Posted on March 16, 2012 9:38 AM
OECD Territorial Review Assesses Mega-Region's Economy, Part 4: Transportation and Logistics
NOTE: This is the fourth in a six-part series of Policy Updates on the OECD Territorial Review:
Part 1: Assets and Challenges
Part 2: Workforce
Part 3: Innovation
Part 4: Transportation and Logistics
Part 5: Green Growth
Part 6: Governance
The Organisation for Economic Co-operation and Development (OECD) recently released an in-depth report on the 21-county tri-state area of southeast Wisconsin, northeast Illinois, and northwest Indiana as part of its Territorial Reviews: Competitive Cities in the Global Economy series. The report discusses many dimensions of the area's economy, which CMAP is profiling in this series of Policy Updates. The first Policy Update focused on assets and challenges, the second post focused on preparing the workforce for jobs in the tri-state area, and the third focuses on innovation. The focus of this Policy Update is on transportation and logistics.
The OECD Territorial Review identifies the tri-state area as North America’s leading transportation and logistics hub, with specializations in air travel, railways, and trucking. O’Hare International Airport is the second-busiest airport in the U.S. and is the fourth-busiest in the world, handling over 66 million annual passengers in 2010. The region’s airports serve a variety of domestic and international destinations and serve as a critical hub for the greater Midwest. According to the OECD report, the tri-state region plays a less central role as an air cargo hub, but maintains a diverse air cargo network, with important linkages to Europe, Asia, and North America.
The tri-state area is the continent’s premier rail hub. Chicago is the only hub to be served by six of the seven Class I railroads in the U.S., and handles 500 freight trains and 37,500 cars daily. This traffic represents half of U.S. rail freight movements. In fact, approximately one quarter of all U.S. freight movements pass through the Chicago region, including nearly half of intermodal units. The tri-state region enjoys close connection to major Pacific ports, handling 54 percent of intermodal units from Seattle/Tacoma and 26 percent from Los Angeles/Long Beach.
The tri-state area is also a major trucking hub. Trucks carry about 43 percent of regional freight by volume and 73 percent by value. An estimated one in six vehicles on the region’s interstate highways are trucks. Trucks play an important role in transferring freight to and from rail and air connections in the region.
Transportation plays a key role in the regional economy, contributing $16.9 billion to the regional economy in 2010. Of the various transportation activities, trucking added the most value to the regional economy ($4.3 billion), followed by air ($3.1 billion), and rail ($2.9 billion). Given the density of transportation infrastructure and traffic, the tri-state region is relatively specialized in transportation: over 20 percent more people in the tri-state region work in the transportation sector compared to the U.S. as a whole. In total, some 160,000 people work in transportation, or 4.5 percent of total employment in the tri-state region.
Policy Issues and Recommendations
The OECD report is frank in pointing out the challenges facing the region’s transportation systems. Many facilities are congested and in need of repair, some modes are poorly integrated, and the tri-state area's capacity to finance transportation projects is decreasing. Land constraints have forced logistics activities to decentralize to the fringes of the region, raising local and regional land use challenges. According to the report, these issues pose a serious threat to the mega-region's competitive advantage, and thus its long-term economic health.
To meet these challenges, the OECD calls for increased investment in transportation infrastructure, especially transit; a more strategic, data-driven approach to selecting transportation investments; better integration of transportation facilities across modes and political boundaries; and a move toward more sustainable revenue sources for transportation, including user fees. The OECD’s recommendations largely echo those identified in GO TO 2040, which also calls for strategic investments, increased commitment to public transit, and efforts to increase the efficiency of the freight system. GO TO 2040 also recognizes the need for new revenue streams, new approaches to allocating transportation funds, and improved coordination among federal, state, and local governments.
This last issue is perhaps the most compelling message from the OECD report. The OECD recommends that stakeholders work across jurisdictional boundaries to advance common transportation interests through “integrated, multi-modal, long-range planning”, and cites the CREATE rail program as a step in that direction. The report calls for expanded collaboration among stakeholders, including advocacy to make the case for the tri-state region to federal and state funding and regulatory agencies. Increased engagement across state lines, levels of government, and modal agencies is essential to sustain the region’s status as a national and global transportation hub.