Translinked Regional Freight Study

Translinked Freight Study

December 2011

Prepared for:

Detroit
Regional
Chamber


Table of Contents

1 EXECUTIVE SUMMARY ................................................................................................................................... 1
1.1 TRANSLINKED ................................................................................................................................................... 1
1.2 RECOMMENDATIONS ......................................................................................................................................... 2
1.3 REGIONAL FREIGHT FLOWS ................................................................................................................................. 5
1.4 INDUSTRY TRENDS AND LOCATION COMPARISON .................................................................................................... 9
2 DETROIT BEA FREIGHT FLOWS ..................................................................................................................... 11
2.1 INTRODUCTION ............................................................................................................................................... 11
2.2 DETROIT BEA TOTAL CARGO............................................................................................................................. 12
2.3 DETROIT BEA TRUCK CARGO ............................................................................................................................ 16
2.3.1 Total ....................................................................................................................................................... 16
2.3.2 Domestic Inbound and Outbound .......................................................................................................... 18
2.3.3 Domestic Internal and Through Cargo ................................................................................................... 22
2.3.4 Imports and Exports ............................................................................................................................... 22
2.3.5 Canada ................................................................................................................................................... 23
2.3.6 Mexico ................................................................................................................................................... 24
2.4 DETROIT BEA RAIL CARGO ............................................................................................................................... 25
2.4.1 Total ....................................................................................................................................................... 25
2.4.2 Domestic Inbound and Outbound .......................................................................................................... 27
2.4.3 Domestic Internal and Through ............................................................................................................. 31
2.4.4 Imports and Exports (excl. NAFTA) ........................................................................................................ 31
2.4.5 Canada ................................................................................................................................................... 32
2.4.6 Mexico ................................................................................................................................................... 33
2.5 OTHER TRANSPORT MODES .............................................................................................................................. 33
2.6 CORRIDOR SPECIFIC FLOWS............................................................................................................................... 33
2.6.1 Halifax Freight Flows ............................................................................................................................. 33
2.6.2 Montreal Freight Flows .......................................................................................................................... 34
2.6.3 U.S. Intermodal Rail Corridors ............................................................................................................... 35
3 TOLEDO AND WINDSOR FREIGHT FLOWS .................................................................................................... 37
3.1 TOLEDO, OHIO ............................................................................................................................................... 37
3.2 WINDSOR, ONTARIO ....................................................................................................................................... 38
4 INDUSTRY TREND ANALYSIS ........................................................................................................................ 40
4.1 EXISTING TRANSPORTATION INFRASTRUCTURE AND LOCATION SELECTION FACTORS ..................................................... 40
4.1.1 Logistics and Transportation Infrastructure Summary .......................................................................... 40
4.1.2 Rail ......................................................................................................................................................... 41
4.1.3 Highways ............................................................................................................................................... 43
4.1.4 Ocean Gateways .................................................................................................................................... 44
4.1.5 Airports .................................................................................................................................................. 45
4.1.6 Toledo, OH ............................................................................................................................................. 46
4.1.7 Windsor, ON .......................................................................................................................................... 47
4.2 INLAND STRATEGIES AND NETWORK OPTIMIZATION............................................................................................... 48
4.3 REAL ESTATE INFRASTRUCTURE .......................................................................................................................... 51
4.4 LABOR AND DEMOGRAPHIC PROFILE ................................................................................................................... 52
4.5 BUSINESS AND TAX ENVIRONMENT..................................................................................................................... 53
4.6 FOREIGN TRADE ZONES .................................................................................................................................... 53
4.7 TRENDS IN TRANSPORTATION AND THE NEAR-TERM OUTLOOK ................................................................................ 54

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4.7.1 Trucking Industry ................................................................................................................................... 54
4.7.2 Trends in U.S. Containerized Trade ........................................................................................................ 57
4.7.3 Trends in Intermodal Rail ....................................................................................................................... 62
4.8 REPRESENTATIVE SERVICE PROVIDERS AND SHIPPERS ............................................................................................. 67
5 DETROIT BEA FREIGHT FORECAST ................................................................................................................ 70
5.1 INTRODUCTION ............................................................................................................................................... 70
5.2 METHODOLOGY .............................................................................................................................................. 70
5.3 ECONOMIC REVIEW AND OUTLOOK .................................................................................................................... 71
5.4 FREIGHT FLOW FORECAST................................................................................................................................. 73
6 COMPARATIVE LOCATION ANALYSIS ........................................................................................................... 77
6.1 INTRODUCTION ............................................................................................................................................... 77
6.2 REGIONAL TRUCK/RAIL LOGISTICS COMPARISON................................................................................................... 77
6.2.1 Transit Time Hurdle ............................................................................................................................... 78
6.2.2 Total Landed Cost Comparison .............................................................................................................. 78
6.2.3 Rail Transits ........................................................................................................................................... 79
6.2.4 Transportation Cost Indication by Gateway .......................................................................................... 79
6.2.5 Trucking Transits and Market Coverage ................................................................................................ 80
6.3 LOCATION PROFILES – COLUMBUS AND CHICAGO.................................................................................................. 85
6.3.1 Columbus, OH ........................................................................................................................................ 85
6.3.2 Chicago, IL.............................................................................................................................................. 86
6.4 REGIONAL COMPARISON SUMMARY ................................................................................................................... 88

List of Tables
Table 1-1: Selected Regional Freight Flows in 2009 .................................................................................................................................................5
Table 1-2: Inbound and Outbound Freight Forecast for 2020 – Base, Low and High ....................................................................................8
Table 2-1: Warehouse-able Commodities ............................................................................................................................................................... 14
Table 4-1: Detroit Logistics Summary....................................................................................................................................................................... 40
Table 4-2: West Coast Transit Time Comparison (Transit Days): Shanghai to Detroit .......................................................................... 45
Table 4-3: East Coast Transit Time Comparison (Transit Days): Hong Kong and Rotterdam to Detroit .......................................... 45
Table 4-4: Detroit MSA Warehouse Vacancy and Lease Rates, Third Quarter 2011 ................................................................................ 51
Table 4-5: Detroit-Warren-Livonia, MI Employment by Industry Percent Changes between 2001 and 2011 .................................... 52
Table 4-6: Tax Foundation Business Tax Climate Rank for Selected States ................................................................................................. 53
Table 4-7: Sample of Logistics Providers in the Study Region – Located in Michigan ................................................................................. 67
Table 4-8: Sample of Logistics Providers in the Study Region – Located in Ohio and Ontario ............................................................... 68
Table 4-9: Sample of Major Shippers in the Study Region ................................................................................................................................... 69
Table 5-1: Real Gross Domestic Product by MSA within the Detroit BEA ................................................................................................... 71
Table 5-2: Economic and Industry Factors Related to Goods Movement in the East North Central Region and the Detroit BEA:
Ten-Year Annual Growth Rates, 2010-2020 .......................................................................................................................................................... 72
Table 5-3: Forecast of Inbound and Outbound Freight Flows ........................................................................................................................... 74
Table 5-4: Macro Forecast Growth Rates by Transport Mode ......................................................................................................................... 75
Table 5-5: Inbound and Outbound Freight Forecast for 2020 – Base, Low and High ................................................................................. 76
Table 6-1: Estimated Rail Transits in Hours from Key Port Gateways to Selected Midwest Points ...................................................... 79
Table 6-2: Translinked Study Area Cost* Evaluation by North American Port Gateway ......................................................................... 80
Table 6-3: U.S. and Canada Population within 10-Hour Truck Drive-Time of Detroit and Selected Cities ........................................ 81
Table 6-4: Truck Transit Time from Detroit and Selected U.S. Distribution Hubs to Major Cities ...................................................... 83
Table 6-5: Estimated Truckload Costs from Detroit and Selected U.S. Distribution Hubs to Major Cities ........................................ 84
Table 6-6: Columbus Regional Logistics Summary ............................................................................................................................................... 85
Table 6-7: Chicago Regional Logistics Summary ................................................................................................................................................... 86
Table 6-8: Detroit, Chicago and Columbus Summary Table............................................................................................................................. 88

List of Figures
Figure 1-1: Map of Translinked Region ........................................................................................................................................................................1

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Figure 1-2: Detroit BEA Cargo in 2009 by Transport Mode.................................................................................................................................6
Figure 1-3: Detroit BEA Cargo in 2009 by Trade Flow ..........................................................................................................................................7
Figure 1-4: Detroit BEA Cargo Tons in 2009, Total and Warehouse-able .......................................................................................................7
Figure 1-5: 10-Hour Truck Drive-Time Area Comparison: Detroit, MI, Chicago, IL, Columbus, OH, and Harrisburg, PA ........... 10
Figure 2-1: Map of Detroit BEA .................................................................................................................................................................................. 11
Figure 2-2: Detroit BEA Cargo in 2009 by Transport Mode.............................................................................................................................. 12
Figure 2-3: Detroit BEA Cargo in 2009 by Trade Flow ....................................................................................................................................... 13
Figure 2-4: Value per Cargo Tons .............................................................................................................................................................................. 14
Figure 2-5: Detroit BEA Cargo Tons in 2009, Total and Warehouse-able .................................................................................................... 15
Figure 2-6: Detroit BEA Truck Cargo by Trade Flow in 2009........................................................................................................................... 16
Figure 2-7: Detroit BEA Truck Cargo in 2009 – Top Ten Commodity Groups .......................................................................................... 17
Figure 2-8: Detroit BEA Inbound and Outbound Truck Cargo in 2009 – Top 20 Commodity Groups ............................................... 18
Figure 2-9: Detroit BEA Inbound and Outbound Truck Cargo in 2009 – Top 20 Freight Lanes ............................................................ 19
Figure 2-10: Domestic Inbound Truck Freight ....................................................................................................................................................... 20
Figure 2-11: Domestic Outbound Truck Freight ................................................................................................................................................... 21
Figure 2-12: Detroit BEA Import Truck Cargo in 2009....................................................................................................................................... 22
Figure 2-13: Detroit BEA Export Truck Cargo in 2009....................................................................................................................................... 23
Figure 2-14: Detroit BEA - Canada Truck Cargo in 2009 ................................................................................................................................... 23
Figure 2-15: Detroit BEA - Mexico Truck Cargo in 2009 ................................................................................................................................... 24
Figure 2-16: Detroit BEA Rail Cargo by Trade Flow in 2009............................................................................................................................. 25
Figure 2-17: Detroit BEA Rail Cargo in 2009 – Top Ten Commodity Groups ............................................................................................ 26
Figure 2-18: Detroit BEA Inbound and Outbound Rail Cargo in 2009 – Top 15 Commodity Groups ................................................. 27
Figure 2-19: Detroit BEA Inbound and Outbound Rail Cargo in 2009 – Top Freight Lanes .................................................................... 28
Figure 2-20: Domestic Inbound Rail Freight ............................................................................................................................................................ 29
Figure 2-21: Domestic Outbound Rail Freight........................................................................................................................................................ 30
Figure 2-22: Detroit BEA Import Rail Cargo in 2009 ........................................................................................................................................... 31
Figure 2-23: Detroit BEA Export Rail Cargo in 2009 ........................................................................................................................................... 31
Figure 2-24: Detroit BEA - Canada Rail Cargo in 2009 ....................................................................................................................................... 32
Figure 2-25: Detroit BEA - Mexico Rail Cargo in 2009 ....................................................................................................................................... 33
Figure 2-26: Detroit BEA – Cargo Flows from the Halifax Area in 2009 ....................................................................................................... 34
Figure 2-27: Detroit BEA – Cargo Flows with the Montreal CMA in 2009................................................................................................... 35
Figure 2-28: Detroit BEA - Top-10 U.S. Intermodal Rail Lanes by Cargo Tons in 2009 ............................................................................ 36
Figure 3-1: Port of Toledo Cargo ............................................................................................................................................................................... 37
Figure 3-2: Port of Toledo Commodity Mix ........................................................................................................................................................... 37
Figure 3-3: Detroit BEA Domestic Freight Flows with Toledo BEA, 2009 .................................................................................................... 38
Figure 3-4: Windsor, Ontario CMA Freight Flows in 2009 ................................................................................................................................ 39
Figure 3-5: London, Ontario CMA Freight Flows in 2009 .................................................................................................................................. 39
Figure 4-1: Class I Railroad Map with Container Ports........................................................................................................................................ 42
Figure 4-2: Regional Highway Map ............................................................................................................................................................................. 43
Figure 4-3: Detroit Truck Border Crossings .......................................................................................................................................................... 44
Figure 4-4: Current Rail System in Windsor ........................................................................................................................................................... 47
Figure 4-5: Comparison of Container Sizes............................................................................................................................................................. 48
Figure 4-6: Example of Distribution Center Network ......................................................................................................................................... 49
Figure 4-7: Example of Distribution Center and Cross-Dock Network......................................................................................................... 50
Figure 4-8: Detroit-Warren-Livonia, MI Number of Employees by Industry, August Year over Year, 2001 – 2011 (000) ............ 52
Figure 4-9: Indexes of Trucking Volume (TL and LTL), U.S. Industrial Production and Real GDP: 1995-2010 (1995=100) ........... 54
Figure 4-10: Indexes of Real Revenue per Load for Truckload Freight versus Real Diesel Fuel Prices: 1995-2010 (1995=100) ... 55
Figure 4-11: Indexes of Truckload Loads by Length-of-Haul Segment: 1996-2010 (1996=100) .............................................................. 56
Figure 4-12: Growth of U.S. Containerized Import and Export Loads, 1995-2010 ..................................................................................... 58
Figure 4-13: Far East as a Share of U.S. Containerized Imports and Exports, 1995-2010 ......................................................................... 59
Figure 4-14: Trends in the Composition of U.S. Containerized Imports and Exports, 1995-2010 ......................................................... 60
Figure 4-15: Annual North America Intermodal Rail Volume, 2000 to 2010 ................................................................................................ 62
Figure 4-16: Growth of North America Intermodal Service by Equipment Type, 2000 to 2010 ............................................................ 63
Figure 4-17: Quarterly Average Intermodal Train Speeds for North American Class I Railroads, 2000-2010 ................................... 63
Figure 4-18: Midwest Inbound Intermodal Volume from West Coast and Share, 2000 to 2010 ............................................................ 65
Figure 4-19: Detroit BEA - Top-10 U.S. Intermodal Rail Lanes by Cargo Tons in 2009 ............................................................................ 66
Figure 5-1: Forecast of Detroit BEA Inbound and Outbound Freight Flows – Warehouse-able Commodities ................................. 73
Figure 6-1: 10-Hour Truck Drive-Time Area Comparison: Detroit, MI, Chicago, IL, Columbus, OH, and Harrisburg, PA ........... 82

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Executive Summary

1 EXECUTIVE SUMMARY
1.1 Translinked
The Detroit Regional Chamber is one of the largest chambers of commerce in the country. The Chamber
seeks to power the economy of southeast Michigan through economic development programs, advocacy,
strategic partnerships and valuable member benefits. One key initiative of the Detroit Regional Chamber’s
Economic Development activities is Translinked.

The goal of Translinked is to create an industry cluster of excellence around transportation, distribution and
logistics in the region comprising southeast Michigan, northwest Ohio and southwest Ontario. The
Translinked strategy envisions the mobilization of public, private and academic resources around a
consensus on the physical, financial and institutional infrastructure necessary to create this cluster. This
initiative seeks to attract more freight, perform value-added service and become a key intermodal supply
hub. The overall goal of Translinked is to create an efficient and cost-effective first-tier multimodal
transportation and logistics hub in southeast Michigan, northwest Ohio and southwest Ontario. Translinked
is supported by the Michigan Economic Development Corporation (MEDC), the New Economy Initiative
(NEI), and the Detroit Regional Chamber.

The Translinked region (Figure 1-1) includes major freight centers, including Detroit, Ann Arbor, Lansing,
Flint and Port Huron in Michigan, Toledo in Ohio and Windsor and Sarnia in Ontario, Canada. The region
encompasses major manufacturing
activity (e.g. the automotive industry)
and is situated on the principal border Figure 1-1: Map of Translinked Region
crossings for overland trade between
the United States and Canada. A
comprehensive set of freight
infrastructure supports regional
economic activity, including rail and
road border crossings, airports, marine
ports, rail yards, and interstate highways
and rail corridors. The region is also
connected by rail and highway to major
U.S. and Canadian international sea
ports, including New York/New Jersey,
Halifax, Montreal and Norfolk on the
East Coast.

The Translinked Freight Study provides,
subject to the availability of data on
regional freight movements, a data-
driven analysis of existing regional
freight movements, an assessment of
key freight industry trends, and makes
recommendations on how to further
develop the Translinked region.
Source: Detroit Regional Chamber

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Executive Summary

1.2 Recommendations
The evaluation of freight flows and industry trends drive the following recommendations for future
development of the Translinked initiative:

Establish a Translinked Commercial Marketing Initiative
Involve the Private Sector, Remove Barriers that Slow Down Decision Making
Remove Variability from the Border Crossing Process
Include Rail Facilities and Third Party Logistics Providers (3PLs) that Reduce Transportation Costs,
and Increase Flexibility
Marketing Initiative and Freight Corridors

The recommendations and next steps are discussed below.

Establish a Translinked Commercial Marketing Initiative
Translinked opportunities are with companies that have specific distribution needs, such as a high
concentration of customers in Northern Michigan, over to Toronto, and including the US Midwest.
Companies that require fastest ocean transits from China or Europe, especially for high value goods, or
manufacturers that receive materials used in production from nearby sources are potential candidates.

Next Steps: Develop Translinked Marketing Plan

TranSystems recommends a detailed, company by company analysis to identify opportunities
based on the specific advantages of the Translinked region.

Develop a list of potential Translinked customers. Identifying and selling value will
require detailed knowledge of the customer’s business, particularly its supply chain;
and facts about the customer’s inventory and supply chain strategy. Carefully
identify (segment) beneficial cargo owners (BCO) with high costs, complicated
supply chains, or poor inventory performance.

Conduct private sector outreach to gather input. Develop supply chain straw-men
using various distribution strategies and present them to shippers to assess the
viability of Translinked as a supply chain hub. Demonstrate how a Translinked
location reduces lowest landed costs. Present regional advantages, such as the CSX
intermodal facility in North Baltimore, OH to private sector logistics managers.

Once strategies are validated, market regional advantages in industry publications,
such as DC Velocity, Inbound Logistics, Journal of Commerce, and American
Shipper. The KC (Kansas City) Smartport initiative is an excellent model for
marketing strategies that may be applicable to the Translinked initiative.

Involve the Private Sector, Remove Barriers that Slow Down Decision Making
Time is of the essence. Comments made during interviews as part of this study suggest there is a perception
that the overall direction and ownership of Translinked is unclear, and the initiative lacks sufficient
involvement from commercial interests. Commercial participation will be necessary to lend support and

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Executive Summary

credibility to the project. It should be noted that recent improvements in Ohio, such as CSX’s Northwest
Ohio Intermodal Terminal at North Baltimore, Norfolk Sothern’s Heartland Corridor Initiative serving
Columbus, and BNSF’s Chicago rail terminal adjacent to the CenterPoint Intermodal Park have been noticed
in the industry. Successes in the Translinked region itself, such as improvements at the Port of Toledo, have
been attributed to public/private cooperation and agreed priorities. Barriers impeding Translinked progress
should be identified, and addressed. Slow-moving initiatives will lose out to locations that are established,
and proven, and that have active engagement with the private sector.

Next Steps: Identify and Remove Barriers to Progress

Focus and prioritize opportunities based on strengths identified in the Marketing Plan, and
gather private sector support as quickly as possible.

Solicit active and ongoing participation on the Translinked committee from companies
such as railroads and third party logistics companies to provide a sense of what is
commercially viable. The CN Railroad for example actively participated in the design,
and invested $25 million in the new West Coast ocean terminal at Prince Rupert, BC -
private investment will signal commercial viability. The Detroit Intermodal Freight
Terminal (DIFT) may be another example of a successful transportation related
public/private development.

Public sector involvement and coordination is crucial, but all parties should adhere to
commercially based priorities. A failure to agree on priorities may signal an inability to
move the project forward, and a review of Translinked overall goals and makeup is
advised.

Remove Variability from the Border Crossing Process
Supply chain managers work to eliminate events that introduce variability into supply chains. The Translinked
region opportunities will be aided by addressing perceptions about the unpredictability of border crossings.
The inclusion of the Toronto area population of 5 million within a distribution range served by the
Translinked region will elevate the effectiveness of the region as a transportation hub. Therefore, addressing
perceptions about unpredictable crossing delays is critical.

Next Steps: Assess and Manage Border Crossing Perception

As part of the development of the Translinked Sales/Marketing plan, gather border
crossing information, including an assessment of perceived vs. real barriers, expected
delays, and suggestions for improvement.

Based on this input, develop strategies to correct misconceptions about crossing delays,
or work with US and Canadian customs agencies to develop programs that reduce
variability in border wait times. An evaluation of the effectiveness of the Fast Past
program, which allows truckers to us the “FAST” lane, and reduces the amount of
paperwork, should be included in the analysis.

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Executive Summary

Include Rail Facilities and Third Party Logistics Providers (3PLs) that Reduce
Transportation Costs, and Increase Flexibility
Distribution centers (DC) on-site at rail terminals, including multiple rail carriers, will reduce truck drayage
costs. Include railroads and shippers in terminal location and design discussions. The presence of 3PL
services, such as warehouse and distribution services, will enable shippers to introduce flexibility to their
supply chains and will provide distribution options in the Translinked region without requiring shippers to
commit capital to an owned facility.

Next Steps:

Confirm importance of the Detroit Intermodal Freight Terminal (DIFT) during the
development of the Translinked Marketing and Sales Plan.

Revitalize and develop a sense of urgency around the DIFT rail project if potential users
are attracted to this kind of facility.

Explore willingness of large DCs, trucking companies; 3PL’s to locate near new DIFT
facility, and zone appropriately if needed to support logistics facilities.

Marketing Initiative and Freight Corridors
The Translinked region is strategically located on several major trade corridors, notably cross-border with
Canada. In addition, the region’s consumers and industry are served by several important port gateways in
the U.S. (e.g. ports of New York/New Jersey, Norfolk and Los Angeles/Long Beach) and Canada (the ports
of Halifax, Montreal and Prince Rupert). In developing the Translinked marketing initiative discussed above,
focus should be placed on companies that could benefit from the following freight corridors:

International trade via:
− Canadian ports of Halifax, Montreal and Prince Rupert.
− U.S. Northeast ports, notably New York/New Jersey, Norfolk, and Baltimore. Investments
in rail infrastructure by CSX and NS are making these gateways even more accessible for
the Translinked region.
− U.S. West Coast ports, which are the principal gateways for U.S. trade with the Far East.

Highway and rail corridors serving major consumption markets in the U.S.

Cross-border highway and rail corridors with major consumption markets in Canada, notably
markets in Ontario.

The marketing initiative should also incorporate testing the perceived value of the different North American
Gateways, such as the Prince Rupert Gateway, with the fastest transit from China, or the Halifax Gateway,
and evaluate shipper preferences of North American gateways into the study area. The market strategy
initiative should include shippers who transport the fastest growing commodities. For example, Machinery
and Parts Manufacturing, and Electronics Manufacturing have projected ten-year annual growth rates of 4.4
percent and 5.0 percent respectively. Keep in mind that these growth rates may reflect a recovery from
steep declines experienced during the economic downturn; however, logistics service opportunities may
emerge as the recovery continues.

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Executive Summary

1.3 Regional Freight Flows
Regional economic activity generates inbound, outbound and internal freight flows. The Translinked region
also sees freight moving through the region between Canada and the rest of the U.S. An overview of
selected regional freight flows in 2009, the latest year for Transearch Freight Data1, is presented in Table
1-1. The main characteristics of freight flows are discussed below.

Table 1-1: Selected Regional Freight Flows in 2009
Tons by Tons by Tons by Tons by Other Total
Total Tons
Truck Rail Water Modes Value
Detroit BEA Freight Flows in 2009 (Million Tons and Billion $)
Total 286.60 206.07 52.81 26.60 1.12 $413.5
1
Domestic 212.00 160.42 30.85 20.69 0.04 $248.8
Inbound 107.54 66.10 22.44 18.99 0.02 $107.1
Outbound 51.30 42.00 8.20 1.07 0.02 $101.7
Internal 47.07 46.22 0.21 0.63 0.00 $26.1
Through 6.09 6.09 0.00 0.00 0.00 $13.9
Canada 54.02 34.09 18.85 0.00 1.08 $129.7
Inbound 5.97 3.37 1.95 0.00 0.65 $18.3
Outbound 3.16 2.40 0.39 0.00 0.37 $10.7
Through 44.89 28.32 16.51 0.00 0.06 $100.7
Mexico 2.64 1.12 1.52 0.00 0.00 $14.0
Inbound 1.63 0.56 1.07 0.00 0.00 $10.1
Outbound 0.94 0.49 0.45 0.00 0.00 $3.6
Through 0.08 0.07 0.01 0.00 0.00 $0.2
Import & Export 2 17.93 10.44 1.59 5.91 0.00 $21.1

Detroit BEA – Toledo BEA Freight Flows in 2009 (Million Tons and Billion $)
Total 3 15.81 14.57 0.35 0.89 0.00 $6.95
Inbound 10.84 9.82 0.14 0.88 0.00 $4.47
Outbound 4.97 4.74 0.21 0.01 0.00 $2.47

Detroit BEA – Windsor CMA Freight Flows in 2009 (Million Tons and Billion $)
4
Total 1.42 1.16 0.19 0.00 0.07 $4.75
Inbound 0.25 0.19 0.06 0.00 0.00 $1.28
Outbound 0.18 0.13 0.00 0.00 0.05 $0.39
Through 0.99 0.83 0.13 0.00 0.02 $3.08

(1) Domestic flows include some international cargo that moves as “domestic” freight – e.g. overseas imports moving in
domestic 53-foot containers from the U.S. discharge port to the Detroit BEA.
(2) Overseas import and export cargo that moves intact between U.S. ports and the Detroit BEA.
(3) Freight moving between the Detroit BEA and the Toledo BEA.
(4) Freight moving between the Detroit BEA and the Windsor CMA, and freight moving through the Detroit BEA
between the Windsor CMA and the rest of the U.S.
Source: IHS Global Insight Transearch Data

1
This Study includes content supplied by IHS Global Insight (USA), Inc; Copyright 2011 IHS Global Insight (USA), Inc.

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Executive Summary

Detroit BEA Freight Flows
The Detroit-Warren-Flint Business Economic Area
Figure 1-2: Detroit BEA Cargo in 2009 by
(Detroit BEA) covers the cities of Detroit, Flint and
Transport Mode
Warren, and surrounding areas. The Detroit BEA
had total estimated cargo flows amounting to 287
million tons in 2009 with an estimated value of
$414 billion. Total cargo comprises several
different transport modes – truck, rail, water (via
the Great Lakes), air and other – and includes all
trade flows, domestic and international, inbound,
outbound, internal (movements within the Detroit
BEA) and through (not stopping in the Detroit
BEA).

Truck is the dominant mode with 72 percent of
cargo volume and 81 percent of cargo value, the
larger share of value reflecting the higher-value
commodities that move via truck. Rail handles both
lower-value and higher-value commodities, and it
accounts for 18 percent of both volume and value.
The water mode accounts for 9 percent of tons but
less than one percent of value due to the low-value Note: Includes domestic and international, and all directions
bulk commodities shipped by water. The highest – inbound, outbound, internal and through
value freight is shipped by air. Source: Derived from IHS Global Insight Transearch Data

Total cargo is spread across different directions
and trades (Figure 1-3). Domestic cargo accounts for 74 percent of total tons and 60 percent of value.
Domestic cargo includes some international cargo that moves as domestic freight to or from U.S. ports (e.g.
New York/New Jersey). International trade related to Canada accounted for 19 percent of tons and 31
percent of value, while international trade with Mexico was one percent of tons and 3 percent of value.
Import and Export trade that moves intact to and from U.S. ports accounted for 6 percent of tons and 5
percent of value.

Inbound and outbound cargo amounted to 183 million tons in 2009 with an estimated value of $270 billion.
These flows are driven by industry and consumption, and generate the principal demand for warehousing
and logistics facilities. The largest directional flow is inbound to the Detroit BEA.

The region also has a large volume of internal cargo movement (18 percent of total tons and 7 percent of
value), a significant share of which is truck shipments to and from warehouses within the region and drayage
of containers to and from intermodal rail yards. A large amount of cargo also moves through the Detroit
BEA, notably between Canada and other regions of the U.S., and is handled by the border crossing points in
the Detroit BEA.

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Executive Summary

Figure 1-3: Detroit BEA Cargo in 2009 by Trade Flow

Source: Derived from IHS Global Insight Transearch Data

When evaluating the region’s cargo, it is helpful to
focus on commodities that are more suited to Figure 1-4: Detroit BEA Cargo Tons in 2009,
added-value logistics services or undergo some form Total and Warehouse-able
of manufacturing process. Such commodities will be
of primary interest to the development of industry
and logistics services. The broadly defined
“warehouse-able” commodities are those with a
relatively high value per metric ton and/or
commodities that are processed (e.g. food products)
as opposed to raw materials (e.g. grain). These
commodities are more likely to require added-value
logistics services.

Warehouse-able cargo was an estimated 141 million
tons in 2009, 49 percent of total Detroit BEA cargo.
Warehouse-able cargo accounted for an estimated
90 percent of total cargo value, which reflects the
higher value nature of warehouse-able commodities
(e.g. consumer products). These commodities
accounted for 42 percent of inbound tons, and their Source: Derived from IHS Global Insight Transearch Data
share was highest in the cross-border inbound trade
– 64 percent of tons from Canada and 99 percent of
tons from Mexico – and compared to 41 percent of domestic inbound tons. Warehouse-able commodities
accounted for 66 percent of total outbound tons. Penetration by trade was – domestic outbound 68 percent
of domestic tons, shipments to Canada 48 percent and shipments to Mexico 87 percent.

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Executive Summary

Detroit BEA Freight Flow Forecast
The forecast of inbound and outbound freight (warehouse-able) commodities is presented in Table 1-2. The
Base projections of cargo flows driven by assumptions related to regional, national and international
economic activity, and relationships between industry inputs and outputs. Total inbound and outbound
freight is projected to have increased from 89.9 million tons in 2009 to 97.8 million tons in 2010, driven by
recovery from the recession and growth of industries in the region. Total inbound and outbound freight is
projected to increase to 126.0 million tons in 2020, based on domestic economic growth and the expansion
of cross-border trade with Mexico and Canada, and growth of trade with overseas markets. The projected
10-year (2010 to 2020) compound annual growth rate (CAGR) is 2.6 percent.

Table 1-2: Inbound and Outbound Freight Forecast for 2020 – Base, Low and High
Inbound Freight (Warehouse-able Commodities)
2020 Tons CAGR 2010 to 2020
Trade 2009 Tons 2010 Tons Base Low High Base Low High
Domestic 44,334,660 47,678,414 59,970,374 57,318,605 63,775,639 2.3% 1.9% 3.0%
Canada 3,835,424 4,232,502 5,513,774 5,127,613 5,798,233 2.7% 1.9% 3.2%
Mexico 1,613,233 1,761,005 2,981,832 2,708,501 3,145,764 5.4% 4.4% 6.0%
Import 1,205,197 1,343,248 2,028,841 1,859,298 2,273,105 4.2% 3.3% 5.4%
Grand Total 50,988,514 55,015,169 70,494,821 67,014,016 74,992,742 2.5% 2.0% 3.1%
Outbound Freight (Warehouse-able Commodities)
2020 Tons CAGR 2010 to 2020
Domestic 34,989,373 38,422,157 49,083,371 44,989,601 51,752,543 2.5% 1.6% 3.0%
Canada 1,512,627 1,665,247 2,218,630 2,059,365 2,308,990 2.9% 2.1% 3.3%
Mexico 812,665 927,945 1,451,046 1,369,738 1,658,503 4.6% 4.0% 6.0%
Export 1,581,080 1,796,395 2,756,368 2,495,304 3,036,918 4.4% 3.3% 5.4%
Grand Total 38,895,745 42,811,744 55,509,415 50,914,008 58,756,955 2.6% 1.7% 3.2%
Inbound & Outbound Freight (Warehouse-able Commodities)
2020 Tons CAGR 2010 to 2020
Domestic 79,324,033 86,100,571 109,053,745 102,308,206 115,528,183 2.4% 1.7% 3.0%
Canada 5,348,051 5,897,749 7,732,404 7,186,977 8,107,223 2.7% 2.0% 3.2%
Mexico 2,425,898 2,688,950 4,432,877 4,078,239 4,804,267 5.1% 4.3% 6.0%
Import & Export 2,786,277 3,139,643 4,785,209 4,354,602 5,310,023 4.3% 3.3% 5.4%
Grand Total 89,884,258 97,826,912 126,004,235 117,928,024 133,749,697 2.6% 1.9% 3.2%

Source: TranSystems Forecasts and IHS Global Insight 2009 data.

Low and high case projections are also presented in Table 1-2. The basis for these alternative projections is
that the principal driver of freight flows is economic activity, represented by indicators such as disposable
income and industrial production. In addition, housing-sensitive commodities are subject to more
uncertainties going forward due to uncertainty as to the timing of recovery in regional housing markets. In
general, the sensitivities for non-housing related commodities (e.g. transportation equipment) are -0.5to
+0.5 percent per year. Secondary traffic is assumed to be 25 percent housing-related and the sensitivities are

8 | TranSystems

Executive Summary

-0.2 to +1.5 percent per year. The growth sensitivities for international flows are -1.5 to +1.5 percent per
year. A stronger recovery in regional, national and international economic activity would be expected to
drive a healthy growth of international trade. Total inbound and outbound shipments of warehouse-able
commodities are projected to have 10-year compound annual growth rates of 1.9 percent under the Low
Case and 3.2 percent under the High Case.

The projections indicate that truck shipments will grow at a slightly faster rate than shipments by rail. This
result is driven by several factors – (1) the macro nature of the forecast models, with their underlying
assumptions on industry input and output relationships, and fixed modal shares for individual commodities,
(2) the large amount of freight moving between the region and truck friendly origins and destinations in the
East North Central region, and (3) the current transportation mode distribution. However, the macro
forecast models do not take into account significant transportation industry factors that are expected to
accelerate the growth of rail usage. The trucking industry is faced with several challenges that are
encouraging shippers to expand the use of rail in their supply chains. These factors include fuel price
increases, favoring rail over highway transport, the cost of recruiting and maintaining truck drivers,
investments by railroads in intermodal rail hubs tied to logistics parks, and increased marketing and
attractive pricing by railroads of shorter haul intermodal rail services. For these reasons, it is likely that the
use of rail in the supply chain strategies of shippers will expand in the future.

Detroit BEA – Toledo BEA
In 2009, 15.0 million tons of domestic freight moved between the Detroit BEA and the Toledo BEA, 10.4
million tons inbound from the Detroit BEA and 4.6 million tons outbound from the Detroit BEA. Truck is
the dominant mode accounting for 92 percent of inbound freight and 96 percent of outbound freight.

Detroit BEA – Windsor CMA
The Windsor area has a diversified economy with a strong presence in the automotive sector, agriculture,
and food products, and emerging sectors that include high tech manufacturing. A total of 1.4 million tons of
freight moves to and from the Detroit BEA, and to and from other regions of the U.S through the Detroit
BEA. Truck is the dominant mode of transport, accounting for 88 percent of freight shipped to the Windsor
CMA and 72 percent of the tons shipped from the Windsor CMA. The respective shares for rail were 5
percent and 28 percent.

1.4 Industry Trends and Location Comparison
Logistics managers are continuously evaluating their logistics networks to squeeze excess transportation
expenses and other costs out of their supply chains. The availability of all transportation modes is essential
in order to enable logistics managers to have the flexibility to choose the mode that best suits shipment
needs. Lowest-cost transportation options, such as rail, are selected provided that service is available, and
transit time and reliability meet service level requirements. Trucking costs are the largest portion of the
supply chain expense. Locating DCs in high-density customer/supplier areas reduces trucking expenses
enough to more than compensate for lower ocean and rail costs to competing regions. Because of this,
supply chain strategies that reduce trucking as much as possible have been a major goal of supply chain
managers. Warehouse locations are chosen based on the cost of the facility, and their proximity to
customers and suppliers, thereby reducing trucking costs. Labor, green initiatives, government incentives,
etc. are considered after transportation service and rate level requirements are met, and these
considerations typically influence a specific site location among competing sites that meet transportation
requirements.

9 | TranSystems

Executive Summary

The Translinked region performs well under a variety of criteria used by shippers and manufacturers to
select locations, including transportation infrastructure (rail and highway and airports), access to ocean
gateways for international trade, and the availability of warehousing and distribution facilities.

The Translinked region must compete against two regional hubs – Columbus, OH, and Chicago, IL – that
are well established and in a strong position to compete for DC operations in the Midwest. Columbus has a
higher U.S. and Canadian population reach, and Chicago has superior rail and air cargo services, as well as a
large Midwest distribution reach. Both of these locations have competitive labor and industrial real estate
costs as well. Translinked region opportunities are with companies with specific distribution needs, such as a
high concentration of customers in Northern Michigan, over to Toronto, and including parts of the U.S.
Midwest. Companies that require fastest ocean transits from China or Europe, or manufacturers that
receive materials used in production from nearby sources are other potential candidates.

Figure 1-5: 10-Hour Truck Drive-Time Area Comparison: Detroit, MI, Chicago, IL, Columbus,
OH, and Harrisburg, PA

Source: TranSystems

10 | TranSystems

Existing Freight Flows

2 DETROIT BEA FREIGHT FLOWS
2.1 Introduction
The first step in the evaluation of freight flows is to address the Detroit BEA2, which encompasses the main
Translinked centers of Detroit, Flint, Ann Arbor, Lansing and Port Huron. As shown in Figure 2-1, the
Detroit BEA covers the eastern portion Michigan and the major freight corridors through Southeast
Michigan.

Figure 2-1: Map of Detroit BEA

Source: TranSystems

The primary source for freight flows related to the Detroit BEA is the Transearch Database from IHS
Global Insight3. This database provides statistics on domestic freight flows, and cross-border freight flows
with Canada and Mexico. The latest year available for this study was 2009, which was a depressed year for

2
BEAs are designated by the Department of Commerce and each Economic Area represents a major economic center
3
This Study includes content supplied by IHS Global Insight (USA), Inc; Copyright 2011 IHS Global Insight (USA), Inc.

11 | TranSystems


economic activity and freight activity. However, the database is still appropriate for providing a profile of
freight flows related to the Detroit BEA. This database is supplemented by statistics on U.S. containerized
trade from JOC Piers and data on cross-border flows from the Bureau of Transportation Statistics.

2.2 Detroit BEA Total Cargo
The Detroit-Warren-Flint Business Economic Area (Detroit BEA) covers the cities of Detroit, Flint and
Warren, and surrounding areas. It had a population of 6.9 million in 2009, with Total Personal Income (TPI)
of $247 billion, and per capita income of $35,713.4 The Detroit BEA ranked 10th by population, 12th by TPI
and 75th by per capita income out of the country’s 179 BEAs tracked by the Bureau of Economic Analysis.
The Detroit BEA borders five other BEAs5 that had a combined population of 4.2 million in 2009, generating
TPI of $134 billion, and per capita income of $31,738.

The Detroit BEA had total estimated cargo flows
Figure 2-2: Detroit BEA Cargo in 2009 by
amounting to 287 million tons in 2009 with an
Transport Mode
estimated value of $414 billion. Total cargo
comprises several different transport modes
(Figure 2-2) – truck, rail, water (via the Great
Lakes), air and other – and includes all trade flows,
domestic and international, inbound, outbound,
internal (movements within the Detroit BEA) and
through (not stopping in the Detroit BEA).

Truck is the dominant mode with 72 percent of
cargo volume and 81 percent of cargo value, the
larger share of value reflecting the higher-value
commodities that move via truck. Rail handles both
lower-value and higher-value commodities, and it
accounts for 18 percent of both volume and value.
The water mode accounts for 9 percent of tons but
less than one percent of value due to the low-value
bulk commodities (e.g. iron ore) shipped by water.
The highest value freight is shipped by air, but air
only handles 0.03 percent of total tons and 0.35 Note: Includes domestic and international, and all directions
percent of total value. In 2009, the values per cargo – inbound, outbound, internal and through
ton by transport mode were $1,616 for truck, Source: Derived from IHS Global Insight Transearch Data
$1,456 for rail, $63 for water, and $17,445 for air.

As shown in Figure 2-3, total cargo is spread across different directions and trades. Domestic cargo
accounts for 74 percent of total tons and 60 percent of value. Domestic cargo includes some international
cargo that moves as domestic freight to or from U.S. ports (e.g. New York/New Jersey). For example, an
import will be “converted” to domestic freight when it, for example, enters an import distribution center
(IDC) and then departs the IDC in domestic equipment for the Detroit BEA.

International trade related to Canada accounted for 19 percent of tons and 31 percent of value, while
international trade with Mexico was 1 percent of tons and 3 percent of value. Import and Export trade that

4 Data is for 2009 from the Bureau of Economic Analysis
5 Alpena, Traverses City, Grand Rapids-Muskegon-Holland, Fort Wayne-Huntington-Auburn, and Toledo-Fremont

12 | TranSystems


moves intact to and from U.S. ports accounted for 6 percent of tons and 5 percent of value. For example,
this trade flow includes imports and exports moving in international marine containers by intermodal rail
service between the Detroit BEA and U.S. ports.

The main cargo flows of interest in this Study are inbound and outbound, which together amounted to 183
million tons in 2009 with an estimated value of $270 billion, 64 percent of total tons and 65 percent of total
cargo value. These flows are driven by industry and consumption, and generate the principal demand for
warehousing and logistics facilities, within the Detroit BEA. The largest directional flow is inbound to the
Detroit BEA, 43 percent of tons and 36 percent of value. Outbound flows account for 21 percent of tons
and 29 percent of value, the higher share of value driven by the presence of higher value manufactured
goods in the outbound trade from the Detroit BEA.

The region also has a large volume of internal cargo movement, 18 percent of total tons and 7 percent of
value. Nearly 70 percent of internal traffic is truck shipments to and from warehouses within the region (for
example, deliveries from warehouses to stores), drayage of containers to and from intermodal rail yards,
and movements of petroleum refining products. The internal cargo category includes an element of double
counting of the inbound and outbound flows. For example, an inbound shipment enters a warehouse in the
Detroit BEA and then departs the warehouse as a local delivery to a store or manufacturing plant. There is
also a large amount of cargo moving through the Detroit BEA, notably between Canada and other regions of
the U.S., and handled by the border crossing points in the Detroit BEA. Through freight is generated by
economic activity unrelated to the Detroit BEA.

Figure 2-3: Detroit BEA Cargo in 2009 by Trade Flow


The cargo flows identified above have considerable variation in terms of value per cargo ton. While
domestic inbound is the largest cargo flow it has one of the lowest values per cargo ton due to the presence
of a large volume of lower-value commodities. By contrast, higher-value commodities dominate the
international cargo flows. As shown in Figure 2-4, the highest values per cargo ton are present in the cross-

13 | TranSystems


border trade with Mexico and Canada, due to the
large presence movement of manufactured goods in Figure 2-4: Value per Cargo Tons
these lanes.

When evaluating the region’s cargo, it is helpful to
focus on commodities that are more suited to
added-value logistics services or undergo some
form of manufacturing process. Such commodities
will be of primary interest to the development of
industry and logistics services in the Detroit BEA.
The broadly defined “warehouse-able”
commodities are those with a relatively high value
per metric ton and/or commodities that are
processed (e.g. food products) as opposed to raw
materials (e.g. grain). These commodities are more
likely to require added-value logistics services
including warehousing and distribution services.
Commodity groups are identified as warehouse-
able (Table 2-1) based on value per ton data, Source: Derived from IHS Global Insight Transearch Data
commodity characteristics and judgment using
experience from prior projects. Given the broad
commodity groups in the source data, a commodity
group may contain a mixture of higher value and lower value components.

Table 2-1: Warehouse-able Commodities
Warehouse-able Commodity Groups Other Commodity Groups
(Higher Value / Distribution Potential) (Lower Value / Distribution Potential)
Alcoholic Beverages Pharmaceutical Products Agricultural Products Petroleum Products
All Other Machinery Plastics And Rubber Base Metal Rocks Stone And Sand
Base Metal Articles Printed Materials Cereals Wood Products
Food Products Textiles And Articles Chemical Products Waste And Scrap
Electronics Tobacco Products Coal
Furniture Transportation Equipment Fertilizer
Live Animals And Fish Vehicles And Parts Logs And Rough Lumber
Misc Manufactured Prod Mineral Products
Source: TranSystems

Warehouse-able cargo was an estimated 141 million tons in 2009, 49 percent of total Detroit BEA cargo.
Warehouse-able cargo accounted for an estimated 90 percent of total cargo value, which reflects the higher
value nature of warehouse-able commodities (e.g. consumer products).

14 | TranSystems


The distribution of warehouse-able commodities by
Figure 2-5: Detroit BEA Cargo Tons in 2009,
direction is shown in Figure 2-5. Looking at the Total and Warehouse-able
inbound flow, these commodities accounted for 42
percent of inbound tons. Their share was highest in
the cross-border inbound trade – 64 percent of tons
from Canada and 99 percent of tons from Mexico –
and compared to 41 percent of domestic inbound
tons.

Warehouse-able commodities accounted for 66
percent of total outbound tons. Penetration by trade
was – domestic outbound 68 percent of domestic
tons, shipments to Canada 48 percent and shipments
to Mexico 87 percent.

Warehouse-able commodities are also a prominent
part of through cargo, with a 71 percent share.
Through cargo is mostly freight moving between
Canada and other parts of the U.S. More detailed
discussion of cargo flows, with an emphasis on Source: Derived from IHS Global Insight Transearch Data
inbound and outbound flows, is provided in Section
2.3 (truck cargo), Section 2.4 (rail cargo), and
Section 2.5 (other modes).

15 | TranSystems


2.3 Detroit BEA Truck Cargo
2.3.1 Total
Truck is the dominant transportation mode for freight moving in, out, within and through the Detroit BEA,
accounting for 72 percent of tons and 81 percent of cargo value in 2009. This truck freight is generated by
local consumption and industrial production, local and regional distribution, and freight movements through
the Detroit BEA between other regions (e.g. Canada to other parts of the U.S.). Total truck freight
amounted to 206 million tons with a total value of $333 billion.

Truck cargo comprises a variety of flows and truck modes as shown in Figure 2-6. The largest segment by
tonnage is domestic inbound freight, which accounted for 32 percent of tons in 2009 and 29 percent of total
value. This segment is followed by domestic internal6 (22 percent and 8 percent), and domestic outbound
(22 percent and 8 percent). Truck freight related to Canada (inbound, outbound and through) is also
significant with 17 percent of tons and 30 percent of value; Canada’s larger share of value is due to the
shipment of manufactured goods, notably finished motor vehicles and motor vehicle parts and accessories.

Figure 2-6: Detroit BEA Truck Cargo by Trade Flow in 2009

Note: Canada and Mexico is classified as Truck, which captures both truckload and LTL service.

Truck cargo moves by several different truck modes – truckload, less-than-truckload (LTL), private fleet, and
truck (freight moving to and from Mexico and Canada). Private fleet involves freight handled by private in-
house truck fleets, such as those operated by retailers, as opposed to commercial common carrier
truckload services. LTL is a relatively specialist sector involving the transport of higher value and/or time
sensitive and/or small volume freight. Trade with Canada and Mexico is classified under a general “Truck”
category and this cargo is largely moved by commercial truckload service. Truckload freight is the principal

6
Freight with its origin and destination within the Detroit BEA

16 | TranSystems


truck mode with 44 percent of both cargo tons and value. Private Fleet truck shipments are the second
largest truck mode measured by tons (38 percent) and the third largest by value (23 percent), which reflects
the lower value basic materials (e.g. gravel and sand) that are a significant amount of this truck mode.

A profile of regional truck cargo (domestic and international, all directions) by commodity group is provided
in Figure 2-7. The largest commodity group is Nonmetallic Minerals, which amounted to 31 million tons in
2009 and 15 percent of the region’s truck cargo, and involves shipments of low value materials including
sand and gravel. The second largest commodity group is Secondary Traffic (28 million tons and 14 percent),
which is largely made up of Warehouse and Distribution Center traffic (for example, deliveries of consumer
products from warehouses to stores) but also includes some freight drayage related to intermodal rail yards
and airports. Farm Products (28 million tons and 14 percent) includes grains, livestock, fruits and vegetables,
and other agricultural products. Food or Kindred Products (11 percent) includes a blend of intermediary
products for further processing and final products, and examples are animal by-products, pet food,
fresh/chilled/frozen meat, soft drinks and mineral water, and canned fruits and vegetables. The top four
commodity groups are then followed by a mixture of industrial inputs and outputs – chemicals, petroleum
and coal, primary metal products, etc. Transportation Equipment (ranked eighth with 4 percent of truck
tons) captures the shipment of Motor Vehicles and Motor Vehicle Parts or Accessories by truck.

The commodity ranking shifts when a filter is applied to identify the warehouse-able commodities, those
suited to warehousing and logistics services (see background discussion in Section 2.XX). Secondary Traffic
becomes the top commodity group and bulk-focused commodities fall down the rankings (e.g. Farm
Products and Nonmetallic Minerals). The second and third ranked commodity groups are Food or Kindred
Products and Chemicals or Allied Products. Further analysis of commodities, with a focus on the
warehouse-able commodities, is provided in the discussion of domestic and international truck flows by
direction (inbound, outbound, etc.) presented below.

Figure 2-7: Detroit BEA Truck Cargo in 2009 – Top Ten Commodity Groups


17 | TranSystems


2.3.2 Domestic Inbound and Outbound
Domestic inbound and outbound flows together account for 52 percent of truck cargo tons related to the
Detroit BEA. This cargo is generated by industry and consumption within the Detroit BEA, and demand in
the rest of the country.

In 2009, the Detroit BEA had inbound truck cargo of 66 million tons with an estimated value of $95 billion.
Approximately 41 million tons (62 percent) with a value of $87 billion (92 percent) is classified as
warehouse-able cargo. As shown in Figure 2-8, nearly all the top commodity groups shipped inbound to the
Detroit BEA fall into the warehouse-able category. Some of the more significant individual warehouse-able
commodities are Warehouse and Distribution Center freight, a variety of dry food products (e.g. soft drinks
and canned goods), Motor Vehicle Parts and Accessories, and Forest Products. The lower-value and defined
as non-warehouse-able commodities include Grains, Broken Stone and Riprap and Petroleum Refining
Products.

The Detroit BEA generated 42 million tons of outbound cargo with a value of $76 billion in 2009. An
estimated 31 million tons (74 percent) with a value of $73 billion (95 percent) was defined as warehouse-
able cargo. The top outbound commodity group (Figure 2-8) was Secondary Traffic, nearly all falling into the
Warehouse and Distribution Center category. Other individual outbound warehouse-able commodities
include Grain Mill Products, Motor Vehicles, and Motor Vehicle Parts and Accessories.

Figure 2-8: Detroit BEA Inbound and Outbound Truck Cargo in 2009 – Top 20 Commodity
Groups


18 | TranSystems


Domestic inbound and outbound truck freight is heavily concentrated in short-haul lanes with regions
surrounding the Detroit BEA. Figure 2-9 shows the top partner BEAs measured by tons. Based on 2009
data, the top-ten partner BEAs accounted for 70 percent of inbound and outbound truck tonnage, and all
these BEAs were in the states of Michigan, Ohio, Illinois and Indiana. The next ten BEAs accounted for 12
percent of inbound and outbound freight, and four of these BEAs were in Ohio and Wisconsin. More distant
BEAs ranked in the top-twenty were New York, Buffalo, Pittsburg, Los Angeles, Rochester and Minneapolis.

The distribution by lane is little changed when focusing on the warehouse-able commodity segment. As also
shown in Figure 2-9, the top ten part BEAs are all in Michigan, Ohio, Indiana and Illinois, and they accounted
for 68 percent of warehouse-able cargo tons. Prominent among the partner BEAs are important logistics
hubs, including Chicago, IL.

Figure 2-9: Detroit BEA Inbound and Outbound Truck Cargo in 2009 – Top 20 Freight Lanes


19 | TranSystems


Figure 2-10: Domestic Inbound Truck Freight

20 | TranSystems


Figure 2-11: Domestic Outbound Truck Freight

21 | TranSystems


2.3.3 Domestic Internal and Through Cargo
The Detroit BEA had internal7 truck cargo of 46 million tons with an estimated value of $26 billion. Much of
this traffic is of lower value commodities and the largest commodity is Nonmetallic Minerals (17.1 million
tons). Other main commodity groups are Secondary Traffic (7.1 million tons), Farm Products (6.5 million
tons), Petroleum or Coal Products (6.4 million tons), Clay, Concrete, Glass or Stone (4.1 million tons),
Chemicals or Allied Products (1.5 million tons), Lumber or Wood Products (1.3 million tons), and Waste or
Scrap Materials (1.0 million tons).

Higher-value warehouse-able cargo was an estimated 13 million tons (28 percent) and accounted for 75
percent of the value of internal cargo. The largest component of the warehouse-able cargo is Secondary
Traffic, which is made up of Warehouse and Distribution Center traffic (5.6 million tons), drayage of rail
intermodal cargo to and from ramps (1.5 million tons), and a small amount of air freight drayage.

A large volume of domestic cargo flows through the Detroit BEA without stopping. In 2009, this domestic
through cargo amounted to 6.1 million tons with an estimated value of $14 billion. A majority of this cargo,
4.7 million tons or 76 percent, originates in and is destined for the Grand Rapids BEA, west of the Detroit
BEA. Approximately, 5.4 million tons or 89 percent with a value of $13.7 billion is classified as warehouse-
able. The two main warehouse-able commodities were Secondary Traffic and Food or Kindred Products,
which together accounted for 51 percent of warehouse-able commodity tons.

2.3.4 Imports and Exports
The IHS Global Insight database provides estimates of import and export shipments that move intact
between the international ocean port (e.g. Port of New York/New Jersey) and the Detroit BEA. These
estimates do not capture all international freight moving in these corridors, much of which moves in
domestic equipment as domestic freight. For example, a containerized import will be “converted” to
domestic freight when it, for example, enters an import distribution center (IDC) near the Port of Los
Angeles and then departs the IDC in domestic equipment for the Detroit BEA. Similarly, export cargo can
be shipped in domestic equipment to the international gateway port and then transloaded for shipment
overseas. These types of moves are captured as
domestic shipments and thus are included in the
domestic inbound and outbound data presented earlier. Figure 2-12: Detroit BEA Import Truck
Additionally, the import and export data do not include Cargo in 2009
trade with Canada and Mexico, which are reviewed
separately in Sections 2.3.5 and 2.3.6 respectively.

The Detroit BEA had import cargo, excluding cross-
border trade with Canada and Mexico, of 5.0 million
tons in 2009 with a value of $12 billion. As shown in
Figure 2-12, this cargo is broken down into several
flows. The inbound flow of 1.4 million tons represents
imports, mainly of warehouse-able commodities, via
international cargo gateways to the Detroit BEA. The
top two gateways are New York (19 percent of tons)
and Los Angeles (16 percent of tons).

7
Internal refers to freight with its origin and destination within the Detroit BEA.

22 | TranSystems


The outbound flow of 1.0 million tons is import cargo arriving in the Detroit area from overseas and then
shipped to a final destination outside the Detroit BEA. The largest two commodities are Primary Metal
Products (53 percent of tons) and Clay, Concrete, Glass or Stone (29 percent). Final destinations are
primarily the regions surrounding the Detroit BEA. The internal flow, at 2.5 million tons, is cargo identified
as imports arriving in the Detroit BEA (for example, via the Great Lakes) that remain in the Detroit BEA.
The largest commodity in this segment is Nonmetallic Minerals (1.8 million tons).

Figure 2-13 shows the breakdown of export cargo by
Figure 2-13: Detroit BEA Export Truck
direction. The Detroit BEA had total export cargo of
Cargo in 2009
5.4 million tons in 2009. The outbound flow of 2.2
million tons represents exports via international
gateways outside the Detroit BEA. The largest gateway
was Los Angeles (37 percent of tons) followed by
Toledo, OH (11 percent) and Houston, TX (8 percent).
The top three commodity groups were Chemicals or
Allied Products, Waste or Scrap Materials, and Farm
Products.

The inbound flow of 0.5 million tons captures exports
shipped from other parts of the country to the Detroit
BEA, and then exported overseas. Origins are
principally the areas around Detroit. Finally, the internal Source: Derived from IHS Global Insight Transearch Data
flow captures exports originating within the Detroit
BEA and shipped overseas via the Detroit BEA. This
flow amounted to 2.5 million tons.

2.3.5 Canada
As a major border crossing point, the Detroit BEA has a significant volume of truck freight generated by
local and U.S. trade with Canada. In 2009, total volume was 34 million tons with a value of $98 billion.

As shown in Figure 2-14, the largest part this freight, 28
Figure 2-14: Detroit BEA - Canada Truck
million tons or 83 percent, moved through the Detroit
Cargo in 2009
BEA to and from other parts of the U.S. This through
freight is dominated by warehouse-able cargo, including
shipments of Food or Kindred Products, Chemicals or
Allied Products, Transportation Equipment, Pulp, Paper
or Allied Products, Farm Products and Rubber or Misc
Plastics.

The inbound truck trade from Canada to the Detroit
BEA amounted to 3.4 million tons with a value of $9.4
billion. Locations in Ontario are the source for 89
percent of the inbound truck freight from Canada. The
top three commodity groups are Transportation
Equipment (32 percent of tons), Primary Metal Products Source: Derived from IHS Global Insight Transearch Data
(19 percent), and Food or Kindred Products (7
percent).

23 | TranSystems


The outbound truck trade to Canada from the Detroit BEA was 2.4 million tons with a value of $7.9 billion.
Ontario dominates the outbound trade and was the destination for 95 percent of outbound tons. Major
commodity groups were Primary Metal Products (25 percent of tons), Transportation Equipment (25
percent), Farm Products (11 percent), and Chemicals or Allied Products (9 percent).

Finally, the source database provides estimates of freight flows by truck (and rail) between the Detroit BEA
and Canadian port hinterlands, including Halifax. These data are reviewed in Section 2.6 in a discussion of
freight flows along specific corridors.

2.3.6 Mexico
Truck trade with Mexico amounted to only 1.1 million tons with a value of $5.4 billion. This small amount of
truck freight, 42 percent of total trade volume with Mexico, reflects the preference for rail in the long-
distance corridor between the Detroit BEA and Mexico
and the likelihood that some Mexican trade flows
through import distribution centers in other parts of the Figure 2-15: Detroit BEA - Mexico Truck
U.S. prior to arrival in the Detroit area, thus arriving in Cargo in 2009
Detroit as a domestic shipment.

As shown in Figure 2-15, inbound truck freight from
Mexico amounted to 0.56 million tons. This freight is
primarily higher-value commodities and the largest
commodity groups were Transportation Equipment (38
percent), Machinery (13 percent), and Electrical
Equipment (12 percent).

The outbound trade to Mexico was 0.49 million tons
and is dominated by Chemicals or Allied Products (50
percent), which includes plastics and synthetic fibers.

24 | TranSystems


2.4 Detroit BEA Rail Cargo
2.4.1 Total
Rail is predominant over longer distances and it was the transport mode for 18 percent of tons and 19
percent of cargo value moving in, out, within and through the Detroit BEA in 2009. This rail freight is
generated by local consumption and industrial production, and freight movements through the Detroit BEA
between other regions (e.g. Canada to other parts of the U.S.). Total rail freight amounted to 53 million
tons with a total value of $77 billion.

Rail involves a variety of trade flows and modes as shown in Figure 2-16. The largest segment by tonnage is
domestic inbound freight, which accounted for 42 percent of tons in 2009 but only 14 percent of total value,
due to the presence of low-value coal shipments, which account for 67 percent of the domestic inbound
tonnage. Canada rail shipments (by carload and intermodal) account for 17 percent of tons and 30 percent
of value, due to the presence of higher-value manufactured goods in this trade. Rail shipments through the
Detroit BEA between Canada and other U.S. regions dominate the Canada rail flows, accounting for 88
percent of tonnage. The third largest trade flow is domestic outbound shipments from the Detroit BEA,
accounting for 16 percent of tons and 33 percent of value, the larger share of value due to outbound
shipments of higher value commodities (e.g. Transportation Equipment). Rail shipments with Mexico are
another high value commodity trade, accounting for 3 percent of rail tons and 11 percent of rail cargo value.

Rail cargo involves different types of rail modes – carload, intermodal (that is, container or trailer on flatcar),
and rail (freight moving to and from Canada and Mexico). Lower value commodities dominate movements
by carload, which accounted for 57 percent of tons and 36 percent of value. Intermodal rail, with 4 percent
of tons and 14 percent of value, handles higher value commodities. Trade with Canada and Mexico is
classified under a generic rail mode. Intermodal rail has a presence in these trades due to the many higher
value commodities shipped.

Figure 2-16: Detroit BEA Rail Cargo by Trade Flow in 2009


25 | TranSystems


A profile of regional rail cargo (domestic and international, all directions) by commodity group is provided in
Figure 2-17. The largest commodity group is inbound shipments of Coal, which amounted to 15 million tons
in 2009 and 28 percent of the region’s rail cargo. The other top commodities are Chemicals and Allied
Products (13 percent of tons), Transportation Equipment (12 percent), Petroleum and Coal Products (8
percent), and Primary Metal Products (8 percent). Transportation Equipment is primarily Motor Vehicles
and Motor Vehicle Parts or Accessories. Agricultural and consumer related commodities, Food Products (5
percent) and Food or Kindred Products (4 percent) also appear in the top ten commodity groups.

The commodity ranking shifts when a filter is applied to identify the warehouse-able commodities, those
suited to warehousing and logistics services (see background discussion in Section 2.2). The total amount of
warehouse-able rail cargo is estimated at 21 million tons, dominated by Chemicals and Allied Products (32
percent of warehouse-able tons) and Transportation Equipment (30 percent). Examples of commodities in
the Chemicals and Allied Products group are Plastic Materials and Synthetic Fibers, Soap or Other
Detergents, and Dyes.

Further analysis of commodities, with a focus on the warehouse-able segment, is provided in the discussion
of domestic and international rail flows by direction (inbound, outbound, etc.) presented below. A review of
intermodal rail corridors is provided in Section 2.6.3.

Figure 2-17: Detroit BEA Rail Cargo in 2009 – Top Ten Commodity Groups


26 | TranSystems


2.4.2 Domestic Inbound and Outbound
Domestic inbound and outbound flows together account for 58 percent of rail cargo tons related to the
Detroit BEA. This cargo is generated by industry and consumption within the Detroit BEA, and demand in
the rest of the country.

In 2009, the Detroit BEA had inbound rail cargo of 22 million tons with an estimated value of $11 billion.
Approximately 15 million tons (65 percent) with a value of $486 million (5 percent) was inbound shipments
of coal. Warehouse-able rail cargo amounted to 3.2 million tons with a value of $8 billion (77 percent). As
shown in Figure 2-18, the top-15 rail commodities shipped inbound to the Detroit BEA are a mixture of
warehouse-able and other commodities. Four of the five top commodities are lower value and bulk-focused
commodities, and these are nearly all shipped by carload service. Carload service moved 78 percent of the
warehouse-able commodities, including shipments of transportation equipment (e.g., Motor Vehicles in
specialized auto railcars). The remaining 22 percent of the warehouse-able commodities (e.g. Motor Vehicle
Parts or Accessories) move by intermodal service (that is, container or trailer on flatcar).

The Detroit BEA generated 8 million tons of outbound cargo with a value of $25 billion in 2009. An
estimated 3.8 million tons (46 percent) with a value of $23.7 billion (94 percent) was defined as warehouse-
able cargo. The top outbound commodity group was Transportation Equipment (58 percent of outbound
tons), which moved by carload service and intermodal rail service. The two other main warehouse-able
commodities were Miscellaneous Mixed Shipments by intermodal rail and Food or Kindred Products, nearly
all shipped by carload service.

Figure 2-18: Detroit BEA Inbound and Outbound Rail Cargo in 2009 – Top 15 Commodity
Groups

* The chart excludes coal shipments, which amount to 14.6 million tons.

27 | TranSystems


Apart from coal and iron ore related shipments, rail freight is widely dispersed across origin and destination
regions (Figure 2-19). The top four lanes involve inbound coal shipments from Wyoming, West Virginia and
Kentucky and mainly inbound iron ore shipments from the Cincinnati, OH BEA. Outside of these top four
lanes, rail freight is widely dispersed by origin and destination. Some of the larger lanes include BEAs
centered on ports and distribution hubs – for example, Chicago, New York, and Kansas City.

The distribution by lane shifts when focusing on the warehouse-able commodity segment, with port and
logistics hub related BEAs, as well as large population centers, more prominent. The mix of origins reflects
inbound shipments related to local industry, notably the automotive sector, and for local consumption.
Similarly, the outbound destinations are partly driven by shipments by the automotive sector, both of
finished vehicles and components.

Figure 2-19: Detroit BEA Inbound and Outbound Rail Cargo in 2009 – Top Freight Lanes


28 | TranSystems


Figure 2-20: Domestic Inbound Rail Freight

29 | TranSystems


Figure 2-21: Domestic Outbound Rail Freight

30 | TranSystems

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Translinked Regional Freight Study

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