Northern Arizona Freight Analysis Phase I, May 2004
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Acknowledgements This report was funded, in part, by the Arizona Department of Transportation, the Federal Highway Administration and Federal Transit Administration. Additional funding was made available through the Arizona Department of Commerce Rural Economic Development Initiative. Contact Information Dave Wessel-Co-Project Manager Transportation Planner Flagstaff MPO City of Flagstaff 211 W Aspen Flagstaff, AZ 86001 928-779-7658 phone 928-556-0940 fax Chris Fetzer-Co-Project Manager Transportation/Environmental Planning Director Northern Arizona Council of Governments 119 E. Aspen Flagstaff, AZ 86001 928-213-5200 phone 928-773-1135 fax [email protected] Don Breazeale, Consultant Don Breazeale and Associates, Inc. P.O. Box 7121 2 Rancho Santa Fe, CA 92067 858-759-8321 phone 760-942-9217 fax [email protected] 3 Table of Contents ACKNOWLEDGEMENTS .................................................................. 1 CONTACT INFORMATION................................................................ 2 TABLE OF CONTENTS..................................................................... 4 EXECUTIVE SUMMARY.................................................................... 5 DATA COLLECTION AND ANALYSIS ........................................... 30 TRENDS ANALYSIS........................................................................ 33 SITE ANALYSIS .............................................................................. 80 ECONOMIC DEVELOPMENT IMPACT ANALYSIS ....................... 98 ARIZONA JOB GROWTH ............................................................. 117 CONCLUSION ............................................................................... 124 APPENDIX A – CROSSDOCK FACILITIES.................................. 129 APPENDIX B - LETTERS FROM WINSLOW AND CAMP NAVAJO- BELLEMONT ................................................................................. 133 APPENDIX C-PORT AUTHORITY ................................................ 134 APPENDIX D-INTERVIEW FORM................................................. 160 APPENDIX E-LABOR CHARACTERISTICS ................................ 164 APPENDIX F - SHIPPING TERMINOLOGY AND GLOSSARY OF TERMS AND ACRONYMS ............................................................ 169 4 Executive Summary Data and information contained in this report has been gathered from a wide variety of sources and when taken from an outside source the Consultant has acknowledged that fact in the footnotes and in the text itself. In addition the Consultant has provided in Appendix A, a glossary of shipping terminology and terms and acronyms so the reader can follow this report and its terminology. The Consultant believes that the growth rate for this facility when constructed will conservatively be at 5% per year after an initial first year growth reflective of a start up operation. While the goods movement market is growing at much higher levels as is reflected elsewhere in this report the Consultant believes it is consistent with the City and FMPO’ stated goals and the communities interests that growth be controlled. In addition it is typical of facilities of this type that they enjoy an initial surge of activity and then develop based on service and consistency of operation. Growth will depend on many factors not the least of which will be adherence to a well disciplined marketing plan. The data reflected in Tables 1 and 2 below is also reflected in the section on data collection and is not meant to be redundant but rather to provide the reader with a reference to this data in an appropriate place in this report. Don Breazeale and Associates, Inc. conducted 230 interviews and incorporated the data and information gathered in these interviews, without violating the confidentiality of the companies and entities interviewed, into the charts that are attached. The consultant also analyzed goods movement data from the U.S. Department of Transportation, Federal Highway Administration (Freight Analysis Framework) and truck movements to/from Coconino County purchased from Reebie Associates and these findings are also included in the charts attached. The Consultant used current industry standards to effectively analyze and extrapolate the data both from the interviews and Reebie (Reebie data was sorted by commodity so we were able to identify only those commodities easily converted from truck to intermodal movement). Issues such as the fact that there is an imbalance of trade between imports and exports to/from the state of Arizona that causes an excess of empties to be included in the data were taken into account. The consultants approach to data collection and to projections was conservative. Table I: Based on data collected through the interview process, the total annual lifts for the Northern Arizona Regional Freight Facility is 70,026; lifts are defined for purposes of this study to be units. Table 1 Potential Intermodal Diversions Total Market Anticipated Market Total Intermodal Penetration Market Total Trucks Inbound 35,100 68% 23,920 Total Trucks Outbound 47,800 76% 36,130 5 Total Rail Inbound 3,100 50% 1,550 Total Rail Outbound 800 75% 600 Intermodal empties outbound @ 20% 7,226 Phoenix bound transshipment freight* 600 Total 86,800 70,026 *Inbound by piggyback trailer and truckload carrier, cross-docked for LTL delivery to Phoenix area Table 2: In addition the Consultant utilized Reebie data and the results of that analysis are indicated in Table 2 along with a total number of lifts the Consultant believes will be generated by this new facility. Table 2 Coconino County Reebie Data Originated Less Truck and Total % Total to Intermodal Rail Freight 2,235,407 571,009 1,664,398 1.5 24,966 Terminated Less Truck and Total % Total to Intermodal Rail Freight 2,273,557 1 ,696,307 577,250 1.5 8,659 Total Table 2 33,625 Totals Tables 1 & 2 103,651 Please refer to the following URL for an excellent overview of a rail facility provided by BNSF: http://www.railprices.com/business/nes/whatis.html Lift: A lift occurs each time a container and/or trailer is lifted from its point of rest onto a rail conveyance and/or when a unit is lifted from a rail conveyance to a place of rest in the facility. Lift Cost: The cost per lift is determined as a component of the total facility cost albeit in most rail facilities in the USA a standard cost assessed by the operator has been established at $30-34.00 per lift. It should be noted that the terminal operator selected will set the gate fees (each move through the gate is assessed a charge; usually $10.00 per unit in and $10 per unit out), the lift on/lift off charges, and other accessorial charges such as forklift fees, heavy lift fees, and all other special handling fees. It is important to 6 note that while the revenue for this type of facility is generally an assessment of the gate and lift on/lift off fees that in reality the accessorial fees may usually amount to approximately 50% of the primary fees. Generally these are not included in an assessment of terminal revenue but will be an important part of negotiations with the terminal operator selected. Cross Dock Facility: Cross-docking is the transfer of goods from one conveyance to another across a dock designed for high speed exchange and without any capacity for storage. In general a cross dock facility would be rectangular and would have a series of doors on either side with a dock high platform equipped with dock plates for unloading/loading. Depending on facility design and volume and operational issues the facility would have ramps for forklift traffic. A rail facility at either Winslow of Camp Navajo/Bellemont would be designed for the anticipated volume and in stages to accommodate growth. The facility would most likely be 60 feet wide a corresponding number of doors on either side of the facility with rail egress/ingress along one side and truck ingress/egress along the opposite side. We have included a picture of a typical cross dock facility in Appendix A Flagstaff Region The 2004 truckload market is experiencing the tightest capacity in years due to increased business, consolidation of the industry and others going out of business combined with rising costs (drivers, insurance, fuel) and the new hours of service regulations the price gap between intermodal freight movement and truck is narrowing. The long term trend of improving rail intermodal service reliability will accelerate the modal shift to rail. Regional warehouse strategies continue to grow for the following reasons: Major retailers are finding a few distribution centers around the country are not as agile in responding to demand spikes for particular items on a regional basis as distribution centers located closer to the marketplace Minimization of the risks associated with weather, labor disruptions, tariffs, quotas and terrorist acts Availability, cost and quality of regional short-haul transportation services Potential to reduce inbound transportation costs Complex, product customization center operations and products for a specific regional market The regional warehouse model allows them to virtually customize their service to any given marketplace. Small manufacturers have found success in the Phoenix area and we believe Flagstaff will be able to attract these types of businesses with the improved transportation services offered by a truck/rail compatible facility offering intermodal and transloading/cross-dock capabilities. The Flagstaff Region will be very attractive to warehousing, distribution and manufacturing