Chapter 2: U.S. Transportation System

Chester Ford

Economic Competitiveness

In the U.S. DOT Strategic Plan for FY2010FY2015, ¹ one goal is to maximize economic returns from transportation policies and investments in the U.S. transportation system to meet future demand. The focus of this section is economic competitiveness. The first part reviews domestic productivity and output, while the second part discusses international freight and passenger movement.

Domestic Productivity and Output

On average, for-hire transportation services in the United States increased at a rate of about 3 percent per year from 2004 to 2008, compared to the U.S. gross domestic product (GDP) growth rate of about 2 percent per year, as measured in 2005 constant dollars, over the same period. Although for-hire transportation services had a much higher growth rate than that of the U.S. GDP, it also decreased much faster than the total GDP when the United States entered the latest economic downturn. Between 2008 and 2009, U.S. GDP attributed to for-hire transportation services decreased 13 percent. Among all transportation modes, decreased consumer spending had the biggest impact on rail and truck transportation services, which decreased an average 8 and 9 percent, respectively, from 2007 to 2009 as fewer goods were transported to markets to be sold. During the same period, water transportation services showed an 11 percent increase, which followed a 42 percent average annual increase from 2004 to 2007 (Table 3-1: U.S. Gross Domestic Product Attributed to For-Hire Transportation Services).

Due to decreased global and U.S. demand, both U.S. exports and imports as measured by the volume of international maritime containers (or millions of 20-foot equivalent units (TEUs) decreased. U.S. imports increased more than 7 percent from 2005 to 2006 and then decreased more than 21 percent from 2007 to 2009. The number of TEUs processed for imported goods decreased from a peak of nearly 19 million in 2006 to less than 15 million in 2009. Growth in U.S. exports remained relatively unchanged between 2007 and 2009 (Table 3-3: U.S. International Maritime Container Volumes).

The two largest U.S. maritime container ports, Los Angeles/Long Beach, CA, and New York, NY, accounted for 49 percent of the total TEUs processed in the United States in 2009. They experienced decreases of 18 and 8 percent, respectively, in TEUs processed between 2007 and 2009. Charleston, SC, experienced a decrease of 32 percent from 2007 to 2009, although the port processed a relatively small (4 percent) portion of the total TEUs (Table 3-4: Top 10 U.S. Maritime Container Ports).

The number of vessel calls at U.S. ports peaked at 65,000 in 2006 and then decreased by 15 percent to 56,000 calls in 2009 (Table 3-5: Vessel Calls at U.S. Ports). However, by comparing the first 9 months of 2010 with the same period in 2009, it is evident that U.S. foreign waterborne freight increased by approximately 9 percent (Table 3-6: U.S. Foreign Waterborne Freight).

From 2004 to 2008, domestic air and water cargo showed a consistent decrease in ton-miles. Ton-miles for natural gas pipeline increased over the same period, while ton-miles for oil pipeline decreased from 2004 to 2007 before increasing 13 percent from 2007 to 2008 (Table 3-7: U.S. Ton-Miles of Freight). Of other freight modes, rail freight ton-miles peaked in the third quarter of 2008 above 450 billion, but decreased by 14 percent in the third quarter of 2009 due to the economic downturn (Table 4-33: Rail Freight Average Speeds, Revenue Ton-Miles, and Terminal Dwell Times). The average loaded freight railcar weight was at a 5-year high in 2009 at 64.2 tons per carload, up from 61.0 in 2005 (Table 3-8: Average Loaded U.S. Railcar Weight).

The U.S. airline industry's operating margin, which shows the airlines profits or losses as a percentage of total operating revenue, grew from a 1.1 percent loss in 2004 to a peak of 5.7 percent in 2007. The combined effects of the high cost of fuel (Table 3-12: Domestic and International U.S. Airline Industry Share of Operating Expenses by Category) and a decline in the number of passengers enplaned (Table 4-9: Domestic Enplanements at U.S. Airports) led to a 1.8 percent loss in operating margin in 2008. However, the operating margin in 2009 recovered to 1.6 percent, and in the first half of 2010 increased to 5.6 percent (Table 3-9: U.S. Airline Industry Operating Margins).

Domestic or international yield as measured by revenue per mile and total operating revenue are two additional indicators that track airline performance. Between 2004 and 2008, domestic yield measured in 2000 dollars fluctuated slightly within $0.110 and $0.113 per mile, while international yield steadily increased from $0.097 to $0.108 per mile. In 2009, as a result of the economic slowdown, both domestic and international yields recorded their lowest levels at $0.098 and $0.091, respectively. In the first half of 2010, the airline industry's passenger yields were marginally better than those of 2009 (Table 3-10: U.S. Airline Industry Passenger Yields). Beginning in 2004, airline operating revenue increased every year until 2008. However, between 2008 and 2009, it declined from $186 billion to $155 billion, a nearly 17 percent reduction (Table 3-11: Annual Domestic and International U.S. Airline Industry Operating Revenues).

International Freight and Passenger Movement

This section presents information on international freight transportation and passenger travel. The first part summarizes U.S. international trade in transportationrelated goods. The second part highlights freight transportation between the United States, Canada, and Mexico. The third part describes U.S. international trade in transportation-related services and the number of passengers who visited the United States from Canada and Mexico.

U.S. Trade in Transportation-Related Goods

Transportation-related goods traded between the United States and other countries include motor vehicles, aircrafts, ships, and railway vehicles. In 2009, total trade (exports plus imports) of transportation-related goods reached $313 billion, comprising 12 percent of total U.S. international trade (Table 3-13: U.S.-International Trade in Transportation-Related Goods). U.S. trade for transportation-related goods decreased in 2008 and 2009 from its 2007 peak of $429 billion. Between 2008 and 2009, trade of transportation-related goods decreased by 24 percent. Of that total amount, there was a 31 percent decrease of imports, which was two times greater than the decline in exports.

The United States maintains a competitive edge in exporting aircraft, ships, and railway vehicles. In 2009, these commodities were exported by the United States more than they were imported. Although these exports accounted for 35 percent of trade for transportation-related goods, they made a positive contribution to the U.S. trade balance (Table 3-14: U.S. Trade in Transportation-Related Goods by Commodity).

Almost two-thirds of U.S. trade in terms of transportation-related goods was motor vehicles. Although the United States was a net importer of motor vehicles, the magnitude of the trade imbalance (imports over exports) for this commodity has declined. After reaching a peak ($123 billion) in 2006, the trade imbalance for motor vehicles decreased in 2009 to $57 billion, which was a 53 percent decrease (Table 3-14: U.S. Trade in Transportation-Related Goods by Commodity).

Freight Transportation between the United States, Canada, and Mexico

Canada and Mexico are two of the top three trading partners of the United States. From 2004 to 2008, merchandise trade between the United States, Canada, and Mexico continued to increase from $712 billion in 2004 to a peak of more than $960 billion in 2008, which was a 35 percent increase. Total U.S. trade with Canada and Mexico decreased to $735 billion in 2009 as well as personal consumption of transportation across North America (Table 3-15: U.S. Surface Trade with Canada and Mexico).²

Trucks, rail, and pipeline transported more than 80 percent of commodities (by value). Among those surface transportation modes, trucks moved more than 58 percent of trade with Canada and 68 percent of trade with Mexico by value in 2009.

Since 2004, the numbers of incoming trucks and trains from Canada to the United States have consistently declined. The number of incoming trucks from Canada decreased 27 percent from nearly 7 million in 2004 to 5 million in 2009. Similarly, the number of incoming trains from Canada to the United States decreased by 27 percent from 33,000 in 2004 to 24,000 in 2009. In contrast, the number of incoming trucks and trains from Mexico to the United States increased until 2007 and then declined in the next two years due to the economic downturn. (Table 3-16: Incoming Truck and Train Crossings to the United States from Mexico and Canada).

A similar pattern can be observed for incoming loaded rail containers from Canada and Mexico to the United States. From 2004 to 2009, the number of rail containers from Canada decreased by nearly 462,000 and reached about 1 million in 2009. Rail containers coming from Mexico to the United States peaked at 383,000 in 2006 and decreased to 239,000 in 2009, a 38 percent decline (Table 3-17: Incoming Full Rail Containers to the United States from Mexico and Canada).

Passenger Travel

From 2004 to 2007, international travel to and from the United States increased 1 to 5 percent each year (measured in 2005 constant dollars), as indicated by the total U.S. trade (exports plus imports) in transportation-related services, which includes passenger fares and other transportation. In 2007, international travel reached a peak of $142 billion dollars (in 2005 constant dollars). International travel is typically sensitive to global economic conditions and changes in currency exchange rates. Due to decreased international passenger travel, total U.S. trade in transportation-related services decreased by 13 percent from 2008 to 2009 and reached $122 billion in 2009 (Table 3-18: U.S.-International Trade in Transportation- Related Services).³

The total number of visitors from Canada and Mexico declined since 2004. In 2009, the total number of visitors from both countries was about 240,000, which was 22 percent lower than the number of visitors in 2004 (Table 3-19: Passenger Crossings into the U.S. by Personal Vehicles, Bus, Train, and Foot from Mexico and Canada). More than 76 and 95 percent of visitors from Mexico and Canada, respectively, traveled into the United States by motor vehicle. Another popular method for visitors from Mexico to enter the United States is by foot, which accounted for more than 20 percent of visitors per year.

¹ U.S. Department of Transportation, Draft U.S. DOT Strategic Plan FY2010-FY2015: Transportation for a New Generation (Apr. 15, 2010), available at http://www.dot.gov/stratplan/dot_strategic_plan_10-15.pdf as of January 2011.

² North American Transportation Statistics Online Database, table 2-1, available at http://aplicaciones1.sct.gob.mx/nats/sys/themes.jsp?id=2&i=3 as of Feb. 8, 2011.

³ North American Transportation Statistics Online Database, table 10-1, available at http://aplicaciones1.sct.gob.mx/nats/sys/index.jsp?i=3 as of Feb. 8, 2011.