Understanding the nature of the freight industry is essential to evaluating specific freight funding alternatives. International goods movement involves multiple modes that move freight from origin to destination, includes stops or transfers at nodes along the way, and uses a network of federal, state, local, and private infrastructure.2 In the United States, for example, nearly 25 million containers and trailers full of products (such as electronics, mail, food, paper products, clothes, appliances, textiles, and auto parts) are moved using more than one mode, likely a combination of rail, ocean shipping, and trucking.3 For domestic freight, however, nearly 70 percent of shipments (by tonnage) are made by truck.4 As noted in the Commission's Interim Report, a growing economy and population, together with reduced rail capacity and the speed and convenience of single-mode movement, have significantly increased the amount of freight carried on the highway system.5
A diversity of business models exist within the trucking industry, based on vehicle configurations, ownership structures, and cargo characteristics. Vehicle configurations vary widely: in 2005, over 26 million trucks hauled nearly 11 billion tons of freight, Put only 3 million of these trucks were Class 8 vehicles-primarily the large "18 wheeler" truck and trailer combinations weighing more than 33,000 pounds that many people associate with freight transportation.6 In fact, about 90 percent of freight-carrying vehicles are smaller trucks such as 20-foot "bobtail" trucks, parcel delivery vans, or large single-purpose commodity carriers (e.g., cement trucks).7
The ownership structure of trucking fleets also varies. There are large national and regional publicly owned companies that operate the less-than-truckload sector of the industry on scheduled services that cross the country, as well as truckload carriers that haul freight in a single truck from one origin to one destination. There also are commodity haulers that specialize in carrying raw materials such as grain, gravel, and timber. Most of these carriers own their trucks, and their drivers are employees. But there also are large public companies that rely on owner-operators (individuals who typically own and operate one vehicle) to move their freight. There are captive shippers and contract carriers owned by or performing services under contract to companies such as large retailers or food and beverage distributors, working exclusively on moving the products of those companies both long and short distances. Finally, there are parcel delivery services that use a combination of vehicles and a mix of employee drivers and owner-operators. Owner-operators are prevalent in all parts of the trucking industry and may contract with a single truck line or with multiple lines to keep their trucks running and generating revenue.
Over-the-road trucking, or long-distance haulers, have significantly different business models (in terms of revenue per load or per ton, revenue per mile, cost per mile, driver productivity, and fuel efficiency) than drayage drivers who charge per short trip to move goods in and out of ports to intermodal terminals and customer facilities. The business models also vary for time-sensitive local freight firms and for parcel delivery operators that move goods from local warehouses or airports to their final destination.
Cargo characteristics are equally important differentiators. Freight can differ by volume and value, by whether it includes component parts or finished products, by hazardous or non-hazardous material, and by form (i.e., solid, liquid, or gas). Transportation costs vary by the freight shipment mode. Industries characterized by low value-to-volume or value-to-weight products such as agricultural crops and coal rely on modes with lower transportation costs, such as rail or water (which also are slower and less reliable) to keep costs in line with product value. In contrast, industries characterized by high value-to- volume or -weight products rely on modes that can provide speed and reliability, typically truck or air, in order to minimize inventory carrying costs.
The implications of this diversity-and the reason that this chapter commences with this overview-is that lumping freight movements together into a single category of "goods" or "vehicles" can generate misleading conclusions based on oversimplifications of both the truckers' and shippers' ability to pay and the user impacts on the system. Any single approach to deriving revenues from freight-related users of the transportation network may miss some users entirely or disproportionately burden one type of carriage or shipper over another, regardless of the impact on the transportation system.