What the Data Show

Role of transportation in Oregon’s economy

The state’s economy and job base are transportation dependent, especially on its highways, for the connections they provide to domestic and international markets.

Oregon’s geographic location makes it a key component of U.S. West Coast logistics, serving as a major hub for domestic and international freight. The state provides key international air and maritime gateways, as well as an important junction of critical transcontinental highways. Oregon is served by 23 port districts, including nine with inter-modal freight terminals; 23 railroads, including high-capacity transcontinental mainlines of both western Class 1 railroads; and 97 public-use airports, including seven with commercial airline service. Portland-metro in particular ranks fifth among western metropolitan regions in international shipments. However, all of these modes depend on efficient and reliable highway access for freight shipments and business deliveries, as well as passenger travel for business. This is because trucks are the workhorse of the system, linking businesses throughout the state to the global marketplace and providing the “last mile” connection to inter-modal facilities, business operations and end users, as shown in Figure 1.

Traded-sector industries – those industries that provide goods and services outside of Oregon and bring money back into the state economy – are particularly reliant on an efficient transportation network. Exports from these industries are shipped through most major ports on the U.S. West Coast. These industries also are critical to statewide economic growth and job creation. In Oregon, the top traded-sector industries include wood product manufacturing, forestry, agriculture, computer and electronics manufacturing, beverage manufacturing, and metal manufacturing, see Figure 2 and 3.

INTEL CORPORATION

Intel Corp. is one of the world’s largest designers and producers of essential technologies that serve as the foundation for the world’s computing devices. Hillsboro, Oregon is home to the company’s largest site for fabrication, testing and wafer production. Missed flight connections require Intel to reschedule shipments and are costly due to the limited usable life of dies used in production and manufacturing of chip sets.

CENTRAL OREGON TRUCK CO.

Central Oregon Truck Company is an over-theroad, irregular route, 48 State carrier located in Redmond Oregon. The impacts of congestion reduces productivity delivering consumed products that can not be recovered. This cost is ultimately passed back to the consumers of all products. Since the transportation industry has heavily regulated work hours, it makes avoiding peak travel times nearly impossible for all carriers. According to Central Oregon Truck Comapny, the better the roads are maintained and the more efficient roadway travel is, the greater the payback to consumers of any and all products.

The statistics clearly indicate how important these traded-sector industries are to the Oregon economy. Overall, the Oregon transportation system carried $300 billion worth of goods in 2012, more than the entire Oregon gross domestic product (GDP) of $205 billion. About $215 billion, or 72 percent of total value, is carried by truck. When considering transportation-related and transportationdependent jobs in the traded industries, over 346,400 jobs are reliant on an efficient transportation network – or nearly 20 percent of all statewide jobs.

Business interviews

For this study, the businesses listed here were asked about congestion and its effects on their business. Companies involved in exports (international and domestic), transportation services and regional distribution were chosen because of their economic importance to the Portland-metro region.

Agriculture/Natural Resource

  • Anderson Hay and Grain Co.
  • Boise Cascade Co.
  • Hampton Affiliates
  • Imperial Stock Ranch
  • Pacific Seafood
  • Roseburg Forest Products

Advanced Manufacturing

  • Genentech
  • Intel Corp.

Logistics Service Providers

  • Central Oregon Truck Company
  • Expeditors International of Washington, Inc.
  • Oregon Transfer Co.
  • Summit NW

Manufacturing/Food Production

  • Chris King Precision Components
  • Craft Brew Alliance
  • Oregon Iron Works
  • Schnitzer Steel

Retail Distribution

  • Columbia Sportswear Co.
  • The Kroger Company (Fred Meyer)

The transportation system’s impact on business competitiveness

Congestion and travel delay due to deficiencies in the transportation system are already impacting businesses throughout the state, hurting their competitiveness.

Interviews with statewide business leaders underscore the fact that transportation is critical to business competitiveness and sustained business growth in Oregon. Due to increasing congestion, businesses report that they are drastically altering operations in order to keep a competitive edge.

Although some businesses in the report are not located in the metro areas studied, almost all either distribute products in these areas or need to pass through them to get to ports or other operational centers, see Figure 4. As a result, congestion in metropolitan areas, including Portland-metro, can affect operational decisions and in some cases the costs of resource-based companies throughout the state.

Changes in business operations are nearing the limits of what a business can do to overcome transportation congestion before it becomes a severe issue. Many respondents reported that they have implemented staggered shifts, added evening and overnight operations, and are increasing operation during “off-off-peak” hours, with some delivery shifts now starting as early as 2 a.m. However, the businesses are making these operational changes in the face of regulatory limits on driver hours, worries of driver safety and limits to when they can feasibly deliver to customers. For those businesses that cannot shift to off-off-peak hours, managers report “lost turns” on truck deliveries due to congestion, meaning that a truck can take on fewer delivery routes in a day compared to the recent past when there was not as much congestion. Moreover, businesses reported that they do not face these issues in other regions that they operate in, suggesting a competitive disadvantage of operating in Oregon.

Overall impacts of congestion and travel delay on the economy

Failure to adequately invest in the transportation system results in significant losses to Oregon’s economy, job base and quality of life.

Transportation system assessments for the metropolitan regions included in this study (Portland, Salem/Mid-Willamette Valley, Bend and Corvallis) suggest that congestion is becoming an increasing problem statewide and that investments in infrastructure can strongly mitigate these conditions.

HAMPTON AFFILIATES

Hampton Affiliates produces dimensional lumber with six sawmills located throughout the Pacific Northwest. There are three mills in Oregon (Willamina, Tillamook and Warrenton). They produce about 2 billion board feet of wood products per year with roughly 500 million board feet of exports. They rely extensively on for-hire firms for their outbound shipments that require about 45,000 truckloads per year. Hampton’s costs have gone up dramatically in the last five years due to congestion, new driver rules and lack of drivers.




Over time, as more trips are generated in the state, traffic increases cause additional congestion and reduce reliability on the highway network for both passenger cars and trucks, see Figure 5. For example, in 2010, 5 percent of all travel time in Portland-metro took place in congested conditions (e.g. in slow, stop-and-go traffic). This is expected to triple to 15 percent of all trips by 2040. Put another way, by 2040, the average Portland-metro household will experience 69 hours of congestion annually, or nearly two work weeks spent in congested conditions, if only the currently programmed improvements are made, as shown in Figure 6. Additional future investments would reduce this amount to 37 hours per household. In other Oregon metropolitan areas, congestion will increase to 18 hours per household by 2040 without new investments. That figure could be reduced by two-thirds, to six hours per household, with additional investments. In total, new transportation investments would save Oregonians 36.9 million hours of travel time or an average of 27 hours per household, as shown in Figure 7.

These travel time savings from new investments translate to significant economic impacts. With additional transportation investments these savings would generate an additional 8,300 jobs by 2040; $928 million in output; $530 million in GDP or value added; and $380 million in wages and compensation to employees.


GENENTECH

For Genentech, perishability is a key concern and missed air shipments require that products be stored under controlled conditions. When outbound shipments are missed, products must be held in Hillsboro, where the cost of storage, monitoring of tightly controlled conditions and re-dispatching significantly increase costs.

Congestion can affect a region’s economy by reducing its competitiveness resulting in significant impacts on employment and economic output.

This study also finds that by 2040, improving the transportation system investment levels specified in current state and metropolitan area long-range Regional Transportation Plans would generate economic benefits for the state growing to nearly $1.1 billion per year by 2040, as shown Figure 8. Cumulatively, Oregon would receive over $24 billion in benefits from these transportation investments, returning over $2.40 for every dollar spent on improving the transportation system.