Measuring the Impacts of Freight Transportation Improvements on the Economy and Competitiveness
5. Summary of Analysis Tools
The table below summarizes some of the weaknesses and gaps in the different models. A model is necessarily a simplification of reality. Most of the weaknesses identified are model limitations that exist to make the analytical problem more manageable.
| Weaknesses or gaps | Tools |
|---|---|
| Failure to separate relocation effects from organic growth in a region. Growth in Region A may be offset by reduced growth in Regions B and C as industries change location decisions. | All regional and productivity models |
| Implicit assumption that transport improvements in Region A are not offset by similar improvements in Regions B and C. | All regional and productivity models |
| Productivity enhancements due to scale effects in Region A may be partially offset by reduced scale in Regions B and C. | All regional and productivity models |
| Focus on growth through relocation leaves out impacts of increased efficiency. | LEAP |
| Projections of growth by industry depend on static input-output tables. Inputs for a given industry change over time as technology changes and as relative prices of inputs change. Industry-specific projections based on current mix of inputs are unlikely to be accurate. | All models |
| Exclusive or dominant focus on highway networks leads to inability to consider properly rail freight and intermodal carriage. | REIHMS, PECAS, TELUM, REMI TranSight, others |
| Models not designed specifically for transportation require pre-processors to express improved freight performance as inputs the model can use to estimate growth or productivity impacts. | REMI |
| Some models represent improved performance with shorter distances between key points leading to lower costs. But these models do not take account of differences between modes in impacts on performance. | REMI |
| Models are relatively complex and have major data requirements. They do not incorporate rules of thumb or analytical shortcuts to provide low-cost methods of analyzing impacts of improved freight performance. | All models. |
| Most BCA models do not account for impacts on alternative routes of improved performance on a given highway segment. Typically, there will be shifts in traffic among routes in response to improvement on any one of them. | BCA models for highway improvement |
| BCA = benefit-cost analysis • LEAP = Local Economic Assessment Package • PECAS = Production Exchange Consumption Allocation System • REIHMS = Regional Economic Impact Model for Highway Systems • REMI = Regional Models Incorporated • TELUM = Transportation Environment and Land-use Model | |
Summary Comparison of Economic Impact Models
The table below compares the two most commonly used economic impact models.
| Model Characteristics | RIMS II | IMPLAN |
|---|---|---|
| Economic Development Impacts (output) | ||
| Business revenue Goods produced Services produced |
Value of output by industry | Value of output by industry |
| Income | Yes | Yes |
| Employment | Yes | Yes |
| Investment | Yes | Yes |
| Model Features | ||
| Cost | $275 per region $75 per industry, per State. |
$350 for a county; $640 for a State. |
| Transparency | Very transparent – spreadsheet of multipliers. | Less transparent – model software. |
| Ease of use | Does not have user interface. | User friendly software interface. |
| Output detail | Does not show a breakdown of impacts by industry. | Shows breakdown of impacts by industry. |
| Incorporating dynamic effects | No – There are static inter-industry relationships which do not account for price elasticities, changes in consumer or industry behavior based on a direct effect. | No – There are static inter-industry relationships which do not account for price elasticities, changes in consumer or industry behavior based on a direct effect. |
| Adaptability | No, cannot add new industries. | Yes, new industries can be added. |
| Fiscal impacts | No, tax impacts cannot be estimated. | Yes, tax impacts can be estimated. |
| Multi-regional modeling | No | Yes |
| Time | Does not specify a time period to achieve all impacts. | Does not specify a time period to achieve all impacts. |
| Incorporating transportation system improvements | Requires user to develop a custom methodology. | Requires user to develop a custom methodology. |
| IMPLAN = IMpact analysis for PLANning • RIMS = Regional Input-Output Modeling System | ||
Summary of Simplified Productivity Benefit Estimation Tools
The table below summarizes some simplified tools that have been developed to include the wider benefits of transportation investment that arise from productivity improvements, into BCAs and Economic Impact Analyses. These tools estimate how improvements in freight transportation system performance can cause additional benefits for businesses over the long term as they make changes to their operations. The economic benefit estimates produced by these tools are additive to the benefit estimates produced by BCAs and EIAs. These tools are available for free and relatively easy to use providing spreadsheet based menus for the user to navigate. The benefits estimated by the Highway Freight Logistics Reorganization Benefits Estimation Tool overlap with those estimated by the SHRP 2 C11 Reliability Tool and the SHRP 2 C11 Accessibility Tool. While the Highway Freight Logistics Reorganization Benefits Estimation Tool is designed to be used with only BCAs, the SHRP C11 tools can be used with BCAs or EIAs.
| Model Inputs, Outputs & Characteristics | Benefit Type | Summary |
|---|---|---|
| Highway Freight Logistics Reorganization Benefits Estimation Tool | Supply chain reorganization | The benefits estimated include reduction of shipping and sourcing costs, replacement of inventory on-hand with just-in-time delivery of inputs and whole-sale reformation of the supply chain. Information can be used to supplement a BCA analysis. |
| SHRP 2 C11 Reliability Tool | Reliability | Reducing late deliveries enables a reduction in inventories (safety stocks) and can allow more centralized warehousing and delivery processes to be put in place. |
| SHRP 2 C11 Accessibility Tool | Market access | Measures the economic impacts of transportation improvements on market access to both suppliers and buyers. |
| SHRP 2 C11 Connectivity Tool | Connectivity | The connectivity tool provides a way to assess the wider connectivity benefits of highway improvements that enhance access to alternative freight (and passenger) intermodal facilities. |
| SHRP 2 C11 Accounting Framework | Translates reliability, accessibility and connectivity into economic value | Converts the reliability, accessibility and connectivity measures into monetary values that can be used in a BCA or economic impact analysis. |
| BCA = benefit-cost analysis | ||
Summary Comparison of Comprehensive Productivity Models
Table 11 below summarizes how the two models that are best equipped to estimate productivity impacts of freight transportation investments in the U.S. compare to each other with respect to their inputs and outputs.
| Model Inputs, Outputs & Characteristics | REMI | TREDIS |
|---|---|---|
| Economic Development Impacts (output) | ||
| Business revenue Goods produced Services produced |
Value of output by industry. | Value of output by industry. |
| Income | Yes | Yes |
| Employment | Yes | Yes |
| Investment | Yes | Yes |
| Productivity Impacts (output) | ||
| Per man-hour | Yes | Yes |
| Per $ of capital | Requires exogenous calculation. | Yes |
| Labor/capital combined | Requires exogenous calculation. | Requires exogenous calculation. |
| Characterizing Inputs | ||
| Transportation pre-processor | Requires the addition of TranSight or other transportation pre-processor. TranSight represents transportation impacts as modifying the generalized distance between counties. Generalized distance approach doesn't recognize variation in speeds and travel times between modes. | Provides input screens for changes in travel time, costs, reliability and transportation productivity for multiple modes. Includes inputs for changes in intermodal access. |
| Complexity | For some modeling exercises user may need to develop customized approaches to characterizing logistics inputs. | Model specifies logistics inputs. User may pick and choose how many supply chain and logistics inputs to use and for which modes. |
| Cost | $17,000 for a single geography with 3 digit NAICS code detail. | Cost is based on the length of subscription to the web tool and can be significant. |
| NAICS = North American Industry Classification System • REMI = Regional Models Incorporated • TREDIS = Transportation Economic Development Impact System | ||
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