Transportation Performance Index. Key Findings
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1 Transportation Performance Index Key Findings
2 Sponsored in part by The U.S. Chamber of Commerce is the world s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. Copyright 2010 by the United States Chamber of Commerce. All rights reserved. No part of this publication may be reproduced or transmitted in any form print, electronic, or otherwise without the expressed written permission of the publisher. The 2 Transportation Performance Index 2
3 Introduction Every day, transportation, energy, broadband, and water systems are both opportunities and roadblocks for businesses and communities. Blackouts, water main breaks, cyber attacks, and bridge collapses bring acute awareness of the importance of infrastructure to businesses and the economy and are usually followed by swift actions that bring out the best in us all levels of government and the private sector working together like never before to identify resources and fix the problems. However, the main challenge in the United States is a lack of ongoing, sustained attention to infrastructure the physical platform of the economy. In spite of the obvious role of infrastructure in economic prosperity, inaction on the most fundamental legislation, burdensome regulations, and consistent under-investment necessitate U.S. Chamber of Commerce leadership. The mission of the Chamber s Let s Rebuild America (LRA) initiative is to ensure that America s infrastructure systems meet the demands of a diverse, robust economy and a growing population and contribute to U.S. economic growth and global competitiveness. Through LRA, the Chamber is doing something unprecedented: Measuring how well transportation, energy, broadband, and water systems are meeting the demands of the nation, including businesses large and small, and then correlating the results to measures of U.S. economic performance. This effort is called the Infrastructure Performance Index series and it is groundbreaking in three ways: Defines what businesses require of infrastructure to grow and succeed, not what government decides is important. Looks across four critical sectors of infrastructure transportation, energy, broadband, and water and considers their relationships. Correlates the way infrastructure performs to economic growth. Historically, calculations focused on expenditures, jobs, or local economic development. The Transportation Performance Index is the first in the series that drives home the point that infrastructure performance matters to the economy and shapes an environment for action to improve it. Let s Rebuild America U.S. Chamber of Commerce 3
4 4 Transportation Performance Index
5 Transportation Performance Index Let s Rebuild America U.S. Chamber of Commerce 5
6 54 National Results From 1990 to 2008 Transportation Index Results for Selected Years Transportation Performance Index Transportation Index Transportation Index Five-Year Moving Average Year Transportation Performance Index Five Year Moving Average Transportation Performance Index
7 National Results The national Transportation Performance Index combines indicators of supply (availability), quality of service (reliability, predictability, and safety), and utilization (potential for future growth) across all modes of passenger and freight transportation highway, public transportation, freight railroad, aviation, marine and intermodal in order to show how well the U.S. transportation system is serving the needs of businesses and the overall U.S. economy. The national results are from 1990 to 2008 the last year for which national-level data is available. A higher index value is better and lower index value is worse. There is no scale (i.e ) for the index. The national index is in 2008, which is a slight improvement from in However, the moving average, which smooths the annual variations, shows a clear downward trend from 2003 to This trend reveals that the performance of the U.S. transportation system is not keeping pace with the demands on that system. From 1990 to 2008, the Transportation Performance Index increased about 6% overall. In contrast, U.S. population grew 22%, passenger travel grew 39%, and freight traffic grew 27%. Given these facts, it is a testimony to business ingenuity that the national results are not worse. Businesses work around transportation challenges by scheduling deliveries in off-peak hours, implementing flexible employee work policies, and substituting information technology for transportation services. There are also countless stories of transportation infrastructure owners using the engineering equivalent of duct tape to hold infrastructure together and crafting creative operational strategies to enhance throughput. Can the moving average trend be reversed? Without net new investment in transportation infrastructure and a focus on performance, there could be a decline in the index at a rate of nearly one point per year based on an extrapolation through A change in any one indicator in any one location does little to move the index; however, a 10% improvement in all indicators produces approximately a 20% increase in the index. To have a transportation system that supports a 21st century economy, the United States needs a high level of investment targeted at improving performance across all modes and geographies. There can be no more business as usual. Let s Rebuild America U.S. Chamber of Commerce 7
8 2007 State-By-State Results State-By-State Transportation Performance Index AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY is the most recent year for which full state-by-state data are available. 8 Transportation Performance Index
9 State-By-State Results Comparing the State-By-State and the National Results State-By-State Average State-By-State Median National Index Value Given that a strong transportation system is a key factor in economic development, transportation performance indexes are created for every state and the District of Columbia in addition to a national index. The state-bystate results are derived using the same methodology and the same indicators except where data is not available on a statewide basis. State indexes are calculated for 1995, 2000 and 2007; state-by-state results are shown here for 2007 only. The 2007 state results range from for North Dakota to for the District of Columbia. While the District of Columbia is somewhat of an anomaly, New Jersey has the next lowest index with a value of Higher population growth rates and higher population densities are generally associated with lower index value based on an analysis of state results versus population data. While this warrants more rigorous analysis, a closer examination of the states with an index value of less than 60 reveals that these states experience significant pressure in terms of population growth, high levels of development, and limited access to or aging infrastructure. That said a highly ranked state like North Dakota should not disinvest in transportation infrastructure. At the same time, the pressures on the transportation system in states like New Jersey cannot be ignored. In 2007, the average state result is compared to the national result of Note that the national index is not an average of the 50 states plus the District of Colombia, but rather based on a sample of the United States. If the United States was a state, it would rank near the bottom. When it comes to transportation system performance, the whole is not greater than the sum of its parts. Let s Rebuild America U.S. Chamber of Commerce 9
10 Transportation Performance and the U.S. Economy A Trillion Dollars on the Table Value of the Gap Between 2007 Index National Index and State Index (GDP in billions) U.S. Average Top 5 States Average $979 North Dakota $1,450 South Dakota $1,001 Nebraska $883 Montana $850 Iowa $713 The econometric analysis using the Transportation Performance Index is unique because it examines the overall contribution to economic growth from wellperforming transportation infrastructure. It goes beyond charting only the effects of spending and the creation of jobs during construction. The analysis provides robust, stable results showing that the transportation performance is important to maintaining a strong economy. Underperforming transportation infrastructure produces a drag on prosperity. For each single point of improvement in the Transportation Performance index, GDP per Capita would increase by 0.3%. In other words, allowing the nation s overall transportation performance to lag behind the average index of the top five states leaves about $1 trillion of potential GDP on the table. This amount would be additive to the economic value of direct infrastructure investment. If investments are made that improve performance, the real long-term impact on the economy could be one-third higher than what most other economic impact studies estimate. There is also a positive relationship between foreign direct investment (FDI) that opens new establishments in the United States creating new jobs and the performance of transportation infrastructure as measured by the index. FDI established new enterprises that created more than 300,000 jobs in the United States in 2008 ( * Anderson 2008) and may be more dependent on transportation infrastructure than other types of infrastructure because of the need to move goods and people between the foreign country and the United States According to studies done by the Bureau of Economic Analysis, most of what these firms import and about half of what they export is shipped from and to the parent company in the foreign country, making transportation infrastructure an important element of their location decision. The results indicate that a commitment to raising the performance of transportation infrastructure provides positive long-term value for the U.S. economy. Anderson, Thomas (2008). U.S. Affiliates of Foreign Companies Operations in 2006, Survey of Current Business (August), Bureau of Economic Analysis, Washington, D.C. 10 Transportation Performance Index
11 Call to Action Prosperity and job growth emanate from the private sector. The government s role is to establish an environment for the private sector to do what it does best. When it comes to the nation s transportation system, the federal government plays a significant role in policy and funding. This Transportation Performance Index demonstrates and documents the urgent need for serious policy reforms and additional investments to improve performance. When Congress and the administration take vacations from their responsibilities by extending laws instead of doing the tough work of finding solutions, the performance of the transportation system suffers. It s time for them to get back to work and take on the three big questions: How to invest? How much? From what sources? The first order of business is for Congress and the administration to act on the following: Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) reauthorization Water Resources Development Act Freight Rail Infrastructure Capacity Expansion Act Congress and the administration must also act on the infrastructure-related aspects of Federal Aviation Administration reauthorization including aircraft and air traffic control equipage. Together, these actions must create a clear plan for comprehensive improvement and investment in all aspects of the transportation system in the national interest. There must be a framework for state and local government and private sector decision making that supports economic growth through better system performance. And there has to be enough funding and financing to get the job done; this, of course, means taking on the difficult task of finding revenue, even in tough times, and finding new ways to encourage private investment. The benefits are clear: Investment not only supports jobs in the near term, but improved transportation performance boosts economic growth and U.S. competitiveness over the long term. Let s Rebuild America U.S. Chamber of Commerce 11
12 U.S. Chamber of Commerce 1615 H Street, NW Washington, DC
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