PHOTOS COURTESY OF PORT OF PORTLAND OF PORT OF COURTESY PHOTOS
ECONOMIC IMPACTS OF CONGESTION 2014 on the Portland-metro and Oregon economy About this report
In 2005, the Portland Business Alliance, Port of As we have learned through other research, our available from four metropolitan planning Portland, Oregon Department of Transportation, region and state are uniquely trade dependent. organizations around the state, including Portland, METRO, and several other public and private Between 2004 and 2011, Oregon’s trade-related mid-Willamette Valley, Bend and Corvallis, were sector partners completed a groundbreaking study employment grew 7.5 times faster than total used to show the results. titled, “The Cost of Congestion to the Economy employment. In addition, about 90 percent of of the Portland Region.” The study provided key Oregon exporters are small- to medium-sized The study seeks to answer the following questions: information about the importance of investing in businesses. Today, it remains critical to our What are the impacts of highway our transportation system, particularly roads and economy and our quality of life that we adequately congestion on the economic performance highways, as a critical part of our economy. invest in improvements that ensure an efficient and of Oregon and major metropolitan areas of reliable transportation system. The study concluded that geography and past the state? investments have made Portland-metro a sea This 2014 study provides a better understanding of How has congestion affected business and air gateway as well as a regional rail and how congestion and transportation barriers affect transportation decisions and operations in highway hub. As a result, the region’s economic the entire state’s economic competitiveness. the state? competitiveness is heavily dependent on an How have the effects of congestion changed efficient and reliable transportation system. It identifies the current economic foundation of since the 2005 Cost of Congestion study? the region and the state. It also shows our reliance The 2005 study found that even with planned What are the effects of transportation on the state’s transportation system to move goods, improvements, our transportation system would investment on the state’s economy? not keep pace with projected increases in freight ensure access to labor and increase productivity, and general traffic. Failing to adequately invest all of which impact revenues accruing to the in our transportation system would result in a state for vital public services. The study then potential loss to the regional economy of $844 compares two scenarios – a congested future based million annually by the year 2025 – that’s $782 per on no additional transportation revenues and Congestion can affect household per year – and 6,500 permanent jobs. an improved future that includes new financial a region’s economy by resources. The result quantifies the benefit to the “ When completed in 2005, the study gained economy and to jobs due to increased investment. reducing its competitiveness national recognition. As recently as July 2014, the resulting in significant White House issued a report titled, “An Economic Like the previous study, business interviews Analysis of Transportation Infrastructure were conducted to gain better insight into how impacts on employment Investment,” which referenced the study’s findings businesses are coping with transportation and and economic output. and the impact of congestion to businesses. congestion challenges. Travel models made ” This study was produced by the Economic Development Research Group, Inc., in partnership with the Portland Business Alliance, Associated Oregon Industries, Greater Portland Inc., METRO, Oregon Business Association, Oregon Business Council, Oregon Department of Transportation and Port of Portland. 1
BY THE NUMBERS: Introduction $300 billion. Oregon’s transportation system is the backbone reduces productivity. Chronic delay linked to Value of all goods moved in Oregon on all modes of the state’s economy. A well-maintained, congestion can affect the economy by reducing of transportation in 2012. resilient, and efficient network of highways, rail, competitiveness resulting in significant impacts air and waterborne transportation is essential. on employment and economic output. Oregon, It supports the businesses that provide the jobs as a West Coast logistical hub, is particularly 346,400. Number of transportation-related and and revenues needed to underpin the resource- vulnerable to the impacts of increasing transportation-dependent jobs in Oregon in based, traditional manufacturing and advanced congestion. 2013. biotech and computer/electronics technologies that characterize the state’s economy. Additional investment is needed to maintain Oregon’s connections with global and domestic Oregon’s ability to retain its quality of life markets and to remain competitive with other 36.9 million. in an increasingly global economy rests to a states that are planning large investments in Total annual hours of travel time saved in Oregon great degree on our ability to provide well- their transportation infrastructure. This report if additional transportation investments are paying jobs in the diverse array of industries finds that: made. This equals 27 hours per household. that trade with the rest of the U.S. and the rest of the world. To maintain its advantage Oregon’s competitiveness is largely as an attractive location for businesses of dependent on efficient transportation. 8,300. all types, including those in the industrial More than 346,400 jobs are Oregon jobs generated as a result of additional sectors that offer middle-income jobs, Oregon transportation related, or transportation transportation investments by 2040. must support, retain and attract workers and dependent, meaning that system businesses best suited to the emerging demands deficiencies threaten the state’s of the domestic and international marketplace. economic vitality. $928 million. Businesses report that traffic congestion Additional Oregon annual economic output/ One of the key business requirements needed and travel delays cost money, forcing sales generated by businesses due to an to grow and succeed in a highly competitive changes in business operations and improved transportation system by 2040. marketplace is the ability to maintain location decisions. consistently high levels of productivity. This Additional investments would generate $1.1 billion. requires that the costs to move materials 8,300 jobs, $1.1 billion in benefits, needed to produce goods in every sector of Annual income and non-monetary benefits of and a $2.40 return for every $1 of additional transportation investments to Oregon, the economy, and the costs to move finished investment, by 2040. products to their final markets, must remain or $788 per household, by year 2040. competitive. Transportation congestion increases the cost of business operations and $2.40. The potential return for every $1 invested in the state’s transportation system. 2
What the data show
Role of transportation in freight. The state provides key international shipments. However, all of these modes depend Oregon’s economy air and maritime gateways, as well as an on efficient and reliable highway access for important junction of critical transcontinental freight shipments and business deliveries, as The state’s economy and job base are highways. Oregon is served by 23 port districts, well as passenger travel for business. This is transportation dependent, especially on its including nine with inter-modal freight because trucks are the workhorse of the system, highways, for the connections they provide to terminals; 23 railroads, including high-capacity linking businesses throughout the state to the domestic and international markets. transcontinental mainlines of both western global marketplace and providing the “last mile” Class 1 railroads; and 97 public-use airports, connection to inter-modal facilities, business Oregon’s geographic location makes it a key including seven with commercial airline service. operations and end users, as shown in Figure 1. component of U.S. West Coast logistics, serving Portland-metro in particular ranks fifth among as a major hub for domestic and international western metropolitan regions in international Traded-sector industries – those industries that provide goods and services outside of Figure 1: Major flows by truck to, from and within Oregon, 2040 Oregon and bring money back into the state economy – are particularly reliant on an efficient transportation network. Exports from these industries are shipped through most major ports on the U.S. West Coast. These industries also are critical to statewide economic growth and job creation. In Oregon, the top traded-sector industries include wood product
INTEL CORPORATION Intel Corp. is one of the world’s largest designers and producers of essential technologies that serve as the foundation for the world’s computing devices. Hillsboro, Oregon is home to the company’s largest site for fabrication, testing and wafer production. Missed flight connections require Intel to reschedule shipments and are costly due to the limited usable life of dies used in production and manufacturing of chip sets. Source: U.S. Federal Highway Administration. 3
Figure 2: Oregon import and export trade in billions of dollars by trade market
Source: Moody’s Analytics, Annual Population Estimates [FPOPA.OR], Accessed November, 2014.
manufacturing, forestry, agriculture, computer FigureFigure 3: Oregon3: Oregon top Top five Five industries’ Industries ‘ Shareshare and electronics manufacturing, beverage of internationalof International trade, Trade, imports imports & exports CENTRAL OREGON TRUCK CO. manufacturing, and metal manufacturing. Computer & Exports See Figures 2 and 3. Electronics Central Oregon Truck Company is an over-the- Imports Products road, irregular route, 48 state carrier located in The statistics clearly indicate how important $17.2 Redmond, Oregon. The impacts of congestion these traded-sector industries are to the Oregon Agricultural $16.5 $16.0 $16.3 reduce productivity delivering consumed economy. Overall, the Oregon transportation Machinery, products that can not be recovered. This cost system carried $300 billion worth of goods $13.3 except Electrical is ultimately passed back to the consumers of in 2012, more than the entire Oregon gross all products. Since the transportation industry domestic product (GDP) of $205 billion. Chemicals has heavily regulated work hours, it makes About $215 billion, or 72 percent of total avoiding peak travel times nearly impossible value, is carried by truck. When considering Transportation Equipment for all carriers. According to Central Oregon transportation-related and transportation- Truck Comapny, the better the roads are dependent jobs in the traded industries, more Primary Metal maintained and the more efficient roadway than 346,400 jobs are reliant on an efficient Manufacturing travel is, the greater the payback to consumers transportation network – or nearly 20 percent 0% 5% 10%15% 20%25% 30%35% 40% of any and all products. of all statewide jobs. Source: WiserTrade International Trade Industry Data, accessed October 2014. Federal Highway Administration, Freight Analysis Framework 3, 2012, Values, accessed November 2014. 4
Business interviews The transportation system’s cannot shift to off-off-peak hours, managers For this study, the businesses listed here were impact on business report “lost turns” on truck deliveries due to asked about congestion and its effects on congestion, meaning that a truck can take on their business. Companies involved in exports competitiveness fewer delivery routes in a day compared to (international and domestic), transportation the recent past when there was not as much Congestion and travel delay due to deficiencies services and regional distribution were congestion. Moreover, businesses reported that in the transportation system are already chosen because of their economic increasing congestion result in a competitive impacting businesses throughout the state, importance to the Portland-metro region. disadvantage of operating in Oregon. hurting their competitiveness. Agriculture/Natural Resource New issues emerging for businesses also Interviews with statewide business leaders highlight the importance of transportation Anderson Hay & Grain Co. underscore the fact that transportation is critical infrastructure. Businesses are focusing on Boise Cascade Co. to business competitiveness and sustained exports for business growth, requiring reliable Hampton Affiliates business growth in Oregon. Due to increasing access to all U.S. West Coast international Imperial Stock Ranch congestion, businesses report that they are gateways and reliable service at ports and Pacific Seafood drastically altering operations in order to keep a airports both inside and outside of Oregon. Roseburg Forest Products competitive edge. Demand for transportation services serving Advanced Manufacturing Although some businesses in the report are not foreign markets is growing faster than the Genentech located in the metro areas studied, almost all demand for domestic markets. Furthermore, Intel Corp. either distribute products in these areas or need businesses are optimizing costs by relying more to pass through them to get to ports or other on transportation service providers such as Logistics Service Providers operational centers. See Figure 4. As a result, third-party logistics companies and for-hire Central Oregon Truck Co. congestion in metropolitan areas, including transportation services, thereby minimizing Expeditors International of Portland-metro, can affect operational decisions direct operating risks and passing them onto Washington, Inc. and in some cases the costs of resource-based another party. companies throughout the state. Oregon Transfer Co. Businesses were also asked to comment on Summit NW Changes in business operations are nearing the any concerns or plans they have regarding Manufacturing/Food Production limits of what a business can do to overcome the resiliency of the transportation system transportation congestion before it becomes to seismic events. Many businesses reported Chris King Precision Components a severe issue. Many respondents reported high vulnerability to a seismic event if major Craft Brew Alliance that they have implemented staggered shifts, transportation links were disrupted, with some Oregon Iron Works added evening and overnight operations, and more localized businesses reporting an inability Schnitzer Steel are increasing operation during “off-off-peak” to sustain themselves in the event of long-term Retail Distribution hours, with some delivery shifts now starting transportation system failure. Thus, in addition as early as 2 a.m. However, the businesses are to the reliability of the transportation network, Columbia Sportswear Co. making these operational changes in the face the resiliency of the network is also of concern The Kroger Company (Fred Meyer) of regulatory limits on driver hours, worries of to Oregon businesses. driver safety and limits to when they can feasibly deliver to customers. For those businesses that 5
Figure 4: Coping with congestion; key routes (blue), bottlenecks (black) and businesses interviewed (red)
Source: Esri, HERE, DeLorme, TomTom, Intermap, Increment P. Corp, USGS, FAO, NPS, NRCAN, GeoBase, IGN, Kadaster NL, Ordinance Survey, Esri Japan, METI, China (Hong Kong), swisstopo, MapmyIndia, © OpenStreetMap contributors, and the GIS User Community. 6
HAMPTON AFFILIATES Overall impacts of congestion Oregonians 36.9 million hours of travel time Hampton Affiliates produces dimensional and travel delay on the economy or an average of 27 hours per household, as lumber with six sawmills located throughout shown in Figure 7. the Pacific Northwest. There are three mills in Failure to adequately invest in the These travel time savings from new investments Oregon (Willamina, Tillamook and Warrenton.) transportation system results in significant translate to significant economic impacts. With They produce about 2 billion board feet losses to Oregon’s economy, job base and additional transportation investments these of wood products per year with roughly quality of life. 500 million board feet of exports. They rely savings would generate an additional 8,300 jobs extensively on for-hire firms for their outbound Transportation system assessments for the shipments that require about 45,000 truckloads metropolitan regions included in this study Figure 6: Improved future transportation per year. Hampton’s costs have gone up (Portland, Salem/Mid-Willamette Valley, fundingFigure 6:reduces Improv edpercent future of transportation travel time dramatically in the last five years due to Bend and Corvallis) suggest that congestion is in fundingcongestion reduces congestion congestion, new driver rules and lack of drivers. becoming an increasing problem statewide and 16% that investments in infrastructure can strongly mitigate these conditions. 14% $17.2 Over time, as more trips are generated in 12% $16.0 $16.3 $16.5 the state, traffic increases cause additional 10% FigureFigure 5: 5: Portland-metro Portland-Region Prprojectedojected congestion and reduce reliability on the highway $13.3 travelTravel increases, Increases, 2010-2040 network for both passenger cars and trucks. See 8% Figure 5. For example, in 2010, 5 percent of 100% all travel time in Portland-metro took place in 6% congested conditions (e.g. in slow, stop-and-go 4% 80% $17.2 traffic). This is expected to triple to 15 percent $16.3 $16.5 $16.0 of all trips by 2040. Put another way, by 2040, 2% the average Portland-metro household will
60% Trucks $13.3 0% experience 69 hours of congestion annually, Portland Other Oregon MPOs or nearly two work weeks spent in congested 40% conditions, if only the currently programmed 2010 baseline Cars improvements are made, as shown in Figure 6. Additional future investments would reduce 2040 congested future* 20% this amount to 37 hours per household. In 2040 improved future** other Oregon metropolitan areas, congestion 0% will increase to 18 hours per household by 2040 * Based on no investment beyond current funding. Vehicle trips Vehicle miles Vehicle hours traveled traveled without new investments. That figure could ** Based on fully funded Regional Transportation Plans. be reduced by two-thirds, to six hours per Source: Portland Metro household, with additional investments. In total, Source: Portland Metro and Oregon DOT Office of Planning. Travel demand model estimates provided directly, October new transportation investments would save 2014. 7
GENENTECH FigureFigure 7: Improved 8: Improved future future transportation transportation funding funding reduces reduces congestion, congestion, hours hours per per householdhousehold in slow, stop-and-go traffic For Genentech, perishability is a key concern and missed air shipments require that products 80 2040 congested future* be stored under controlled conditions. When 69 hours 70 outbound shipments are missed, products $17.2 2040 improved future** must be held in Hillsboro, where the cost 60 $16.0 $16.3 $16.5 of storage, monitoring of tightly controlled conditions and re-dispatching significantly $13.3 50 increase overall costs. 40 37 hours Hours 30
20 18 hours
10 6 hours Due to increasing congestion, businesses report that 0 Portland Other MPOs “they are drastically altering * Based on no investment beyond current funding. ** Based on fully funded Regional Transportation Plans. operations in order to keep a Source: Calculations from EDR Group based on travel demand model estimates. Household data from Moody’s Analytics, Total Households [FHHOLDA], Accessed October 2014. competitive edge.
by 2040; $928 million in output; $530 million Figure 8: Economic benefits for Oregon per year by 2040 in GDP or value added; and $380 million in ” wages and compensation to employees. Portland-metro Other study metros Total This study also finds that by 2040, improving the transportation system investment levels Economic benefits* $822,000,000 $327,000,000 $1,058,000,000 ($908 per household) ($744 per household) ($788 per household) specified in current state and metropolitan area long-range Regional Transportation Plans Jobs** 5,897 2,421 8,318 would generate economic benefits for the state growing to nearly $1.1 billion per year by 2040, * Includes GDP, traveler non-monetary benefits and societal benefits. ** Change to average annual employment level. as shown in Figure 8. Cumulatively, Oregon would receive over $24 billion in benefits from Source: EDR Group these transportation investments, returning over $2.40 for every dollar spent on improving the transportation system. 8
Conclusion
The rewards are high if new investments Understanding both the benefits and potential Business, civic and government leaders should are made. However, the risks are great for risks of transportation infrastructure investment engage in a discussion about transportation the economy and quality of life in Oregon if is important. This study is intended to provide system deficiencies in terms of congestion and additional investments are not undertaken soon. useful information to the public, the business resiliency. It impacts costs for businesses, job Oregon risks erosion of its competitive position community and government decision-makers as opportunities, business competitiveness and in domestic and international markets as the they work to reach consensus on transportation ultimately state revenue used to fund vital public cost to move goods increases due to congestion. policy, prioritize projects and make funding services. It is critical to continue to invest in the This means thousands of jobs and billions of decisions. transportation system in order to protect and dollars for the Oregon economy. enhance the state’s economy and quality of life. Thank you to our funding partners. A number of companies and organizations contributed to the funding of this report and the Value of Jobs initiative, including: AAA Oregon/Idaho Pacific Power Bank of America Portland General Electric Cambia Health Solutions Safeway Inc. CenturyLink Schnitzer Steel Columbia Sportswear The Standard ESCO Corporation Stoel Rives Ferguson Wellman Capital Management Travel Oregon Fred Meyer United Postal Service (UPS) The Greenbrier Companies U.S. Bank Intel Corporation Vigor Industrial Key Bank Walmart League of Oregon Cities Media Partners: Melvin Mark Companies Oregonian Media Group Miller Nash LLP KGW Media Group Nike The Portland Tribune & Community Newspapers NW Natural Oregon Health & Science University (OHSU) Oregon State Building & Construction Trades Council Oregon Trucking Association For more information about this report or other Value of Jobs studies, go online to www.valueofjobs.com.
2014 Check-up on the Portland-Region’s Economic Health Portland-Metro’s Health Care International Trade & The Portland Harbor’s Impact 2013 Check-up on the Portland-Region’s Economic Health Higher Education & Regional Prosperity 2012 Check-up on the Portland-Region’s Economic Health Portland-Metro’s Manufacturing Sector Land Availability: Limited Options Portland-Metro’s Traded Sector 2011 Check-up on the Portland-Region’s Economic Health International Trade study 2010 Check-up on the Portland-Region’s Economic Health
About the Value of Jobs Coalition
The Value of Jobs Coalition is based on the premise that in order to have a prosperous, healthy Portland region with a good quality of life, we need more private-sector jobs. The coalition began with an economic study in the fall of 2010, which uncovered troubling economic data about the Portland-metro region. A number of other studies have followed that highlight the region’s economic opportunities and challenges. Find out more at: www.valueofjobs.com.
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PORTLAND BUSINESS ALLIANCE 200 SW Market Street, Suite 150 Portland, OR 97201 www.valueofjobs.com