Measuring the Impacts of Freight Transportation Improvements on the Economy and Competitiveness

1. Introduction

This reference document serves as the final report for FHWA's project to examine economic competitiveness and cost in relation to freight movement. To inform this document, a literature review and white paper that considered the concept of competitiveness in relation to the concept of economic productivity was developed. The white paper identified different freight performance measures and economic factors and discussed their linkage. It also reviewed a broad range of models that have been used to analyze the benefits and economic impacts of transportation improvements. A technical memo provided information sorting economic tools by type and an evaluation of those models that are most relevant to measuring the productivity impacts of freight improvements. In addition, a reference document was developed for practitioners discussing the different classes of benefits, economic impacts, and different models and tools for analyzing them. This document pulls together the research from all the tasks. While there is considerable emphasis in this document on the important economic impacts of freight transportation improvements on competitiveness and economic productivity, other types of economic impacts are also discussed. This document thus reviews three different types of analyses: 1) benefit-cost analysis (BCA), 2) economic impact assessments, and 3) analyses focused on estimating the impact of transportation on industry productivity and competitiveness.

1.1. HOW TO USE THIS DOCUMENT

This document provides a review of approaches, methods, and tools that can be used to evaluate how freight improvements contribute to economic competitiveness and the cost of goods. The information within is intended to serve as a point of reference to assist practitioners, particularly State and regional transportation decision-makers, in considering how freight improvements contribute to the economy. The document provides an overview of the methods used in this area that is not overly technical and is designed to be accessible to a range of practitioners in different disciplines, including engineers, planners, and policymakers. It is expected that this document will be of interest to members of State departments of transportation (DOT), metropolitan planning organizations (MPO), Federal agencies, and other stakeholders interested in freight transportation and economic development. FHWA recognizes that understanding how freight improvements contribute to economic competitiveness and cost is an emerging area. Traditional means of economic analysis and valuation may not always fit in analyzing freight projects. However, this work is intended, in part, to collect information on how to approach these analyses and recommend some options and tools. The document is not intended to be comprehensive, but rather to serve as a starting point for understanding the means for economic analysis that can be used to consider the benefits of freight transportation improvement.

Section 1 introduces the document and provides an overview of overall effort. It also describes the different uses this document may have. First, it will help agencies or consulting firms to select the best tool for a given analysis or project. Second, it will be useful in helping agencies that wish to hire a consultant to evaluate responses to requests for proposal (RFP) so they can select a team that uses the most appropriate tool. Finally, this document provides a starting point for presenters (agency staff, consultants, etc.) to describe what a given "t" analysis can tell the audience and what a method or tool cannot capture.

Section 2 discusses and defines of the economic concept of competitiveness and how freight transportation is related to it. It describes how freight transportation improvements affect mode choice, the productivity of the supply chain and the competitiveness of businesses. In addition, Section 2 discusses three types of freight transportation impacts: direct user benefits, economic development, and productivity improvement. It considers the linkage between direct user benefits, as measured by performance measures, with economic development and the more long-term productivity improvements that help to drive economic growth.

Section 3 provides a list of factors and considerations for review when planning an economic analysis of a freight transportation investment.

Section 4 gives readers an overview of the approaches and some modeling tools to conduct benefit cost analyses, economic impact analyses, and productivity (competitiveness) analyses for freight transportation projects. In addition, simplified methods to address these approaches are also discussed.

Section 5 offers an overall summary of these methods and describes some of their strengths and weaknesses.

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