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In this issue
1 Foreign rade Zones: AnEconomic Opportunity
2 Water: our history, ouruture?
3 Zelle Appointed MnDOCommissioner
3 Rayman to Lead FHWAFreight Management andOperations
3 Making the Most o MAP-21
8 2013 MAFC/IS/KYCJoint Annual FreightMeeting
10 Wood Pellets in HighDemand in the EU
11 Summit on the BenecialUse o Dredging Materials
8 U.S. Coal Exportation: ANew Frontier
Foreign Trade Zones: An Economic OpportunityAlex Marach, CFIRE Research Intern
$534 billion o goods entered USoreign-trade zones (FZ) in 2010(Foreign-rade Zones Board, 2012).MAFC FZs accounted or $98 billionor 18.4 percent o the total US valuereceived by FZs in 2010. FZs receiveinputs rom both domestic and oreignsources, but use US labor to turninputs into nal products. Te MAFC
has the transportation network tosupport FZs and much o the MAFCis FZ eligible. Te MAFC has theopportunity to use FZs to encourageeconomic development through theuse o US labor.
FZs by law are located adjacentto a port o entry (POE). A POE isa designated area where a customsocer is authorized to accept entrieso merchandise, collect duties, and
enorce customs and navigation laws(19 C.F.R. 101.1, 2012). POEs aretypically border crossings, airports, orwater ports.
FZs come in two orms, generalpurpose zones (GPZ) and subzones.GPZs may have multiple companiesusing a single site and are usuallylocated at a POE or an industrial park.Subzones are approved or a singlecompanies use when a general purposezone cannot accommodate the user.
Subzones are typically manuacturingacilities and are located at companymanuacturing acilities. Adjacency ora GPZ is dened as a location within60 miles or 90 minutes o driving timeby US law. Adjacency or a subzoneis reliant on the subzone meetingsupervision requirements romCustoms and Border Protection (15C.F.R. 400.2, 2012).
FZs coner tari benets on theuser and exist to encourage oreigncommerce (15 C.F.R. 400.1, 2012).FZs increase the number o optionsavailable to users when applying taristo imports. For instance, FZ users areable to choose when to pay a tari on agood. Some products have an invertedtari structure where componentshave a higher tari than the nishedproduct. Inverted taris incentivize theuse o American workers to assembleproducts. For example, a Chattanooga,N, Volkswagen actory saved $13per car or $1.9 million annuallyrom inverted tari savings (Bolleand Williams, 2012). Similarly, i animported good is destroyed duringthe production process there is no
Benefits to FTZ Users
Zone users can choose to pay atari on the nal product whenit exits a FZ or pay taris on theinputs.
No duty is due i a good isre-exported out o the FZ,scrapped, or destroyed in a FZ.
Zones eliminate the need to apply
or duty drawback when a good isimported and then re-exported.
Products can be transerred zone-to-zone without paying a duty.
FZs allow the user to le aweekly entry reports and pay asingle processing ee rather thanindividual ees or each entry.
Continued on page 4.
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When I started writing thisarticle, I knew I wanted to talkabout water resources but wasntexactly sure which direction totake or which marine reightissues to address. Tere are such awide variety o issues that I couldaddress: invasive species, ooding,racking, droughtI could haveseveral messages about ourwaterways and their role in reightmovement.
My message could be that there are more and moredemands on our waterways than ever and it appears romall accounts that the variety and intensity o the demandswill only increase. We are all aware o increasing reightloads and the potential to use the waterways, but whatabout the increasing population levels that require moredrinking water, or the reoccurring idea o piping the waterrom the Missouri River to the arid west, or new demandssuch as mining with hydraulic racturing in the Dakotas,or increased recreational uses? All o these water usesappear legitimate, so who gets to decide how we use ourwater resources and what is their planning horizon? Can
and should navigation be a DO issue and be unded andmanaged as an integrated part o the total transportationsystem?
Or my message could be that lake levels and river levelsseem to be uctuating more and more with extremeweather. Declining Great Lake levels threaten portsand declining river levels threaten the barge industry.Shutting down the barge industry costs not only the towbusinesses, but all o society. Heres a conservative andhi-level perspective. Te Iowa DO estimates that onebarge carries about 52,500 bushels o grain. For example,using Missouri corn at $7.35 a bushel, one barge load
carries about $385,875 worth o corn. A six-barge towwould carry over $2 million dollars in corn and a 42-towbarge south o St. Louis on the Mississippi would carryabout $16 million in corn. Te current drought across theMidwest is also causing major problems. According to theIowa Farm Bureau, two-and-a-hal billion dollars worth oreight that would move during the winter and early springmonths is at jeopardy o being shut down i the channel isnot maintained with enough ow to get barges through it.And lets remember: that isnt just grain or ertilizer waitingto be shipped. Its also a barge crew without work, a small
town grain elevator laying o people over the holidays,and processors reducing crews to match reduced supply oraw materials. Tis system is important to the agriculturaleconomy o the Midwest.
My message could also be that we are not investing in thislow-cost natural reight system. As reight advocates weknow that many o our lock systems are past their primeand need work. Dam maintenance and dredging are behindand underunded and threaten port operations, channeldepth, and even communities. Our waterways policy hascreated a cycle o degradation or our reight waterwaysystem. Te cycle progresses as ollows: as the system ages
and we do not invest in innovation or maintenance, theperormance and reliability o the waterway system degradeAnd as reliability degrades reight moves to other modes. Aswaterway investments are based on tonnages moved, ewertons means less opportunity or investment. Less investmentallows the system and reliability to degrade even urtherand more reight moves rom our waterways to the railsor highways. A declining system is not considered worthyo urther investment. We have created a sel-perpetuatingcycle o devolution in our marine systems that can onlymake sense rom a very narrow point o view.
We could also talk about other water-related issues andconsider how ortunate we are in the Midwest, where weare bounded and served by ample lakes and rivers while900 million people across the planet are acing shortageso resh drinking water. Te wealth and health o nationsis predicated upon water, but we seem to beto our ownembarrassmentalling ever arther behind in our ability tomanage this system and the resources it provides.
So what is my message? Water and waterways serve awide variety o needs and wants. Te demand or wateror all these uses will only increase. Te MAFC regioncontains about 31 percent o the inland river system and
good portion o the Great Lakes. Tis is a tremendouseconomic asset. We need to make plans, decide on societalpriorities, and put our plans to work on these waterwaysbeore someone else does. Tis is our backyardand ourront yard. And we will need more than the traditionalmetricized, project prioritization approach to x theseproblems and solve these conicts. We need to approachtransportation systems as community and economicdevelopment systems that have tremendous impacts onour lives. We need a broad-based systems approach toaddressing transportation investments, maintenance, and
Water: our history, our future?Ernie Perry, MAFC Program Manager
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Te Federal Highway Administration (FHWA) recentlyselected Caitlin Hughes Rayman to serve as the FHWA'sOce o Freight Management and Operations. She will
succeed ony Furst, who now serves as FHWA's AssociateAdministrator or Saety.
"We are ortunate to have Ms. Rayman take the leador reight at FHWA," said MAFC program managerErnie Perry. "Ms. Rayman brings the state DO reightdevelopment experience to her new position and hasdemonstrated innovation and openness in her work. Tetime is right or advancements in reight policy, unding,planning, and operations and we look orward to workingwith Ms. Rayman at FHWA."
Rayman to Lead FHWA FreightManagement and Operations
even the prioritization o the activities or which the waterwill be used. And importantly, our region should be taking
the lead on these eorts to understand and sustainablydevelop our waterways. We have the most to lose should thesystem or water supply degrade, or when others prioritize itor us.
Wishing you the best in the New Year and Happy Holidays!
Zelle Appointed MnDOT Commissioner
Minnesota Governor Mark Dayton has appointed CharlieZelle to be the new MnDO Commissioner, eectiveJanuary 15, 2013.
Zelle is president and CEO o Jeerson Lines, whichprovides travel services in 13 Midwestern states. His amilyounded the company in 1919. It serves more that 60Minnesota cities and specializes in connecting rural areas todestinations across North America.
He currently serves as the chairman o the MinneapolisRegional Chamber o Commerce, a member o theCorridors o Opportunity Policy Board and a member othe Minnesota Chamber o Commerce board o directors.He also is a board member and chairman o the policycommittee o the American Bus Association, and he has
served on the executive committee o the University oMinnesota Center or ransportation Studies.
Zelle succeeds om Sorel, who resigned on December 1 tobe the CEO o AAA Minneapolis.
Rayman is currently the Assistant Secretary orransportation Policy and Freight at the Maryland
Department o ransportation, where she has servedsince 2007. At the Maryland DO, she was responsibleor overseeing the development and implementation olegislation and policies aimed at improving multimodalreight transportation.
Beore joining the Maryland DO in 2007, she served as theederal legislative programs coordinator or North CarolinaDO, where she worked on reight mobility issues. Raymanis a member o the American Association o State Highwayand ransportation Ocials' Standing Committee on Railransportation and an active member o the Coalition orAmerica's Gateways and rade Corridors (CAGC).
For more inormation, visit the FHWA Oce o FreightManagement and Operations.
Making the Most of MAP-21
ransportation orAmerica has justreleased a handbookto help policy makersand transportation
stakeholdersunderstand andimplement MovingAhead or Progressin the 21st Century(MAP-21), therecently enactedederal suracetransportationlegislation.
Making the Most ofMAP-21: A Guide
to the 2012 FederalTransportation Law And How to Use it for PositiveChange in Your Communityeatures both narrative chaptersand two-page explainers on the key eatures o the newprogram, rom the consolidated highway program to thenew transportation alternatives, as well as new nancingoptions.
For more inormation or to download the handbook, visitthe ransportation or America MAP-21 resources.
MOSTMaking the
of MAP-21
A Guide to the 2012 Federal Transportation Law
And How to Use it for Positive Change in Your Community
http://www.ops.fhwa.dot.gov/freight/http://www.ops.fhwa.dot.gov/freight/http://t4america.org/resources/map-21/http://t4america.org/resources/map-21/http://www.ops.fhwa.dot.gov/freight/http://www.ops.fhwa.dot.gov/freight/7/30/2019 Mid-America Freight Coalition - Freight Notes Fall 2012 Newsletter
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tari due when the product is scrapped (Bolle andWilliams,2012). Tereore, companies will use FZs as researchacilities i they would otherwise pay high import taris on
the research materials.
FZs employed roughly 320,000 or about 3 percent oU.S. manuacturing workers in 2010. Also, 12 percent oall oreign goods entered the United States through FZsin 2010 (72nd Annual Report o the Foreign-rade ZonesBoard, 2012). able 1 displays the role o FZs in the MAFCand compares the MAFC to the US. Te MAFC has a largenumber o POEs considering many o the member states arenot on a border where POEs are clustered. As o 2010 only24 o MAFC POEs had either an active GPZ or subzone asdened by Te International rade Administration (IA)reporting an adjacent GPZ or subzone receiving goods.
Many o the active POEs have multiple GPZs or subzonesederally dened as adjacent to the POE.
Additionally, each MAFC state uses GPZ and subzonesat dierent levels. able 2 breaks out the POEs, GPZ,subzones, and the value o goods received by each MAFCstate. Nearly every state has more value received in subzonesthan GPZs. IA notes that the trend in FZs is companiesutilizing subzones more than GPZs (Foreign-rade ZonesBoard, 2012).
Te MAFC has numerous POEs which covers a largeportion o the MAFC in the 60 mile buer where GPZsreside. Additionally, the distance rom a POE to a subzonecan be much larger. For instance John Deere & Companyoperates a subzone that is approximately 98 linear miles
rom the Des Moines, IA airport POE. Figure 1 uses 2010
Figure 1
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Table 1
Port of Entry Active General PurposeZones (2010)
Active Subzones(2010)
Total Value of ReceivedShipments (Billions)
MAFC 47 24 51 $98
United States 329 132 263 $534
MAFC as a Percentageof the United States 14.3% 18.2% 19.4% 18.4%
data rom the IA and Customs and Border Protectionto map US POEs with 60 mile buers. Te map showsdisplays orange buers around POEs that have an active
GPZ or subzone associated with the POE. In contrast theblue buers do not contain an active GPZ or subzone andrepresent an opportunity or states to encourage businessesto utilize the benets o a GPZ or subzone. Some POEs mayhave a GPZ or subzone within 60 miles, but the zone shownis not legally associated with that POE. Tereore, goods areimported through a dierent POE that may be urther awayrom the manuacturing or distribution acility.
Overall, FZ status oers benets to importers o oreigngoods and promotes economic development in the statewhere the FZ resides. Furthermore, the MAFCs locationand access to multiple transportation modes creates an
attractive environment or companies. State and local
MAFC economic development organizations shouldbe aware o local POEs, FZs, and subzones to attractbusinesses and enhance the economic competitiveness o
their state.
References
15 C.F.R. 400.1 (2012). 15 C.F.R. 400.2 (2012). 19 C.F.R. 101.1 (2012). Foreign-rade Zones Board. 72nd Annual Report o the
Foreign-rade Zones Board. December 2011. AccessedNovember 14, 2012.
Bolle, M. J., and B. R. Williams. U.S. Foreign radeZones: Background and Issues or Congress.Congressional Research Service. September 5, 2012.
Accessed November 14, 2012.
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Table 2
Port ofEntry
Active GeneralPurpose Zones
Total Value Received(Millions)
ActiveSubzones
(2010)
Total ValueReceived
(Millions)
Illinois 9 3 $6,416 10 $22,587
Indiana 3 2 $1,096 5 $5,880
Iowa 1 - - 3 $340
Kansas 1 2 $19 2 $1,229
Kentucky 3 2 $3,088 8 $19,957
Michigan 8 4 $3,406 6 $5,058
Minnesota 10 2 $532 2 $36
Missouri 4 2 $490 3 $585
Ohio 5 6 $3,153 9 $23,682
Wisconsin 3 1 $0.4 3 $382
MAFC Total 47 24 $18,203 51 $79,740
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In 2009 the European Union (EU) ratied the RenewableEnergy Directive, which outlined three objectives ormember states to meet by 2020:
1. Increase renewable energy consumption to 20 percento total energy consumption;
2. Reduce total energy consumption by 20 percent;3. Reduce greenhouse gas (GHG) emissions by 20 percent.
Tese initiatives, especially those that ocus on renewableenergy consumption and emissions, provide an opportunityor expansion o the renewable energy market. Te EU isscheduled to release details about required certications or
importers o renewable energy products by the end o 2012.
According to the Environmental Deense Fund, the EU isthe worlds largest consumer o wood pellets at 10.4 milliontons per year. Projections suggest that the EU will requirebetween 16 million and 60 million tons o imported woodpellets to carry out the goals o the Renewable EnergyDirective (Joudrey, 2012).
Wood pellets are scraps o wood that are transormed toa high density and low moisture content (usually under10 percent). Pellets burn hotter (reducing their harmul
emissions) and are more economical to transport. Tedemand or wood pellets is driven by 1) a nations relianceon ossil uels, 2) the need to address the eects o climatechange, 3) the need to improve energy security andindependence.
Te United States currently produces only 1.8 milliontons per year. Eighty percent o domestic wood pellets areconsumed in the United States, mostly in residential heatingapplications in the Northeast. In addition, the United Statesonly uses 66 percent o its capacity or producing woodpellets. In comparison, Canada exports 90 percent o theirdomestic supply, primarily to the EU.
Although the annual production o wood pellets in theUnited States is small in comparison to the needs o the EU,this market is growing steadily, doubling in capacity every2-3 years since 2001 (Spelter, 2009). In 2009, nearly 800,000tons o wood pellets were produced in Midwestern states.
Te EU Renewable Energy Directive could create anopportunity or economic growth or the states o the Mid-America Freight Coalition, many o which have wood pelletproduction acilities.
Tis export market, which includes threedistinct end-user segmentsindustrialpower plans, smaller scale district heatingor CHP plants, and residential heatingisonly likely to grow as the shif to morerenewable orms o energy continues.Producers, exporters and shippers in theMAFC region could benet rom thistrend.
References
Joudrey, J., McDow, W., Smith, .,
and Larson, B. (2012). European Powerrom U.S. Forests : How Evolving EUPolicy Is Shaping the ransatlantic radein Wood Biomass. Retrieved November1st, 2012. Spelter, H. and oth, D. (2009).North Americas Wood Pellet Sector.United States Department o Agriculture,Forest Service, Forest Products Laboratory.Research Paper FPLRP656. RetrievedNovember 1st, 2012.
Wood Pellets in High Demand in the EUC. Bryant Dudley, CFIRE Project Assistant
Wood pellet production acilities (Spelter, 2009)
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2013 MAFC/ITTS/KYTCJoint Annual Freight Meeting
Building Paths to Prosperity:The Role of Regional Corridors
State and MPO Working Sessions Freight Planning and Perormance
Measures
Global Economic Implications or
Freight
Perspectives on MAP-21
Industry rends and Perspectives
Practical Approaches to the NewEconomy
Regional and Local Planning
Approaches
ours o Kentucky Freight
Facilities
MAFC and IS Partner Sessions
Louisville, Kentucky March 12-14, 2013
Te CFIRE-sponsored Summit on the Benefcial Use o Dredging Materials will also beheld in conjunction with the 2013 MAFC/IS/KYC Joint Annual Freight Meeting.
S E
For updates about this event, visit midamericareight.org/events/2013am/
For more inormation about this conerence, contact Ernie Perry (MAFC) [email protected] or Bruce Lambert (IS) at [email protected].
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U.S. Coal Exportation: A New FrontierC. Bryant Dudley, CFIRE Project Assistant
Te demand or coal in the United States has declinedsharply since 2008. Much o this decline is driven by thedecreased use o coal or power generation, which hasdropped rom nearly hal to just under a third. Tis trend islikely to continue: 20 percent o coal-burning power plantsin the United States are scheduled or permanent closure inthe coming years (Figure 1) (Soward, 2012). Te low cost onatural gas, new EPA regulations, and a slowing demand orelectricity all contribute to the decline in the use o coal orpower generation.
Chinas coal imports have increased by a actor o 60 overthe past decade. Te bulk o this coal comes rom Australia,which also supplies much o Chinas iron ore. Te USEnergy Inormation Administration predicts that Chinawill account or more than 88 percent o the increase inworldwide coal consumption by 2030 (Figure 2) (Con,2011).
U.S. coal producersparticularly those in the Powder RiverBasinare currently looking to shif rom supplying thedeclining US market to exporting coal to the emergingAsian market. Tis shif rom supplying domestic markets
to exports will also cause a shif in the movement o rail-borne coal, particularly on rail lines operated by BNSFand Union Pacic in the Midwest and Western areas o theUnited States (Colman, 2012).
Te direct impact to the MAFC region could proveto be stiing. According to a US Energy InormationAdministration Carload Waybill sample,* six o the tenstates within the region receive at least 96 percent o theircoal directly rom the Powder River Basin (Sample, 2008).With the plausible combination o Powder River Basin coalbeing exported to Asia and the decline in the demand o
coal powered electric acilities in the Midwest, there couldbe disruptions in the reight transportation both to androm the MAFC region and the Powder River Basin routelines in the uture.
* Note: A waybill can include one or more train cars and atrain can include one or more waybills.
References
Colman, Z. (2012). Coal exports could ace roadblocksi Democrats maintain Senate control. Te Hill.Retrieved October 18, 2012.
Con, W. O. (2011). Power Past Coal. Retrieved October16, 2012.
Institute or Energy Research (2012). Impact o EPAsRegulatory Assault on Power Plants. Retrieved October16, 2012.
Roberts, A. (2012). Market Drivers o Pacic NorthwestCoal Activity. Retrieved October 16, 2012. Sample, S. .-B. (2008). Coal ransportation Rates. U.S.
Energy Inormation Administration. Soward, L. R. (2012). Air Alliance Houston. Retrieved
October 16th, 2012. U.S. Energy Inormation Administration. (2008). Rail
Coal ransportation Rates to the Electric Power Sector.U.S. Energy Inormation Administration.
Figure 1 (Source: Institute or Energy Research, 2012)
Figure 2 (Source: Roberts, 2012)
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Save the Date!
Summit on the
Bl U f Ddgd Ml
LoUisviLLe, KentUcKy-
March 14-15, 2013
This summit will explore the use of dredged materialsin state transportation projects and in other benecialways, as both a sustainable dredging strategy, and anopportunity to utilize a readily available commodity.
F m fm bu umm, .w.g//ddgg/
ConferenCe Themes
Economic impact of the disposalproblem
State of the art of the benecial use
Benecial use in practice
Opportunities for departments oftransportation
Federal and state policy andregulatory perspectives
Tools for nding available dredgedmaterials
The future of benecial use ofdredged materials
Whoshould ATTend?AbouTThe summiT
The summit is open to all interested attendees, butfocuses on issues important to state department oftransportation engineers, including chief engineers,materials engineers, and geotechnical engineers.
tug suplu Ml cmmd f vlu
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Teresa Adams, PhDCFIRE [email protected]
Ernie Perry, PhDMAFC Program Manager
Gregory Waidley, Jr.CFIRE Program [email protected]
Maria HartResearcher
Steve WagnerCommunications [email protected]
Ben ZietlowGeoeconomist
Lisa BenekerProgram [email protected]
Mid-America FreightCoalition
midamericareight.org
Te Mid-America Freight Coalition (MAFC) is a regional organization that cooperates in theplanning, operation, preservation, and improvement o transportation inrastructure in theMidwest. Te ten states o the AASHO Mid-America Association o State ransportationOcials (MAASO) share key interstate corridors, inland waterways, and the Great Lakes. TeMAFC is unded by the National Center or Freight & Inrastructure Research & Education andthe DOs o the ten member states.
You are invited to the
2013 Wisconsin Transportation ReceptionDuring the TRB Annual Meeting
Sunday, January 13, 2013
5:30 p.m.-7:30 p.m.
Marriott Wardman Park Hotel
Thurgood Marshall Ballroom East
2660 Woodley Road, NW
Washington, D.C.
HOSTED BY
UW-Madison Civil and Environmental Engineering
UW-Madison Ofce of Sustainability
University of Wisconsin-Milwaukee
University of Wisconsin-Superior
National Center for Freight & Infrastructure Research & Education
Modied Asphalt Research Center
UW Trafc Operations and Safety Laboratory Great Lakes Maritime Research Institute
Wisconsin Highway Research Program
Recycled Materials Resource Center
Construction and Materials Support Center
Wisconsin Concrete Pavement Association
Wisconsin Transportation Builders Association
CH2M Hill
Collins Engineers
ITS-Wisconsin
Lakeside Engineers, LLC Mead & Hunt
TransSmart Technologies
2013 Sponsors
mailto:adams%40engr.wisc.edu?subject=mailto:ebperry%40wisc.edu?subject=mailto:gwaidley%40engr.wisc.edu?subject=mailto:gollnik%40engr.wisc.edu?subject=mailto:swagner%40engr.wisc.edu?subject=mailto:bzietlow%40wisc.edu?subject=mailto:beneker%40engr.wisc.edu?subject=http://www.mississippivalleyfreight.org/http://www.mississippivalleyfreight.org/mailto:beneker%40engr.wisc.edu?subject=mailto:bzietlow%40wisc.edu?subject=mailto:swagner%40engr.wisc.edu?subject=mailto:gollnik%40engr.wisc.edu?subject=mailto:gwaidley%40engr.wisc.edu?subject=mailto:ebperry%40wisc.edu?subject=mailto:adams%40engr.wisc.edu?subject=