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The Milken Institute Review
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Randy GaRbeR is a San Francisco-based partner in a.T.
Kearney, the management consulting firm. amiya SeTu
is a Chicago-based associate at a.T. Kearney.
Optimizing the return on intermodal
transit investment is, of course, easier wished
for than done. By its very nature, it requires
coordination among often bitterly competi-
tive transportation sectors, as well as help
from a host of state, local and federal agencies
with widely varying priorities. But the effort,
we believe, would generate a payoff measured
in the hundreds of billions of dollars.
overtaxed highways
America's Interstate Highway System was
once the envy of the world. In many ways,
however, it proved to be too good, encourag-
ing dependence on cars for commuting and
on trucks for long-haul freight. The Federal
Highway Administration recently calculated
that highway delays cost the trucking industry
more than $8 billion a year. All told, the Texas
Transportation Institute ­ the independent
source for most of the analysis available on
road use ­ estimates that highway congestion
cost Americans an astonishing $87 billion in
wasted fuel and travel time in 2007.
There is little hope, however, of solving
congestion problems solely by investing in
more highway capacity. According to the
American Society of Civil Engineers, annual
spending on highway improvements is now
roughly $70 billion ­ a fraction of the esti-
mated $186 billion needed to stay
ahead of traffic growth.
intermodal to the rescue?
In an era of chronic, rising conges-
tion and high fuel costs, it's no sur-
prise that shippers are attracted to
intermodal systems because they
offer ways to bypass highways for
much of the trip. Here, freight gen-
erally starts and finishes the journey
on trucks, but is moved long dis-
tances by water and rail.
Actually, the appeal of intermo-
dal transportation is hardly new.
Britain pioneered intermodal sys-
tems in the 1920s. Shipping systems
using the now-familiar steel boxes,
bearing the logos of shipping com-
panies from dozens of countries, really came
into their own in the late 1960s with the
global standardization of containers.
Truck-train intermodal transit, the key to
land-based service, took off in the United
States in the decades that followed. For one
thing, the deregulation of interstate truck and
rail transit gave shippers far greater flexibility
to choose modes and routes that minimized
costs. For another, the explosive growth of
global trade and the conversion of virtually
all non-bulk ocean-going freight to container
systems led to massive demand for intermo-
dal options at the ports.
r a i l r o a d s a n d g r i d l o c k