SWUTC Research Project Description

Title of Project: Export Growth, Energy Costs and Sustainable Supply Chains

Project Number:  476660-00069

Principal Investigator:
Robert Harrison
(512) 232-3113
P.I. Affiliation:  University of Texas at Austin
harrison@mail.utexas.edu

Project Monitor:
Ronald D. Matthews, Ph.D
Professor
The University of Texas at Austin
Department of Mechanical Engineering
Cockrell School of Engineering
1 University Station, C2200
Austin, Texas 78712  
Phone: (512) 471-1045
rdmatt@mail.utexas.edu

Project Status:  Active

Date Started:  9/1/08

Estimation Completion Date:  8/31/09

Estimated Cost - Current Fiscal:  $57,000

Estimated Cost - Total Planned:  $57,000

Project Summary:
Project Abstract:
The United State’s economic growth in the last two decades has been profoundly impacted by changes in transportation systems which have enabled companies to outsource production to both domestic and foreign locations and effectively compete in global markets. This may now be changing as a result of (a) rising energy transportation costs, (b) U.S. export growth mitigation due to transportation supply chain shortcomings, and (c) urban freight systems becoming less efficient with unconstrained metropolitan growth. The study will evaluate these three areas – the last area through sustainability - and suggest what likely impacts may occur to the U.S. freight transportation of both domestic and international commodities.

Project Objectives:
The study has a threefold inter-related focus to illustrate future potential freight systems. First, it will review metropolitan sustainability and attempt to identify whether any freight systems have been proposed to more effectively move urban freight in the larger conurbations predicted by demographers.  Second, it will categorize energy impacts on the main modes moving freight and integrate these with the land-use implications derived from the first focus. Finally, it will describe and evaluate the ability of current transportation corridors and supply chains to move export products as efficiently as imported goods. In this manner, short term impacts are covered by addressing export growth, medium term by the adjustments to alternative energy sources, and finally, the longer term by noting the impact of sustainable freight systems supporting continued city growth.

Task Descriptions:
Task 1.  Literature Review
A substantial amount of literature exists on sustainability, so care has to be exercised to develop a freight focus within the broad subject area.  The team will examine the economics underlying sustainability since it implies a change in the current way in which transportation services are priced. The European Union (EU) sponsored work in the 1990s on this topic and this will be reviewed. There is also literature on urban form (land use) so that selected approaches that appear pertinent to cities in Region 6 states will be evaluated. The areas of economics and community and regional planning will then be complemented by mechanical engineering innovations addressing alternative energy types to suggest new supply chain and distribution forms. An area of research undertaken previously by UTCP researchers – mobility versus access - in urban forms will be reviewed and updated. The literature should support the study objective of combining supply chains (corridors), energy efficiencies (transportation systems) and urban form (sustainability).

Task 2.  Supply Chains and Logistics – Past, Present and Future.
The de-regulation of U.S. transportation systems, beginning first with rail in 1981, heralded the start of a national modal transformation that is still in progress as urban forms change. Multi-modal planning gave rise to inter-modal opportunities in distribution, which became more important as international trade grew, first with Europe and then, more significantly, with Asia. Containerization reduced transportation ton-mile costs and enabled goods to be safely and securely moved efficiently between regions. Domestic double stack rail containerization was introduced in the late 1980s and early 1990s with the development of alliances between large truck load (TL) carriers and railroad companies. First, these took the form of moving truck trailers on flat cars (TOFC), but this was superseded by the use of containers that mimicked the exact dimensions of the 53 ft truck semi-trailer. Double stack efficiencies then enabled rail to offer competitive service with trucks for trip distances greater than 500-700 miles, although U.S. railroads now had to handle two categories of boxes which raised rolling stock capital costs. The first category is the International Standards Organization (ISO) marine box which is used for virtually all containerized commodities shipped in maritime vessels. These are smaller in width – 8 ft, rather than 8.5 ft – compared to the domestic box. This requires different rolling stock (well carriers) capable of handling either 20/40 ft international boxes or the 53 ft domestic boxes, although sometimes a 53 ft box can be placed on top of a smaller international container. The study will also examine developments in container terminal handling to address improved ways of serving urban markets. Future supply chain designs will be linked to different types of proposed urban form, and will also capture multi-modal opportunities offered by transportation investment in inter-city, long distance freight movements. This would range from the development of multi-modal urban by-passes to inter-city regional freight corridors.

Task 3.  Energy and the Transportation Sector
The substantial rise in fuel prices over the past 18 months, particularly for diesel, has raised costs in the freight sector, although the cost is disproportionate across modes. Air is most heavily affected, and then in order of loaded ton-mile costs comes trucking, rail, barge and deep water vessel. All modes have seen their operating companies attempt to cut or address rising prices.  Short term measures include moving to a more competitive mode (like highway to rail), new operations, like reducing speed and charging higher prices, where these are possible – like fuel surcharges in Houston dray trucking. The longer term measures involve operating more fuel efficient units as older equipment is fully depreciated. The researchers will disaggregate supply chains into their modal components and examine the impact of fuel price escalation and the opportunities for both short and long term measures. In terms of urban freight movements, they will examine the role of Inland Ports, truck size and weight legislative changes, and urban land forms of the type determined for the first task above. There is strong evidence of new technology adoption by truck operators that will change the current fuel use, in which case diesel consumption will fall substantially. In addition to moving away from traditional highway investment, alternative systems that effectively take vehicles (especially autos) off highways will be noted. These range from investment in alternative systems (like bus and light rail) to policy adoptions such as demand management and road pricing.

Task 4.  The Impact of Exports on U.S. Supply Chains
Many U.S. transportation corridors exhibit balanced bi-directional freight flows, such as the IH-35 NAFTA corridor. Others, including coal, grain and – until recently – Asian containerized commodity flows are heavily weighted in a uni-directional manner. In these latter cases, supply chain designs favor the direction in which most of the goods travel - which for containerized goods meant imports. This task will examine if a balance of imports and exports on a corridor changes the design of the supply chains and, if so, how. Exports have now begun to grow in several important sectors, and a number of deep water ports, particularly in the east are reporting noticeably heavier export flows of commodities and products, in part due to the weaker U.S. currency. In this task, a small number of case studies will be developed to show how these characteristics impact supply chain design and offer thoughts on the potential shape of future chains. For example, exporters are complaining about obtaining empty containers in a timely fashion because they are not stored near exporting facilities or because they need special containers (like refrigerated or tanker types) which have to be drayed long distances from yards where empty in-coming containers are stored.

Task 5.  Future Supply Chains that Address Energy, Export and New Urban Forms
Large urban cities comprise populations that must be sustained with food, consumer products and basic services and commodities such as refuse handling and building materials. In addition, such areas typically produce products and services that require freight movement on urban transportation systems. This task will take the three areas examined in earlier tasks and attempt their integration to offer some thinking – perhaps including quantitative analyses – as to their likely structure and costs. It is also hoped that this task will benefit from other urban form initiatives now being examined in Europe and elsewhere. Typically, these appear to address transportation services associated with people and the work may, therefore, complement such efforts by addressing freight needs.

Task 6.  Report on Worked Conducted and Conclusions
This document will report the structure of the project, the analyses undertaken and the consequential results, together with any conclusions that are appropriate.  The results will be presented at the growing number of conferences addressing sustainable cities or at broad transportation meeting sessions, such as those sponsored by TRB. The typical program at such meetings focuses on people, automobiles and living spaces, so the study emphasis on freight – both imports and exports – will add an important dimension to the debate. This contributes an insight on sustainable freight systems that support balanced metropolitan growth. It also contributes to the more immediate challenge of improving U.S. export capability.   

Index Terms:
Sustainable development, Smart growth, Energy, Energy consumption, Costs, Supply chain management, Contracting out, Research projects