Transcript of Cargo-Oriented Development (COD): Freight-Linked …2.6% Financial Services, 8.8% Healthcare and...
Cargo-Oriented Development (COD): Freight-Linked Industrial
Development
Jacky GrimshawCenter for Neighborhood Technology
National Association of City Transportation Officials
May 11, 2009
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Presentation Notes
CNT’s mission is to build more livable and sustainable urban communities, with an emphasis on low-income communities. CNT fulfills this mission by developing and applying strategies that make more efficient and effective use of the undervalued resources in and inherent advantages of the built and natural systems that together create the urban environment. CNT views urban areas not as the source of economic and environmental problems, but rather a potential solution. These hidden assets, often lie dormant —undervalued, underutilized or completely unrecognized by market and institutional structures. Land sits vacant. Infrastructure, both built and natural, is underused. Social capital idles. CNT works to harness these assets, ensuring that the marketplace values them, and that communities and households in need can capture some portion of that value and realize tangible economic benefits. In a word, CNT is think and do tank. We Research, Promote, and Implement Innovative Solutions.
Cargo-Oriented Development (COD): Freight-Linked Industrial
Development
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CNT is based in Chicago, the freight hub of North America. Our multiple local interests lead us to see freight as a major factor in traffic congestion and air pollution; also a major factor in economic development and job creation.
Freight Transportation Is a Major Job Generator
National Employment Distribution
Transportation and warehousing, 4%
Retail trade, 14%
Information, 10%
Wholesale trade, 6%
Manufacturing, 12%
Construction, 7%
Mining, quarrying, and oil and gas extraction,
1%
Finance and insurance, 8%
Administrative and Waste Mang and
Remediation Srvs, 9%
Educational services, 0%
Health care and social assistance, 15%
Leisure and hospitality, 12%
Other services (except public administration),
3%Utilities, 1%
Selected Statistics from the 2007 Economic Census. 2007 Economic Sectors. http://factfinder.census.gov.
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We need to appreciate that freight movement is a major part of the economy and a significant source of jobs. If we consider national data that takes the narrowest definition of freight activity as transportation and warehousing, we see that this work constitutes 4% of US employment.
Freight Transportation Is a Major Job Generator
Regional Employment Distribution
Manufacturing, 14.0%Natural Resources and
Mining, 0.2%
Other Sources, 4.2%
Professional and Business Services,
17.5%
Retail Trade, 12.6%
Transportation, Warehousing and Logistics, 10.5%
Unclassif ied, 0.2%Utilities, 0.4%
Construction, 5.0%
Educational Services, 2.6%
Financial Services, 8.8%
Healthcare and Social Assistance, 11.7%
Information, 2.9% Leisure and Hospitality, 9.4%
Transportation, Warehousing and Logistics Workforce: A job market in motion. The Workforce Boards of Metropolitan Chicago. January 9, 2006
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In the Chicago region transportation, warehousing, and logistics accounts for 10.6% of employment. Chicago probably represents a peak in regard to TWL employment, but in most large cities, the % of jobs in the freight sector will probably be higher than the national average. [The national figures are based on the Economic Census. The Chicago figures are based on a study by the Workforce Boards of Metropolitan Chicago. The Chicago TWL classifies some warehousing and distribution activities as logistics and others as business services. So the higher Chicago region figure is partly a factor of different classification and partly because we have a lot of this type of work in our region.]
Transportation, Warehousing, and Logistics Is a Growth Industry
Projected Growth in Freight Shipments, United States
36,681,435
$20,125,773
$15,233,796$12,621,716
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
2002 2010 2020 2035
Year
Ship
men
ts in
Mill
ions
of
Dol
lars
Federal Highway Administration, Freight Analysis Framework, http://ops.fhwa.dot.gov/freight/freight_analysis/faf/
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Moreover, freight transportation is a steadily and rapidly growing industry. Nationally freight volumes grew each year between 1992 and 2007, and at a average annual rate higher than overall GNP. The current recession has created the first significant dip in this pattern. Per this figure, USDOT has projected that freight volumes by value will approximately triple between 2002 and 2035. The industry is registering substantial productivity gains, so employment is not growing as fast as product volume, but employment can be expected to continue growing.
Freight Facilities are Major Job Anchors
Keep Freight Operations in the City of Chicago vs. Moving Freight Operations Out of Chicago
8,000
-10,000-12000
-10000
-8000
-6000
-4000
-2000
0
2000
4000
6000
8000
10000
Jobs
Cre
ated
or L
ost
Keep freight operations in the CityMove freight operations out of Chicago
The Economic Impact of Rail to the City of Chicago. Reebie Presentation. 2003.
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Another critical consideration about freight and job creation is that freight facilities, particularly intermodal terminals, are powerful anchors for many types of businesses. Between 2001 and 2003, Reebie Associates, a premier consulting firm in the freight industry, recently acquired by Global Insight, performed a study for the City of Chicago DOT. Reebie was asked to determine the impact of retaining and improving intermodal freight facilities within the City of Chicago vs. moving these facilities to the suburbs. A key Reebie finding was that over a ten-year period retaining and improving these facilities would lead to a net gain of 8,000 jobs, while loosing the facilities would cost 10,000 jobs. This difference was not caused by the number of workers in freight facilities, which was relatively small, but by the businesses that want or need to be located near intermodal freight facilities.
Freight Facilities are Major Job Anchors
Job Creation in Freight Zones
553,000
50,00037,0000
100,000
200,000
300,000
400,000
500,000
600,000
Railroads Trucking Freight Centers
Jobs
David Chandler, Albert Benedict and Stephanie Dock. Quality of Jobs Linked to Freight Transportation..87th Annual Meeting of the Transportation Research Board. January 13-17, 2008
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An even more startling figure about the role of freight as an anchor emerged from a report on Chicago’s regional freight transportation system titled Critical Cargo developed in 2004 by the Chicago Metropolis 2020 organization. The report quoted industry sources that approximately 37,000 workers are employed in the region’s rail industry and 50,000 in trucking. But analysis found that areas termed “freight centers”, land immediately surrounding intermodal freight terminals, contained over 550,000 jobs, roughly as many employees as the Chicago CBD. Most of these workers are not classified within the Transportation, Warehousing, and Logistics industry but in manufacturing and business service enterprises as well as the retail occupations that serve any dense concentration of businesses.
Basic Questions About Freight- Linked Jobs
• Some plants have low job intensity; some high.
• Some positions & plants use day labor; others offer good wages & career paths.
• The mix of industries anchored by freight facilities has not been analyzed.
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There are important questions about the links between employment and freight transportation that need to be answered through research. For example: Some highly automated warehouses that distribute goods kept in cases (boxes/containers) employ as few as one worker per 2,000 square feet of plant space. But other distribution centers provide “fulfillment” services that require processing each item in a cargo. These plants may employ as many as one worker per 200 square feet. So until we have a better understanding and classification of logistics and distribution operations, we cannot usefully estimate how many workers might be employed in a logistics-oriented industrial park. Some logistics work, such as assembling small orders from warehouse stock, requires minimal skill and is often performed by entry level workers or day laborers for close to the minimum wage. At the same time a large percentage of logistics work requires understanding of the distribution process and high levels of interaction with business customers. This work offers salaries above the national average and professional career paths to diligent workers who may have little initial education. Until we know more about the most common types of logistics industry employment, we will not know what the typical quality of these jobs is.
Basic Questions About Freight- Linked Jobs
• Some plants have low job intensity; some high.
• Some positions & plants use lay labor; others offer good wages & career paths.
• The mix of industries anchored by freight facilities has not been analyzed.
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There are important questions about the links between employment and freight transportation that need to be answered through research. For example: So far as CNT knows, no one has systematically analyzed the mix of businesses found in the areas around intermodal terminals, so we do not truly know what types of jobs these facilities are anchoring.
Cargo-Oriented Development (COD)
• COD logistics and industrial businesses are developed in clusters with excellent access to multiple modes of freight transportation, complimentary businesses, and a ready industrial labor force.
A. Finkl and Sons Co., Chicago, IL
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While we have a lot to learn about the jobs linked to freight transportation, at CNT we think that cities should foster and capitalize on development patterns that we have termed “Cargo-Oriented Development”.CODs provide two basic types of benefits: Environmental benefits because they allow cargoes to move as far as possible by the most energy efficient mode (usually rail) and establish relatively compact industrial development patterns in which truck trips will be minimized. Economic benefits by capturing the job retention and creation potential we have been discussing.
Cargo-Oriented Development (COD): Ex-Urban Sites
CenterPoint Intermodal Center, Elwood, Illinois
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We should distinguish at least 2 basic types of COD sites: Exurban sites like this one in Elwood IL, 50 miles from the Chicago CBD, are industrial-logistics parks built around a new intermodal freight terminal. It offers extensive vacant space, in part from a closed munitions plant, in part from converted farm land, on which warehouses of up to 1,000,000 square feet are built. This project is less than 7 years old & employs over 6,000 workers, mainly in a range of value added distribution businesses. From a regional air quality and economic development perspective, the best use of this type of intermodal facility and COD is to transfer containers that are actually bound for other cities, and do not have to enter our interior highway network. It contain the types of low job intensity warehousing with ratios of 1,000 square feet or more per worker.
Cargo-Oriented Development (COD): In-Fill Sites
Harvey, Illinois
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A second type of in-fill, usually older, COD is represented by the industrial district that surrounds this 100-year-old carload and intermodal freight facility which spans 4 small towns in Chicago’s inner-ring south suburbs. Industrial businesses that lie within a one-mile radius of this terminal (and ship and receive through it) include metal working, food processing, and chemical plants, as well as distribution centers that employ approximately 8,000 workers. While this district remains a vital industrial center, it is far below its historic peak employment with hundreds of industrially zoned acres sitting idle – their reuse blocked by brownfield conditions, antiquated building structures, fragmented land ownership, and other problems. The optimal use of this freight infrastructure and COD is as a center for plants that will add value to cargos to be consumed in the Chicago market or processed here for wider distribution as finished goods. However, the COD district cannot optimally fulfill this function unless there is public intervention to restore the degraded industrial vacant land so that it can be returned to market and be put to constructive use.
Finding COD Sites
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CNT was focused on the need to restore vacant industrial land in potential COD sites in 2008. In partnership with the SSMMA we examined 44 municipalities of Chicago’s south suburbs, an area encompassing approximately 400 square miles, with a population of over 600,000 residents. This area of mainly older, industrial suburbs has a dense concentration of freight assets including service from 7 freight railroads, 5 expressways, 2 major intermodal terminals, a number of smaller terminals, and barge traffic along a major inland waterway connection between the Great Lakes and the Mississippi River system. We wanted to understand the scale, distribution, and condition of operating and potential COD sites in this area, as a first step in a program of site redevelopment.
Land fragmentation Transload facilities Transit Connectivity Index
Truck routes
Traffic congestion
Number, sales and employees of businesses on site
Number, sales and employees of businesses in area
Logistics and manufacturing workers
COD Selector Analysis Inputs
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To conduct this analysis CNT employed a tool we developed called the “Location Selector”. Using a GIS environment, the Selector conducts a statistical analysis of data on a range of variables that describe real estate parcels, in order to see which sites best match a profile for an ideal type of site are looking for. In this case we considered 32 variables that describe features of COD sites including characteristics of the land, transportation assets, nearby businesses, and the area workforce.
Finding COD Sites: Selector Analysis
Land Inputs Base Multimodal Distribution Rail Served Infill Synergistic Catalytic
Total site acreage High High High High High High
Industrial acreage of site High High High High High
Vacant acreage of site High High High High High High High
Publicly-held acreage of site High High High High High High High
Undervalued acreage of site High High High High High High High
Developable acreage of site High High High High High High High
Acres per parcel High High High High High High
Acres per owner High High High High High High
COD Selector Analysis, Land Inputs
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The selector identifies all the clusters of land in the area that meet a threshold of similarity to a COD site. Then it sorts and ranks the selected clusters according to how well they matched “ideal” descriptions of different types of COD sites.
Finding COD Sites: Basic Results
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Our Selector Analysis found 598 clusters of land that fit the general description for COD sites with a combined acreage of 21,800 acres. Of that land 8,600 acres were in active industrial use, another 12,700 was potentially available for development. The 25 clusters with the highest ranking as general COD sites contained 6,700 acres of which 3,200 acres were vacant; in other words 25 sites with an average of over 100 acres have high potential value for restoration through COD. If these properties can be rebuilt with normal levels of density for industrial-logistics parks, they will house over 20,000 jobs.
Finding COD Sites: Intermodal Distribution Sites
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Our analysis considered variations in types of COD sites. For example, we identified 327 sites in which the primary COD value lay in their proximity to intermodal freight terminals. The top 25 of these sites encompassed 5,200 acres with 2,400 acres available for redevelopment.
Finding COD Sites: Rail-Served Sites
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We also considered sites that had the primary COD advantage of frontage on a freight rail line, so that they have the potential for direct rail car service. We found 289 sites that had this characteristic, of which the 25 top sites contained 5,800 acres, including 2,500 vacant acres. We considered several other types of more narrowly defined types of COD sites, which we don’t have time to delve into in this presentation.
Developing COD Sites: Checklist
• Refinement of Site Data• Integration with Existing Plans• Predevelopment of Sites• Site Marketing
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Since CNT published its report on the COD Selector analysis last summer, our organization, partnered with SSMMA and CMAP (the Chicago area MPO) to initiate more detailed analysis and the first steps toward redevelopment of identified sites. We met with the municipal officials of 12 towns where the top COD sites are concentrated. We have begun to work through a process that includes: Site visits for confirmation and detailing of site data with the benefit of local knowledge. Learning plans of local government and private owners for vacant sites and in most cases gaining their cooperation to move the vacant sites toward redevelopment through COD. In some cases we are beginning to identify or raise funds for predevelopment of vacant sites through brownfields analysis and remediation, assembly of land or other measures. And for some sites, facilitating their sale to new owners through an active outreach and marketing program conducted by SSMMA.
Developing COD Sites: Site Predevelopment
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SSMMA has fully committed the $840,000 in its Brownfields Revolving Loan Fund for the remediation of publicly owned COD sites that the municipalities want to return to industrial development. CNT and SSMMA have helped municipalities submit $1.8 million in applications for brownfield assessment or remediation grants for COD properties in our growing database. $1.4 million has been approved by USEPA. We are also seeking new funding through a “Shovel Ready Fund” here in Illinois to help communities deal with other predevelopment needs of vacant COD sites including: land assembly, demolition of antiquated structures, the professional work involved in creation of TIFs and other special districts. Even in the current economic climate, private developers have expressed strong interest in acquiring and redeveloping our first set of COD sites that are beginning to undergo remediation.
COD Policy Recommendations: Research
• NHCRP and NCFRP on Jobs Linked to Freight Transportation
• Regional analyses of freight assets and land use
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CNT’s experience in studying and acting to implement COD, has led us to endorse a series of public policy recommendations at the national and regional levels. We need research to resolve the issues noted earlier about the nature of the jobs linked to freight transportation. Optimally this work would be funded at the national level by the US DOT.
COD Policy Recommendations: Federal
• Tax freight Shipments: Source of Funds, Incentives, and Penalties.
• Encourage energy efficient freight routing. • Encourage location efficiency in facility &
shipper locations.• Fund development and maintenance of
intermodal connectors with federal dollars.
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Strong new federal policies on freight should include a modest tax on all freight shipments, based partly on ton miles and partly on value. Besides funds to address freight issues this tax would provide strong incentives for moving freight in sustainable ways and penalties for not doing so. The tax should be made on the national level for many reasons but particularly because state or local taxes would create adverse incentives to avoid investments in regions striving for good environmental stewardship. Some of the particular uses of freight tax revenues should include: Incentives for shippers and carriers to use more energy efficient routing of freight, including the use of routing software that considers energy on a par with cost and scheduling and directing freight to terminals that will generate the fewest and shortest truck trips within regions. Incentives to strive for location efficient freight facility and plant investments, which will support compact development of CODs, particularly in in-fill sites. A federal commitment to build and maintain intermodal connectors to levels appropriate for the traffic they support. Provisions to provide such funding were stripped late in the process of passing the last national transportation bill. As a result many low income communities that house freight facilities are now paying for heavily used truck roads that detract from their quality of life while benefiting22 the entire country.
COD Policy Recommendations: Federal & Regional
• Support public-private partnerships on the CREATE model with proportional public- private benefits and investments.
• Assess regional freight assets and land use: Find potential COD sites.
• Provide incentives for COD projects• Create Shovel Ready Fund for COD site
predevelopment.
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In partnership, federal and regional government and private investors should collaboratively fund a number of measures that will improve freight flows and capture its economic benefits for communities: Following the model of Chicago area’s CREATE program federal, state and local governments and private companies should systematically assess the public and private benefits from funding freight projects of major significance and invest accordingly. Large city DOTs and MPOs, with federal funding contributions, should undertake the types of COD analysis and development projects that CNT has pioneered. Federal, state, and local governments should also provide incentives for investors that invest in COD projects that demonstrate traffic congestion, air quality as well as economic benefits. And federal, state, and regional jurisdictions should help lower income communities restore degraded land in COD areas, by funding initiatives such as CNT’s proposed Shovel Ready Fund, so that the entire community can realize the consequent economic and environmental benefits.
For More Information:
• Jacky Grimshaw Vice President for Policy—jacky@cnt.org
• David ChandlerPrincipal Business Analyst— david@cnt.org