmental policy. I
think there is too much saber rattling that goes on in some of
these development projects that gets in the way of some
environmental progress. Letting the freight rail industry
innovate and expand, and making policies in our Government
reflect that ability to expand is good environmental policy.
And let's not forget. I know no one has mentioned the word
``public transit'' in this hearing. If you boost public transit
in this country, and you boost it in some of these large,
metropolitan areas like Mr. Nadler's and others, and give them
more resources so they can expand, not have to cut service,
like we are seeing around the country, that relieves
congestion, that makes more room for freight, and that is good
environmental policy, as well.
Ms. Hahn. Thank you.
Mr. Duncan. Thank you very much, Ms. Hahn. Before I make my
closing comments, I believe Ms. Brown wants to ask some more
questions.
Ms. Brown. Mr. Chairman, this has been very educational. I
just want to say that the Chamber from Miami was here and they
was watching. And so I think, keeping in mind that we have the
support of the business community, their interest in us working
together to move a transportation bill that will give us the
revenue enhancements, taxes, or whatever you want to call it,
and making sure that we reinstate, let's say, the earmarks,
Members' priorities, so that the communities can work together
to get the immediate resources.
Yesterday the Department of Transportation released the
TIGER grants. We will have billions of dollars requested, just
millions to fund, because of the pent up demands in the
community, and those choke points that you all have talked
about.
So, I want to thank you very much, and thank you, the
chairman and the ranking member, for convening this committee.
And thank you all for your testimony. It would be--it has been
very helpful. Thank you.
Mr. Duncan. Well, thank you. Mr. Lipinski, anything else?
Mr. Lipinski. You really don't want to take any more time
here, Mr. Chairman, do you? I was going to say I just talked to
Illinois Council of Engineering Companies, and they also were
excited that this is going on, that we are talking about this.
They understand the need to get this done. But thank you, Mr.
Chairman.
Mr. Duncan. Thank you very much. You know, I was a judge
for 7\1/2\ years before I came to Congress. And I always tried
to get to court right on time. And then I came here, and it
seemed that every hearing started 15 or 20 minutes late. So
when I started chairing subcommittees, I tried to start right
on the minute every time. And my goal was always to hold these
hearings to a couple of hours. I am fascinated with these
topics, but I found that you had better participation by
Members if you started these hearings on time and kept them
running, and I have always tried to do that. We have run a
little bit over today, but the testimony has been fascinating.
I just want to say just a few things. You know, there are
many challenges within transportation, but we are all in this
together. There is an important local role, there is an
important State role. But I have always thought there was a
very important Federal role in all of these topics, because
people in California sometimes use the airports in Texas, and
vice versa. People in Ohio sometimes drive on the roads in
Tennessee and vice versa. People in New York sometimes drink
the water in Florida, and vice versa. And so we are all in this
together.
But it seems to me that there are many challenges. But
number one, of course, is funding. And most of you have said
some things about that, and that is a problem for all of us.
But I have said in here for many years that we need to stop
spending trillions of dollars on unnecessary wars and things in
other countries and start taking care of our own country for a
while.
The second biggest thing, it seems to me, is to speed up
project delivery. I remember when I chaired the Aviation
Subcommittee, they testified that the newest runway at the
Atlanta Airport, which is now several years old, took 14 years
from conception to completion. It took only 99 construction
days. And they were so relieved to get all the final approvals,
that they did that in thirty-three 24-hour days. Then, when I
chaired the Highways and Transit Subcommittee, the Federal
highway people told us that their last two studies, one said 13
years, one said 15 years from conception to completion on all
the highway projects.
And, Mr. Newsome, I remember meeting with Maersk one time
and they told us about the Norfolk Port project that they just
basically did on their own. They did everything for the
Government to try to speed things up. Hopefully MAP-21 will
have some effect on that. It seems to me that when we are
forced into it we can move pretty quickly, like on the
Interstate 35 bridge project, when we all got together on that.
And then the third thing, the third big area to me seems to
be how do we balance our resources. Because what you have got,
you have got people moving all over the country, from the high-
tax States to the low-tax States. You have got people all over
the country still moving out of the small towns and rural areas
to the popular urban areas. And I see that in Tennessee, for
instance, because, Mr. Smith, you know the fast growth in
Tennessee is in the circle around Nashville and the circle
around Knoxville. Half the people I represent have moved from
someplace else. It is phenomenal.
These big cities, primarily in the Northeast, have such an
aging infrastructure, they need a lot of work. But then you
have got the fast-growth areas like the Knoxville area,
Nashville, and a lot of other areas around the country. They
have to have a lot of work done because of all the growth. And
then, all of us have a soft spot in our heart for the small
towns and rural areas, and you don't want to force people to
keep moving out of those areas, and those are poor economic
areas. So they need a lot of help.
But, Mr. Wytkind, these jobs are jobs that can't be
outsourced, for the most part. And that is important to me,
because, you know, I represent the University of Tennessee and
a lot of other small colleges. And I see we are ending up with
the best-educated waiters and waitresses in the world. And
there is nothing wrong with that, that is honorable employment,
but you hate to see people, even with advanced degrees
sometimes, who can't find the good jobs that they used to be
able to find.
Mr. Newsome, the most fascinating slide I think you showed
was that one showing that the Panama Canal was moving to allow
ships with--was it 12,600 TEUs?
Mr. Newsome. 12,500.
Mr. Duncan. 12,500? That amazes me, because I have seen all
those--I have seen presentations--I remember when they thought
8,000 TEUs was just almost unbelievable. And then you go back
into the fifties and sixties and they were really small. But we
have got to keep improving these ports. I had the opportunity
to open and close the Panama Canal at one point. I have been
there and been to most of the ports. And I am glad to see you
doing what you are doing.
Let me just add this. We need specifics, as many specifics
as we can. And, Mr. Moorman, I was glad to see you mention the
Crescent Corridor project, because at the request of my good
friend and yours, John Corcoran, I put in the first money to do
the first Federal study of that project. And, boy, that is sure
something that would--as you said, would be good for my area,
but many other parts of the country as well.
At any rate, we have been asked to go around the country,
we have been asked to make recommendations to all the different
subcommittees. And if there is any specifics that you think of
after you leave here or that you didn't really have an
opportunity to get into in your testimony or your responses
today, please submit them to us, because we want everybody to
do well. We have got a great transportation system. As an
individual or as a company or whatever, you lose the desire to
improve. It is sad for you and it is sad for the people you
work for. I hope I am a better congressman now than I was 5
years ago. I hope, if I am here a while longer, that I am a
better congressman in the future.
So, we got to keep trying to do more. We got to keep trying
to do better. And that is what this panel is all about. So as
many specifics as you can give us for our final report 6 months
from now, we would certainly appreciate. And we appreciate the
work that you have put into your testimony and your responses
here today. And I would like to call on Mr. Nadler to close out
the hearing.
Mr. Nadler. Well, thank you very much, Mr. Chairman. I want
to thank you for convening the hearing. I want to thank the
witnesses and the Members.
This is the beginning of what will hopefully be a very
fruitful investigation into a--that may result in a unified,
intelligent, comprehensive freight policy for this country,
something we haven't had in a long time, an intermodal freight
policy that will look at all the different modes, it will
figure out how to finance them.
Obviously, the elephant in the room is how to finance all
of this. The gas tax, the gasoline tax, which has been the--or
the diesel fuel tax, which has been the primary source of
financing for infrastructure, has been--is a wasting asset,
both because of not adjusted for inflation, and we are becoming
more fuel-efficient, which we want to be. Both of those reduce
the revenues from the tax, and we have got to do something to
replace it, obviously. It is something that we can pass
politically, which may be more difficult than intellectually.
We have to figure out how to cut down on the red tape and
on the delays in implementing projects. And how to make sure
that, from a national point of view, we have those projects,
Projects of National and Regional Significance and others, that
will make the freight system, as much as possible, seamless and
efficient. It is a tall order for 6 months, but I assume we
will come up with some decent answers.
And I want to thank everybody involved in this, and in
particular, the witnesses today.
Mr. Duncan. All right. Thank you very much. I have to ask
unanimous consent that the formal invitation letter sent by
Chairman Shuster and Ranking Member Rahall to the members on
this panel be entered into the record of today's hearing.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] 80577.005
[GRAPHIC] [TIFF OMITTED] 80577.006
[GRAPHIC] [TIFF OMITTED] 80577.007
We thank you all very much for being here, and your work
and that will conclude this hearing.
[Whereupon, at 12:28 p.m., the panel was adjourned.]