Table of Contents - Pima Association of Governments

Transcription

Table of Contents
Freight Flow Analysis
Summary of Findings
A Note on Forecasting Methodology
The Impact of Potential New Gateways on the Forecasts
Data Sources
Primary Database
Secondary Databases
Tucson Freight Volumes
Tucson Domestic Freight Volumes
Factors Influencing Tucson Freight Flows
Inbound Truck Tonnage
Inbound Rail Tonnage
Inbound Air Tonnage
Outbound Truck Tonnage
Outbound Rail Tonnage
Outbound Air Tonnage
Projected Truck Volumes
Cross-Border Trade with Mexico
U.S. Imports from Mexico via Arizona Border
U.S. Exports to Mexico via Arizona Border
Opportunities for Development or Expansion of Distribution Activity
Outbound Distribution of Secondary Traffic
Processing of Mexican Imports of Farm Products for Outbound Shipment
Increased Outbound Distribution from Further Development of Existing Manufacturing Industries
Coordination with Carriers
Freight-related Infrastructure
Corridors and Facilities
Corridors
Highway
Railway
Air
Facilities
Regional Assets
Background
Infrastructure Investment Process
Corridors
Facilities
CANAMEX
Guaymas-Tucson Corridor - Logistics Capacity Study
I-10 Corridor of the Future
I-10 Phoenix/Tucson Bypass
Sun Corridor – Megapolitan
Mexican Infrastructure
US-Mexican Ports of Entry - Mariposa
Red Rock Classification Yard
Coordination
Inland Port’s Roles and Responsibilities
How the Region Compares
Introduction
Quantitative Evaluation
Methodology
Market Coverage
Truckload Shipment Costs
Access to Rail Service
Labor Force
Labor Cost
Lease Rates
Cost of Living
Tax Environment
Ranking of Locations
Conclusion
Qualitative Evaluation
Highways and Congestion
Air Services
Summary
List of Exhibits
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
2007
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
2007
1: Acronyms or Terms
2: Profile of Transearch Data Extract
3: Tucson BEA Volumes
4: Tucson BEA Relative to Other US Western States
5: Relative Growth of Tucson Disposable Income and US Disposable Income
6: Tucson BEA Tonnage by Direction and Mode, 2007
7: Tucson BEA 2007 Total Tonnage, Primary Mode and Secondary Mode
8: Tucson BEA Volumes by Direction and Mode, 2007
9: Tucson BEA Inbound Truck Tonnage by Commodity Segment, 2007
10: Tucson BEA Inbound Truck Tonnage by Origin State, 2007
11: Tucson BEA Inbound Rail Tonnage by Commodity Segment, 2007
12: Tucson BEA Inbound Rail Tonnage by Origin State, 2007
13: Tucson BEA Inbound Air Tonnage by Commodity Segment and Origin State, 2007
14: Tucson BEA Outbound Truck Tonnage by Commodity Segment, 2007
15: Tucson BEA Outbound Truck Tonnage by Destination State, 2007
16: Tucson BEA Rail Outbound Tonnage by Commodity Segment, 2007
17: Tucson BEA Outbound Rail Tonnage by Destination State, 2007
18: Tucson BEA Outbound Air Tonnage by Commodity Segment and State of Destination,
19:
20:
21:
22:
23:
24:
25:
Projected Tucson BEA Inbound Truck Tonnage
Projected Tucson BEA Inbound Truck Tonnage Fastest Growing Commodity Segments
Projected Tucson BEA Outbound Truck Tonnage
Projected Tucson BEA Truck Outbound Tonnage Fastest Growing Commodity Segments
U.S. Imports from Mexico via the Arizona Border, Short Tons
U.S. Imports from Mexico via the Arizona Border, Value
Total U.S. Import Tonnage Growth via Arizona Border and U.S. Real GDP Growth: 1997 -
Exhibit
Tons)
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
26: 2007 U.S. Imports from Mexico via Arizona Border by Major Commodity Group (Metric
27: Destination States of U.S. Imports by Truck via the Arizona Border, 2007
28: Destination States of U.S. Imports by Rail via the Arizona Border, 2007
29: Projected U.S. Imports via the Arizona Border by Mode, 2008 - 2027
30: U.S. Exports to Mexico (Value) by Mode
31: Value of U.S. Exports to Mexico via Arizona Border, by Commodity in 2007
32: Mexico Real GDP Growth and U.S. Export Growth to Mexico (Value)
33: Origin States of Truck Exports to Mexico (Value), 2007
34: Origin States of Rail Exports to Mexico (Value), 2007
35: U.S. Exports via the Arizona Border Forecast, 2007 – 2027
36: Truck Volumes per Day
37: Truck Traffic Profiles I-10 and I-19
38: Train Volumes per Day
39: Railroad Facilities (PFE Yard and Port of Tucson Intermodal)
40: Union Pacific Routes – US and Mexico
41: Air Cargo Facilities
42: Generalized Land Use (Pima County and Tucson)
43: Distribution Center
44: Asarco Mining
45: Port of Tucson part of FTZ 174 Site 2
46: PICOR Warehousing Map and District Distribution
47: Regional Freight Corridors of Significance
48: Freight-related RTA Projects
49: CANAMEX Corridor
50: Guaymas-Tucson Corridor
51: I-10 Coast to Coast
52: I-10 Bypass Options compared to PAG’s LRTP
53: Sun Corridor
54: Mexican National Corridors 2012
55: Mariposa Port of Entry
56: Proposed Red Rock Classification Yard
57: Evaluation Criteria
58: Counties in the Metropolitan Statistical Areas
59: Tucson Local and Next-Day Markets
60: Albuquerque Local and Next-Day Markets
61: Kansas City Local and Next-Day Markets
62: San Antonio Local and Next-Day Markets
63: Local Market Coverage (within one-way driving time of 4 hours)
64: Next Day Market Coverage (within one-way driving time of 8 hours)
65: Representative Truckload Rates to Major Markets
66: Highway Distances (Miles)
67: Rail Connectivity of Class I Railroads
68: Intermodal Terminals by MSA
69: Labor Force in 2007 and 2012
70: Unemployment as of August 2008
71: Labor Cost of Warehouse Employees as of 2007
72: 2007 Union Profile
73: Average Lease Rates
74: Cost of Living as of 2007
75: Home Ownership and Median Household Income as of 2007
76: Tax Environment as of 2007
77: Weighting of Evaluation Criteria
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
78:
79:
80:
81:
82:
83:
84:
85:
86:
Example of Quintile Distribution for Transportation Costs Criteria
Results of Ranking Analysis
Tucson Highway Flowband Map
Albuquerque Highway Flowband Map
Kansas City Highway Flowband Map
San Antonio Highway Flowband Map
Travel Time Index
Annual Hours of Delay
Air Cargo Traffic as of 2007
Freight Flow Analysis
Summary of Findings
The Tucson Business Economic Area (BEA) has achieved a relatively high rate of economic growth in
recent years and is projected to continue on a relatively fast growth track. From the perspective of
freight flows, the Tucson BEA is a net importer; the preponderance of Tucson freight is inbound via
truck. Other than basic materials, which account for over 80 percent of the total tonnage, the
inbound freight for the Tucson BEA is mainly Food Products, Finished Consumer Goods and a variety
of relatively high-value products to support manufacturing and other businesses.
The bulk of the inbound finished consumer goods have already been through at least one stage of
distribution. These goods have mainly come into the U.S. from overseas origins via the ports of L.A.
and Long Beach, shipped to international distribution centers (DCs) in Southern California, or, in
some cases, to regional DCs in larger inland metro areas such as Maricopa County, and trucked to
local warehouses in the Tucson BEA. The local warehouses, in turn, facilitate local distribution within
the Tucson BEA and surrounding areas in Arizona.
Food Products are the leading commodity of outbound freight from the Tucson BEA. Slightly over half
of the outbound tonnage of this commodity is destined for areas outside Arizona, mostly in
neighboring states. Nearly all of outbound Secondary (from local warehouses) Traffic, the second
largest commodity, is shipped to locations within Arizona.
The 20-year forecast for the Tucson BEA’s inbound freight calls for about a 2 percent annual growth
rate, with higher growth rates—2.5-4.0 percent—forecast for consumer goods and other relatively
high-value commodities such as Machinery, Electrical Equipment and Fine Instruments. The forecast
of inbound freight for Tucson is somewhat above the national average, consistent with the Tucson
BEA’s relatively high rate of real income growth.
Subsequent distribution, from the Tucson BEA, of the inbound consumer and other high-value goods
is expected to remain limited to destinations within Arizona. Changes in distribution patterns, placing
Tucson at the front end of the chain of distribution of these commodities, are unlikely. Southern
California is likely to remain the major area of distribution of inbound consumer products. Even if
there is substantial diversion of imports away from Southern California ports, the diverted cargo is
likely to be containers that are moving intact to points in the U.S. east of the Rockies, and would
have no reason to undergo a stage of distribution in Tucson. Tucson-destined imported consumer
goods are likely to remain moving over Southern California ports.
The 20-year forecast of outbound freight from the Tucson BEA is 1.8 percent annually. Products such
as Machinery, Electrical Equipment and Miscellaneous Manufactures are projected to grow at 2-4
percent annually. These high-growth commodities are niche segments, representing local
manufacturing, and collectively accounting for only 2.5-3.5 percent of outbound tonnage from the
Tucson BEA over the forecast period. However, these commodities represent over 25 percent of the
value of outbound freight.
U.S. imports moving over the Mexico border via Arizona gateways were 4.9 million tons in 2007, and
65 percent of this tonnage moved via truck. Growth in Arizona gateway inbound tonnage over the
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Strategic Implementation Plan
Page
6
APPENDIX - PAGE EXPERIENCE | Transportation
past decade was at an average rate of 4.6 percent, which is substantially faster than overall U.S.
imports from Mexico.
Imports from Mexico moving over Arizona gateways are mainly producer goods and raw materials,
with no significant amounts of distribution-eligible consumer goods. Farm Products account for over
half of the total inbound tonnage, and these are normally shipped to plants in the U.S. for further
processing. Another significant cross-border import over Arizona gateways is finished Motor Vehicles
from the Ford plant in Hermosillo. These shipments are generally passing through to inland
destinations particularly in the Midwestern U.S.
Increased distribution activity in Tucson to support the development of a regional inland port facility
will come from:
x
Growth of inbound and outbound freight based on Tucson’s current industry structure. This
“baseline” growth reflects the projected faster growth of Tucson relative to the U.S. as a
whole, and will widen the already large imbalance of inbound over outbound shipments
x
Development of new initiatives that take advantage of the inbound/outbound freight
imbalance (and relatively low “backhaul” truck rates for outbound) and current freight flows.
New distribution opportunities for Tucson could arise from
x
Diversion of “second tier” distribution away from other areas, particularly Maricopa County
x
An increased role in processing of imports of Farm Products from Mexico
x
Accelerated expansion of its core, high value-added industrial activity.
Successful implementation of these activities involves coordination with motor carriers to ensure the
capture of the outbound freight cost advantage.
A Note on Forecasting Methodology
Forecasts of inbound and outbound freight related to the Tucson BEA are based on commodityspecific relationships between freight volumes and economic variables such as disposable income,
employment and industrial production. For example, the volume of inbound shipments of consumer
goods (domestic or imported) into the Tucson BEA is mostly related to the area’s real disposable
personal income. On average, based on previous research, a 1.0 percent increase in real disposable
income would lead to a 0.8 to 1.0 percent increase in inbound tonnage of consumer goods. Similarly,
the volume by commodity of outbound freight from Tucson is related to income and employment in
the destination areas. Commodity-specific freight flow forecasts were developed using forecasts of
economic variables by Moody’s Economy.com and aggregated to produce forecasts of total inbound
and outbound freight flows to/from the Tucson BEA.
Also, it should be noted that all forecasts of freight flows are unconstrained; that is, it is assumed
that there are no impediments to the economic-driven freight projections caused by inadequate
facilities or equipment, new regulations or other constraints. Similarly, under the unconstrained
forecast, additions to port capacity do not affect freight volumes.
The Impact of Potential New Gateways on the Forecasts
In forecasting flows into and out of the Tucson BEA, the impact of new gateways or gateway shifts
for import and export cargo should also be considered. In particular, Tucson import cargo currently
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
7
moving over ports in Southern California and, particularly the Ports of L.A. and Long Beach could be
diverted to future Mexican ports such as Punta Colonet.
However, the impact of this potential diversion is not expected to be significant. Nearly all of the
import cargo that comes into the Tucson BEA is by truck, having already passed through at least one
stage of domestic distribution. In most cases, import cargo ultimately bound for Tucson is unloaded
from inbound international containers at an import distribution center or transload facility in Southern
California, transferred to domestic containers or trailers and trucked to Tucson.
By contrast, virtually all of the future U.S.-bound import cargo that might be diverted from L.A./Long
Beach and move through new gateways such as Punta Colonet would be in international containers
moving intact by rail to their final destinations. Cargo in these intact containers would not be bound
for Tucson , nor would it create an opportunity for Tucson as an import distribution center. In view of
this low potential for Tucson first stage distribution, new gateways such as Punta Colonet are not
explicitly included in the forecasts.
A short list of abbreviations, acronyms, labels and their use is described in Exhibit 1.
Acronym/Term
BEA
CAGR
LTL
PVT
TL
Tonnage
Exhibit 1: Acronyms or Terms
Stands for:
Definition:
Business Economic Area
Defined geographic areas designated by the
Department of Commerce, typically representing
a major economic center.
Compound Annual Growth
The number that describes the rate at which
Rate
volumes or values would grow yearly if a steady
rate is applied between the first and last years of
a given timeframe.
Less Than Truckload
Volume indicating less than a full truckload; a
shipment is considered LTL when a number of
small shipments from multiple shippers are
aggregated together into one truckload for
delivery, usually to multiple destinations in the
same general region.
Private Fleet
Shipments that move via a company’s private
fleet of trucks, (e.g., Wal-Mart)
Truckload
A TL shipment is one in which a single shipment
will fill an entire truck.
NA
In this document tonnage always refers to short
tons, where one short ton equals 2,000 pounds
Data Sources
The project team used several databases to create a profile of freight flows in, out and through the
Tucson region. They are described below.
Primary Database
The Transearch Database was used as the primary source for the profile of historical freight flows in
the Tucson region and as the base to forecast regional freight flows. The database provides statistics
on U.S. freight flows at the national, state, and business economic areas (BEA) levels.
Separate data extracts were obtained for freight moving by truck, rail, and air. The structure of the
data extracts is profiled in Exhibit 2. Data were obtained for 2004, 2005 and 2007 to allow for
analysis of historical trends. However, the data did not appear to be consistent over time, whether
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
8
viewed in the aggregate or by commodity. Therefore, time series analysis was not conducted on
these data and analysis was focused solely on the most recent data, 2007. The Transearch 2004
data was provided by the Pima Association of Governments (PAG).
The extract on freight movements by truck and by rail is at both the state and the Tucson BEA level
due for both 2005 and 2007. The data in 2004 is at a mixture of levels from county to BEA to
geographic region.
Exhibit 2: Profile of Transearch Data Extract
Field
2004
2005
2007
Origin BEA
9
9
Destination BEA
9
9
Origin
County/State/BEA/Region
9
Destination
County/State/BEA/Region
9
STCC4 Commodity Code
9
9
9
Transport Mode
9
9
9
Domestic Tons
9
9
9
Included in
domestic
tons
Included in
domestic
tons
Included in
domestic
tons
Import / Export Tons
US State/BEA to/from Mexico
State
9
Source: TranSystems derived from Global Insight
Secondary Databases
One other database was used to provide profiles of specific market sectors. They are:
x
Transborder Freight Data (TFD) published by the Bureau of Transportation Statistics
This database was used to profile the role of Arizona border points in the U.S.-Mexico trade. The
TFD has been available since 1993, and it contains freight flow data by commodity type, mode of
transport, origin and destination state, and border crossing point. Data are obtained from import
and export filings collected by the U.S. Customs and Border Protection. The database is a useful
tool for evaluating freight flows via the Texas border, however there are some limitations on the
data that should be borne in mind while reading the remainder of this section. They are:
o
Imports are measured by weight and value. Exports are only measured by value.
o
Commodity type and value by border crossing point has only been provided since 2007.
o
Import data are generally more accurate than export data. This is primarily because U.S.
Customs uses import documents for enforcement purposes while it performs no similar
function for exports.
o
The border crossing field identifies the Customs port where the entry or exit documentation
was filed with Customs and the duties paid. It may not always reflect the port where the
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
9
shipment physically crossed the border to or from the United States. Under current Customs
regulations, importers or exporters may file import documentation at one port while the
shipment actually enters at another port.
o
The state field may not always represent the physical origin or destination of the import or
export goods, since the exporters or importer’s address may not necessarily be the same
state as the origin or destination of the goods.
While the dataset has some limitations, it provides a reasonable overall profile of freight flows with
Mexico sufficient to support discussion of the role of Arizona border crossing points in U.S. trade with
Mexico.
Tucson Freight Volumes
Tucson Domestic Freight Volumes
The cargo flows related to the Tucson Business Economic Area (BEA) are the subject of this
overview. The Tucson BEA is made up of three counties, Cochise, Pima and Santa Cruz with Pima
County contributing the majority of overall population. The first section of the overview is devoted to
Tucson BEA cargo flows moving within the fifty U.S. states while the second section focuses on cargo
moving over the Arizona border in to and out of Mexico.
Exhibit 3: Tucson BEA Volumes
Exhibit 4: Tucson BEA Relative to Other US
Western States
Source: Microsoft MapPoint
Source: Microsoft MapPoint
Factors Influencing Tucson Freight Flows
The main drivers of freight flows, both international and domestic, are income, wealth and
production. For inbound flows, historical and forecast data for the Tucson BEA on population, income
and employment all indicate growth rates above the national average. For example, as shown in
Exhibit 5, Real Disposable Income in the Tucson BEA grew at an annual rate of 3.2 percent between
2000 and 2007 and is projected to grow at an annual rate of 3.6 percent over the 20-year period of
2007-2027. These growth rates are significantly higher, by 0.2 to 0.5 percentage points, than for the
U.S. as a whole. Similarly, population in the Tucson BEA is projected to grow at an annual rate of 2.2
percent over the next 20 years, or about twice the national average.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
10
Exhibit 5: Relative Growth of Tucson Disposable Income and US Disposable Income
225
Index (2007=100)
200
175
150
125
100
75
50
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Tucson Real Disposable Income (2007 = 100)
Tucson Population (2007 = 100)
US Real Disposable Income (2007 = 100)
Source: Moody’s Economy.com
As shown in Exhibit 6, total freight tonnage for the Tucson BEA region in 2007 was 45.4 million tons,
with inbound traffic accounting for 57.2 percent of the total. Outbound from the BEA was 22.3
percent and Intra-BEA was 20.5 percent. Truck traffic accounted for the majority of the volumes
moving to or from Tucson, with a 94.6 percent share of total tonnage.
Exhibit 6: Tucson BEA Tonnage by Direction and Mode, 2007
2007 Short Tons: 45 Million Tons
Outbound Air
0.04%
Intra-BEA Truck
20.51%
Inbound Rail
4.28%
Outbound Truck
21.23%
Inbound Truck
52.89%
Outbound Rail
1.03%
Inbound Air
0.03%
Source: Global Insight, Reebie Transearch Data
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
11
APPENDIX - PAGE 10
EXPERIENCE | Transportation
Also, as shown in Exhibit 7, rail accounted for 5.3 percent of total tonnage, and this was dominated
by carload traffic, with intermodal playing only a minor role. Air traffic accounted for less than 0.1
percent of total tonnage, but, according to previous studies, this represents about 5 percent of the
value of freight. For truck traffic, the majority is for-hire, but a substantial portion (40 percent) is
carried by private truck fleets.
Exhibit 7: Tucson BEA 2007 Total Tonnage, Primary Mode and Secondary Mode
Primary
Mode
Rail Tons
Truck Tons
Air Tons
Total Tons
9,408,809
14,519
25,949,317
126,346
3,755,990
16,538
10,106,078
4,237,713
16,877
5,054,831
0
9,309,421
42,597
24,348,053
356,652
18,219,629
31,057
45,364,815
0.1%
53.7%
0.8%
40.2%
0.1%
100.0%
Carload
Intermodal
For Hire
Truckload
LessThanTruckload
Private
Truckload
1,940,022
2,351
14,370,186
213,430
Outbound
426,805
40,246
5,740,154
Intra-BEA
0
0
Total
2,366,827
Share
5.2%
Secondary
Mode
Direction
Inbound
Inbound tonnage plays a much larger role relative to outbound tonnage in the Tucson BEA,
accounting for 2.5 times the volume in 2007 (Exhibit 8). As shown, the majority of this volume is
being moved by the truck mode.
Exhibit 8: Tucson BEA Volumes by Direction and Mode, 2007
Tons in Millions
30
25
Air
20
Private Truckload
15
Less-Than-Truckload
10
Truckload
5
Intermodal
Carload
0
Inbound
Outbound
Intra-BEA
As noted above, inbound truck accounts for over half of all freight flows in the Tucson BEA. The
composition of this inbound tonnage by commodity and origin is shown in Figures 9 and 10. Of the
24 million inbound truck tons in 2007, well over half was in commodities that were extremely low
value or otherwise were not appropriate for value added activity. These include Non-Metallic Minerals
(13.5 million tons), which are mainly sand and gravel; Clay Concrete, Glass or Stone (1.8 million);
Petroleum or Coal Products (0.9 million); Primary Metal Products (0.6 million); and Lumber Products
(0.2 million). About 98 percent of these commodities are sourced from Arizona counties outside the
Tucson BEA and nearly all of the remainder from neighboring states. The other inbound truck
commodities, accounting for 7.0 million tons, are represented by:
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
12
APPENDIX - PAGE 11
Secondary Traffic (3.2 million tons) – This represents mainly consumer goods (apparel, footwear,
consumer electronics, furniture, etc.), where most of these were imported, mostly from Asia, as
either finished or semi-finished goods. About half of this volume was from international distribution
centers (DCs) in Southern California, where overseas merchandise in international containers was
devanned, re-sorted and further processed, and then shipped out by truck to final consumption
points or to secondary DCs in the Tucson BEA. Most of the remainder was shipped from secondary
DCs located in other Arizona counties, mostly Maricopa County. Therefore, when most of these
consumer goods reach the Tucson BEA, they have already gone through one or two stages of
distribution and/or processing.
Food or Kindred Products (1.3 million tons) – Nearly half of this tonnage originates in Arizona, but
the remainder is sourced from a broad array of origins, including neighboring states and substantial
tonnage from Texas, Arkansas and Idaho. These products move to local warehouses, including cold
storage facilities, for shipment to local retail, and to plants for food processing.
Chemicals or Allied Products (0.8 million tons) – These are sourced mainly from Texas and
Louisiana and are used as inputs into local production processes.
Fabricated Metal Products (0.2 million tons) – These are also mainly from California and the
Midwest, and are directly consumed or used in local production and construction.
Transportation Equipment (0.2 million tons) – This is mostly finished automobiles, sourced from a
wide range of origins.
Electrical Equipment (0.2 million tons) – Sourced mainly from California (imports from Asia), Texas
and the Midwest; used in manufacturing and across all industries.
The remaining commodities include mostly smaller-volume, high-value items that are adaptable to
distribution. This includes Machinery, Fine (Precision) Instruments and Miscellaneous Manufactures.
Most of this remaining tonnage is potentially subject to distribution or processing activity.
Exhibit 9: Tucson BEA Inbound Truck
Tonnage by Commodity Segment, 2007
Electrical
Equipment
Transportation
Equipment
Lumber Or Wood
Products
Fabricated Metal
Products
Primary Metal
Products
Chemicals Or
Allied Products
Petroleum Or
Coal Products
Food Or Kindred
Products
Clay,concrete,gla
ss Or Stone
Secondary Traffic
24.0
Tons in Millions
21.0
18.0
15.0
12.0
9.0
6.0
3.0
0.0
2007 Truck Tonnage
Exhibit 10: Tucson BEA Inbound Truck
Tonnage by Origin State, 2007
NonTucson
Arizona
76%
Other
States
9%
New
Mexico
2%
Texas
2%
California
11%
Nonmetallic
Minerals
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
13
APPENDIX - PAGE 12
Inbound Rail Tonnage
Inbound rail into the Tucson BEA amounts to 1.9 million tons, and, as shown in Exhibits 11 and 12, is
about 90 percent coal. About 89 percent of inbound rail tonnage originates in Colorado, Wyoming,
New Mexico and Utah. As noted above, nearly all of this existing rail traffic is carload, mostly bulk
commodities, and presents little, if any opportunities for distribution.
Exhibit 11: Tucson BEA Inbound Rail
2.00
1.75
Tons in Millions
1.50
1.25
1.00
0.75
0.50
0.25
0.00
2007 Rail Tonnage
Clay,concrete,gl
ass Or Stone
Pulp,paper Or
Allied Products
Primary Metal
Products
Petroleum Or
Coal Products
Food Or Kindred
Products
Lumber Or
Wood Products
Waste Or Scrap
Materials
Chemicals Or
Allied Products
Coal
Exhibit 12: Tucson BEA Inbound Rail
Tonnage by Origin State, 2007
Colorado
54%
Other
States
11%
Utah
9%
Wyoming
17%
New
Mexico
9%
Inbound Air Tonnage
Inbound air into the Tucson BEA was about 14,500 tons in 2007. Although only a small fraction of the
inbound tonnage, air freight represents about 3 percent of the total value. As shown in Exhibit 13,
well over half the tonnage is so-called Freight-All-Kinds (FAK), which means that the bill of lading
does not identify the cargo, but in all likelihood, this volume is an assortment of higher value goods.
Inbound air Printed Matter or Mail is shipped directly from the terminal to the end-user. In addition,
moderate quantities of Electrical Equipment, Chemicals, Machinery and Auto Parts make up most of
the remainder of inbound air tonnage. These do not appear to undergo significant distribution activity
and are shipped directly to the final user.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
14
APPENDIX - PAGE 13
Exhibit 13: Tucson BEA Inbound Air Tonnage by Commodity Segment and Origin State,
2007
6,000
All Other
4,000
Transportation
Equipment
Tons
5,000
3,000
Machinery
2,000
Chemicals Or Allied
Products
1,000
Mail Or Contract Traffic
0
NJ
CA
OR
AZ
TX All Others
As noted earlier (Figure 3-4), there is a heavy imbalance in the Tucson BEA of inbound over
outbound truck. The overall tonnage ratio of inbound to outbound in 2007 is 24.0 million to 9.6
million, or 2.5 to 1. However, when considering freight that is eligible for distribution activity, the
inbound/outbound ratio is about 7.0 million to 5.4 million, or about 1.3 to 1. This imbalance tends to
raise trucking costs due to a lack of “backhaul” freight, but also may create low-cost opportunities for
increasing outbound freight.
As shown in Exhibits 14 and 15, by far the main outbound commodity is Food and Kindred
Products, which accounts for over half of the distribution-eligible freight. About 50 percent of Food
Products are distributed to Arizona counties outside the Tucson BEA, and another 39 percent to
adjacent states.
The next largest outbound commodity group that is distribution-eligible is Secondary Traffic, which
as mentioned earlier, is ex-warehouse merchandise, principally consumer goods. Of the 1.2 million
tons of outbound Secondary Traffic, nearly 1.0 million tons is shipped to destinations within Arizona.
Based on population, it is reasonable to assume that at least 0.8 million tons are destined for
Maricopa County. In the discussion above of inbound truck shipments it was pointed out that most of
the Tucson BEA’s inbound Secondary Traffic from Arizona (1.3 million tons in 2007) was likely from
Maricopa County. Most of this two-way Secondary Traffic is from second-tier regional DCs, and is
potentially relocate-able—i.e., Maricopa County warehouses serving Phoenix and Tucson could be
shifted to Tucson and vice-versa.
Another significant outbound truck commodity group that is distribution-eligible is Chemicals and
Allied Products, which is related to Tucson-area manufacturing and amounted to 0.4 million tons in
2007. Top destinations for these products are California and Texas.
Among the other commodities that are distribution-eligible (totaling 1.0 million tons), Machinery,
Electrical Equipment and Fine (Precision) Instruments reflect the high-tech manufacturing in
the Tucson BEA. Distribution of these commodities tends to be the broadest nationwide of the
outbound truck commodities.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
15
APPENDIX - PAGE 14
Exhibit 14: Tucson BEA Outbound Truck
Farm Products
Tons in Millions
10.0
9.0
Primary Metal Products
8.0
Metallic Ores
7.0
Transportation Equipment
6.0
Exhibit 15: Tucson BEA Outbound Truck
Tonnage by Destination State, 2007
NonTucson
Arizona
54%
California
17%
Chemicals or Allied
Products
Nonmetallic Minerals
5.0
4.0
3.0
Secondary Traffic
2.0
Petroleum or Coal
Products
Clay,Concrete,Glass or
Stone
Food or Kindred Products
1.0
0.0
2007 Truck Tons
Other
States
14%
Utah Texas
2% 3%
Nevada
5%
New
Mexico
5%
Outbound Rail Tonnage
Outbound freight volume via rail amounted to only 0.5 million tons in 2007, which is only about onequarter of inbound tonnage. The distribution of rail outbound by commodity and destination is shown
in Exhibits 16 and 17. Outbound rail products are mainly bulk commodities and the majority of the
tonnage moves relatively short distances. Exceptions are Transportation Equipment (60,000 tons)
and Food and Kindred Products (48,000 tons), which move mostly to Midwest destinations, and
Miscellaneous Mixed Shipments (38,000 tons). The latter category includes relatively high-value
commodities destined for California (35,000 tons) and New Jersey (2,000 tons) most likely moving as
intermodal shipments for export.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
16
APPENDIX - PAGE 15
Tons in Millions
Exhibit 16: Tucson BEA Rail Outbound
0.50
0.45
Primary Metal
Products
0.40
Pulp,paper Or Allied
Products
0.35
Farm Products
0.30
Exhibit 17: Tucson BEA Outbound Rail
Tonnage by Destination State, 2007
NonTucson
Arizona
61%
Waste Or Scrap
Materials
0.25
Misc Mixed Shipments
0.20
Food Or Kindred
Products
0.15
0.10
Transportation
Equipment
0.05
Clay,concrete,glass
Or Stone
0.00
Chemicals Or Allied
Products
2007 Rail Tons
Other
States
7%
Indiana
4%
California
8%
Illinois
20%
Outbound Air Tonnage
Outbound shipments by air from Tucson are dominated by high-value technology products
manufactured in the Tucson BEA, including Chemical Preparations, Plastics Products,
Electronic Data Processing Equipment, Printed Matter, Electronic Components and
Machinery. As shown in Exhibit 18, the majority of these products are shipped to Pennsylvania and
Tennessee. In most cases, these destinations are distribution hubs for integrated carriers such as
UPS, FedEx and DHL. These integrated carriers ship consolidated loads from these hubs to final
destinations throughout the U.S. Virtually all of the value-added distribution work performed on this
merchandise (e.g., consolidation/ deconsolidation) is at the hubs of integrated carriers, and is unlikely
to switch to an alternative pattern of distribution.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
17
APPENDIX - PAGE 16
Exhibit 18: Tucson BEA Outbound Air Tonnage by Commodity Segment and State of
Destination, 2007
8,000
Tons
7,000
6,000
All Other
5,000
Misc Mixed Shipments (FAK)
4,000
Printed Matter
Machinery
3,000
Electrical Equipment
2,000
Rubber Or Misc Plastics
Chemicals Or Allied Products
1,000
0
PA
TN
TX
AZ
CA
All Others
Projected Truck Volumes
Over the 20-year period, 2007-2027, total Tucson inbound truck tonnage is projected to grow at an
annual rate of 2.0 percent, from 24.0 million tons in 2007 to 35.7 million by 2027, as shown in Exhibit
19. It should be noted that the projected average growth rate includes two years of negative annual
growth of 2-3 percent in 2008 and 2009. This pattern of negative growth for 2008 and 2009 is seen
for all of the projections presented in this report.
Among the inbound truck commodity groups, projected growth rates differ significantly, with
commodities that are more distribution-eligible projected to grow at a faster rate than locally-sourced
bulk commodities such as sand and gravel. Exhibit 20 shows the inbound truck commodity groups
that are projected to grow the fastest. These are mostly distribution-eligible commodities such as
Fine (Precision) Instruments, Electrical Equipment, Machinery and, the largest category of eligible
freight, Secondary Traffic.
Of the total 24.0 million tons of inbound truck in 2007, an estimated 7.0 million were identified as
distribution-eligible (see Section 3.1.2). These commodities together are projected to grow at a 20year annual rate of 2.6 percent to 11.7 million by 2027. Within this subset, Secondary Traffic is
projected to grow at annual rate of 2.5 percent, from 3.2 million tons in 2007 to 5.3 million tons in
2027. The projected growth rates for the Tucson BEA are above the national average, due to the
relatively rapid projected growth of Tucson’s real income, population and employment.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
18
APPENDIX - PAGE 17
Exhibit 19: Projected Tucson BEA
All Other
Commodities
Transportation
Equipment
40.0
35.0
30.0
Short Tons, Millions
Fabricated Metal
Products
Primary Metal
Products
Chemicals Or Allied
Products
Petroleum Or Coal
Products
Food Or Kindred
Products
Clay,concrete,glass
Or Stone
Secondary Traffic
25.0
20.0
15.0
10.0
5.0
0.0
2007
2017
2027
Inbound Truck Tonnage Fastest Growing
Commodity Segments
Farm Products
Metallic Ores
Food or Kindred Products
Fabricated Metal Products
Secondary Traffic
Machinery
Source: TranSystems
Fine Instruments
0.0% 1.0% 2.0% 3.0% 4.0%
20-Year CAGR
Source: TranSystems
For outbound truck, the overall projected 20-year growth rate is somewhat lower, at 1.8 percent,
with outbound tonnage growing from 9.6 million tons in 2007 to 13.8 million tons in 2027, as shown
in Exhibit 21. The projected growth of outbound truck tonnage reflects the commodity mix and the
economic growth of the destination states or regions for the Tucson BEA’s outbound freight. These
areas, collectively, are projected to grow at a somewhat lower rate than the Tucson BEA.
Of the total outbound truck tonnage in 2007, an estimated 5.4 million tons are identified as
distribution-eligible (see section 3.1.5) and projected to grow at a relatively high average annual rate
of 2.2 percent to 8.3 million tons in 2027. As shown in Exhibit 22, the fastest growing commodities
are Fine (Precision) Instruments, Electrical Equipment, Miscellaneous Manufacturing Products and
Machinery. These commodities reflect the high-tech manufacturing in the Tucson BEA.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
19
APPENDIX - PAGE 18
16.0
All Other
Commodities
14.0
12.0
Machinery
10.0
Transportation
Equipment
8.0
Metallic Ores
6.0
Chemicals Or Allied
Products
4.0
2.0
Petroleum Or Coal
Products
0.0
2007
2017
2027
Secondary Traffic
Exhibit 22: Projected Tucson BEA Truck
Outbound Tonnage Fastest Growing
Commodity Segments
Transportation
Equipment
Secondary Traffic
Chemicals or Allied
Products
Food or Kindred
Products
Nonmetallic
Minerals
Metallic Ores
Machinery
Misc Manufacturing
Products
Fine Instruments
Clay,concrete,glass
Or Stone
Food Or Kindred
Products
Source: TranSystems
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
20-Year CAGR
Source: TranSystems
Cross-Border Trade with Mexico
The Tucson BEA is located on the Arizona-Mexico Border, a major gateway for U.S. cross-border
trade with Mexico. The commodities moving in this trade by rail and truck may create opportunities
for increased distribution activity in Tucson.
Freight flows in this trade, both import and export, are estimated using U.S. Transborder Freight
Statistics, published by the U.S. Department of Transportation, Bureau of Transportation Statistics
(BTS). The BTS data provide consistent annual time series for this trade back to the early 1990s, for
both the overall U.S. Mexico trade and by gateway. The gateway-specific data for imports are
available in terms of tonnage, value and transport mode, rail and truck. For exports, data are
available in terms of value only, although some rough estimates can be developed for tonnage. BTS
data also include distribution by commodity for imports by tonnage and value, and for exports by
value only, but commodity detail is only available for the most recent full year, 2007 when indicating
gateway.
In addition, Global Insight Transearch data provide estimates for 2007 of commodity- and modespecific imports and exports to/from the Tucson BEA from/to individual states in Mexico.
The following subsections examine imports and exports, key characteristics and drivers, and 20-year
forecasts.
U.S. Imports from Mexico via Arizona Border
During the past decade, U.S. imports from Mexico via the Arizona Border grew at an annual rate of
4.9 percent from an estimated 3.3 million tons in 1997 to 5.3 million tons in 2007, as shown in
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
20
APPENDIX - PAGE 19
Exhibit 23. The value of this merchandise, shown in Exhibit 24, increased from $6.2 Billion in 1997 to
$13.9 Billion in 2007, an annual rate of 8.4 percent. In terms of truck and rail tonnage, the Arizona
Border accounted for 12.6 percent of total U.S. imports from Mexico in 2007, down from 14.6 percent
in 1997. Although growth has generally been positive over the past decade, there have been
significant year-to-year declines as well, especially from 2001 to 2002, which appeared to be mainly
the result of the U.S. recession in 2001-02. Also, modal share of imports changed significantly. Truck
share declined from 77 percent in 1997 to 67 percent in 2007, with rail making up the difference.
100.0%
5.0
80.0%
60.0%
3.0
40.0%
2.0
1.0
20.0%
0.0
0.0%
16.0
80.0%
12.0
10.0
60.0%
8.0
40.0%
6.0
4.0
20.0%
2.0
0.0
97 98 99 00 01 02 03 04 05 06 07
0.0%
97 98 99 00 01 02 03 04 05 06 07
Imports by Truck via the Arizona Border
Imports by Rail via the Arizona Border
Share by Truck
Imports by Truck via the Arizona Border
Imports by Rail via the Arizona Border
Share by Truck
Source: US Bureau of Transportation Statistics
100.0%
14.0
US Dollars, Billions
4.0
Exhibit 24: U.S. Imports from Mexico via
the Arizona Border, Value
Truck Share
6.0
Truck Share
Exhibit 23: U.S. Imports from Mexico via
the Arizona Border, Short Tons
Source: US Bureau of Transportation Statistics
Of the specific Arizona gateways, Nogales accounts for about 93 percent of total import tonnage—89
percent of truck tonnage and 100 percent of rail. These shares have remained roughly constant since
2003.
In general, the growth of imports through the Arizona Border is closely tied to the growth of the U.S.
economy. Exhibit 25 plots the annual growth rates of U.S. GDP (left scale) and imports from Mexico (right
scale) via Arizona. The chart in Exhibit 25 shows growth of Mexico import tonnage through Arizona
positively related to growth of U.S. GDP with about a one-year lag. A regression equation showing this
relationship is:
Annual Growth of Imports from Mexico via AZ (%) = -13.3 + 5.9 * Annual Growth of U.S. GDP, lagged 1
year (%)
So, for example, based on this relationship, if U.S. GDP growth one year ago is 4.0%, the predicted value
of Mexico import growth via Arizona is 10.3% (5.9 * 4.0 – 13.3).
The growth of Mexico import growth is considerably more volatile than U.S. GDP growth. As shown in
Exhibit 25, between 1997 and 2007, the range of U.S. GDP growth was 0.7% to 4.4%, while the growth
of imports from Mexico via Arizona ranged from -17.0% to 14.1%.
Tucson
Regional
Inland
Port
Documentation
Tucson
Regional
Inland
Port
Strategic
Implementation Plan
Page
21
APPENDIX - PAGE 20
Exhibit 25: Total U.S. Import Tonnage Growth via Arizona Border and U.S. Real GDP Growth:
1997 - 2007
20.0%
5.0%
4.5%
US Annual GDP Growth
10.0%
3.5%
3.0%
5.0%
2.5%
0.0%
2.0%
-5.0%
1.5%
-10.0%
1.0%
0.5%
-15.0%
0.0%
-20.0%
Total US Import Tons Growth
15.0%
4.0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Real US GDP Annual Growth
Total Imported Short Tons
Source: U.S. Department of Transportation, Bureau of Transportation Statistics; U.S. Department of Commerce,
Bureau of Economic Analysis
Commodity composition other than autos appears to be heavily farm products and other raw materials,
which are inputs into manufacturing processes. There is little in the way of consumer goods, other than
food products.
Exhibit 26: 2007 U.S. Imports from Mexico via Arizona Border by Major Commodity Group
(Metric Tons)
Edible vegetables
31%
Cereals
1%
Copper and articles
thereof
2%
Other
13%
Machinery and
mechanical
appliances; parts
3%
Elect
machinery/equipmt
Beverages; spirits
and parts
and vinegar
3%
Vehicles; parts &
4%
Inorganic chemicals accessories
8%
5%
Salt; Sulfur; Earths &
stone; Plast
materials; lime &
cement
16%
Edible fruit & nuts
14%
Source: U.S. Bureau of Transportation Statistics
The destinations of the Arizona border imports are concentrated in Arizona and the rest of the Southwest,
particularly truck shipments to California and Texas, as shown in Exhibit 27. About 68 percent of the
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
22
APPENDIX - PAGE 21
truck tonnage is destined to Arizona and another 15 percent to California, with 2 percent moving to
Texas and 5 percent moving to the Midwest and New York. The commodities shipped to U.S by truck are
predominantly food products (vegetables, 47 percent and fruit, 22 percent) with a small portion of
electrical machinery and machinery and parts (10 percent). For imports by rail (Exhibit 28), a substantial
portion of the tonnage in recent years has been finished automobiles moving from Hermosillo to
Michigan.
For the year 2007, an estimated 534,000 tons of cross-border freight from Mexico terminated in the
Tucson BEA. This included 479,000 tons, or 90 percent, by truck, and 55,000 tons, or 10 percent, by rail.
Of the origin states in Mexico, Sonora accounted for 62 percent of Tucson-destined tonnage, Nuevo Leon,
13 percent, and Sinaloa, 4 percent. Inbound commodities are nearly all raw or semi-finished products.
Higher-value commodities such as electrical equipment account for less than 15 percent of the total.
Although data on gateway are not available for this tonnage, it appears based on the distribution by
origin-State in Mexico that at least 90 percent of the cross-border tonnage destined for the Tucson BEA is
moving through Arizona gateways. Therefore, in 2007, approximately 10 percent of Mexican imports via
Arizona gateways were destined for the Tucson BEA.
Exhibit 27: Destination States of U.S. Imports by Truck via the Arizona Border, 2007
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
23
APPENDIX - PAGE 22
Exhibit 28: Destination States of U.S. Imports by Rail via the Arizona Border, 2007
Over the next 20 years, 2007 – 2027, Arizona Border import tonnage from Mexico is projected to grow
from 5.4 million tons to 10.9 million tons, an annual growth rate of 3.6 percent. Over the same period,
the percentage moving by truck is projected to decline from its projected 2008 share of 69 percent to 57
percent.
Exhibit 29: Projected U.S. Imports via the Arizona Border by Mode, 2008 - 2027
100.0%
12
90.0%
20-Year CAGR Truck – 2.9%
20-Year CAGR Rail – 4.7%
80.0%
70.0%
8
60.0%
50.0%
6
40.0%
4
Truck Share
Tons in Millions
10
30.0%
20.0%
2
10.0%
0.0%
0
'07 '08 '09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Truck Tons
Rail Tons
Truck Share
Source: TranSystems
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
24
APPENDIX - PAGE 23
U.S. Exports to Mexico via Arizona Border
Unlike imports, tonnage data are not available for U.S. exports to Mexico via the Arizona Border.
However, in value terms, exports show growth trends similar to imports during the past decade; i.e.,
generally positive growth mixed with some year-to-year declines. As shown in Figure 3-27, exports via
Arizona increased from $4.2 Billion in 1997 to $6.8 Billion in 2007, an annual growth rate of 5.1 percent.
Therefore, compared to imports (section 3.2.1), exports to Mexico via Arizona were less than half the
value in 2007 and were growing about 3 percentage points less annually from 1997 to 2007. Over the
same period, share of the total freight value by truck declined from 93 percent in 1997 to 84 percent in
2007, which was similar to the trend for imports (Figure 3-20).
Exhibit 30: U.S. Exports to Mexico (Value) by Mode
$8.0
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
$6.0
$5.0
Truck Share
Value in US$, Billions
$7.0
$4.0
$3.0
$2.0
$1.0
$0.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Exports by Truck via the Arizona Border
Exports by Rail via the Arizona Border
Share by Truck
Exhibit 31: Value of U.S. Exports to Mexico via Arizona Border, by Commodity in 2007
Vehicles and parts
14%
Electrical machinery,
eqmt and parts
27%
Machinery and parts
13%
Plastics and articles
thereof
8%
Other
22%
Paper and
paperboard
3%
Ores; slag and ash
2%
Fine instruments
2%
Iron and steel
3%
Articles of iron or
steel
3%
Edible fruit and nuts
3%
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
25
APPENDIX - PAGE 24
The growth of U.S. exports to Mexico is closely tied to growth of Mexico’s real GDP. As shown in Figure 329, annual changes in the value of U.S. exports to Mexico via the Arizona border (right scale) , track
closely the annual changes in Mexico Real GDP (left scale).
8.0%
30.0%
7.0%
25.0%
6.0%
20.0%
15.0%
5.0%
10.0%
4.0%
5.0%
3.0%
0.0%
2.0%
-5.0%
1.0%
-10.0%
0.0%
-15.0%
-1.0%
-20.0%
97
98
99
00
01
Mexico Real GDP
02
03
04
05
06
Export Value Annual Growth
Mexico Real GDP Annual Growth
Exhibit 32: Mexico Real GDP Growth and U.S. Export Growth to Mexico (Value)
07
Export Value Growth
Source: Moody’s Economy.com
A rough estimate of the tonnage moving in the U.S.-to-Mexico export trade can be developed based on
the commodity mix in value terms, and estimates of the value per ton of each commodity group. The
$6.8 Billion of U.S. exports via Arizona is distributed by commodity value, as shown in Figure 3-28. This
value-oriented commodity mix is heavily weighted by the high-value commodities, such as Electrical
Equipment, Machinery and Vehicle Parts, which together account for over half of the total value of
exports. Using estimates of value per ton for each of these commodities, leads to an estimate of total
export tonnage via Arizona, which is 1.6 million tons in 2007. This total is less than 1/3 the import
tonnage over the Arizona Border, which is an imbalance significantly greater than for U.S. export/import
trade as a whole.
The geographic distribution of the origins of Mexico exports (in value terms) is similar to the distribution
of the import destination by tonnage; i.e., a concentration in the Southwest, particularly Arizona and
California, with significant flows from the Midwest as well, as shown in Figures 3-30 and 3-31. However,
converting the value figures to tonnage would show an even greater concentration in the Southwest, as
export freight from the Midwest (Vehicle Parts and Machinery) has substantially higher average value per
ton.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
26
APPENDIX - PAGE 25
Exhibit 33: Origin States of Truck Exports to Mexico (Value), 2007
Exhibit 34: Origin States of Rail Exports to Mexico (Value), 2007
Cross-border exports to Mexico originating in the Tucson BEA in 2007 were an estimated 557,000 tons,
with 477,000 tons, or 86 percent, by truck and 80,000 tons, or 14 percent, by rail. The leading
destination state in Mexico was Veracruz with 15 percent of total tonnage, followed by Sonora with 11
percent, Jalisco at 7 percent and Guanajuato at 6 percent. In general, cross-border Mexican destinations
for exports from the Tucson BEA are more broadly distributed than import origins, which tend to be
concentrated in Sonora and Nuevo Leon. As in the case of imports, data are unavailable on the
percentage of cross-border tonnage from the Tucson BEA that moves through Arizona gateways.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
27
APPENDIX - PAGE 26
However, assuming that it is 90 percent, then about 30 percent of the estimated export tons moving over
the Arizona Border to Mexico originated in the Tucson BEA. This estimate is itself based on a set of rough
estimates, and may not be particularly reliable, but it appears that the Tucson BEA has a significantly
higher share of exports over the Arizona Border than imports.
U.S. exports to Mexico via the Arizona Border are forecast to grow, in real value terms, at an annual rate
of 4.4 percent from $6.8 Billion in 2007 to $16.1 Billion in 2027. As shown in Figure 3-32, a
disproportionate amount of this growth is expected to come from rail traffic, and this is mainly the freight
originating in the Midwest. In terms of tonnage, growth is projected at an annual rate of about 4 percent,
which according to the tonnage estimates above, would increase tonnage from 1.6 million tons in 2007 to
3.5 million in 2027, still only about 1/3 of the import tonnage of 10.9 million.
Exhibit 35: U.S. Exports via the Arizona Border Forecast, 2007 – 2027
18
US $, Billions
14
85.0%
20-Year CAGR Truck – 4.1%
20-Year CAGR Rail – 5.5%
84.0%
12
83.0%
10
82.0%
8
81.0%
6
80.0%
4
79.0%
2
78.0%
0
Truck Share
16
86.0%
77.0%
'07 '08 '09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Truck $
Rail $
Truck Share
Source: TranSystems
Opportunities for Development or Expansion of Distribution Activity
The projected flows of inbound and outbound freight for the Tucson BEA and the flow of U.S. – Mexico
trade over the Arizona – Mexico border point to growth of distribution activity in the range of 2 percent
per year over the next 20 years, based on a “status quo” industry structure. However, the current pattern
of freight flows also suggests opportunities for the further expansion of distribution to support a regional
inland port facility. These potential opportunities are based on projected flows of commodities that are
judged to be eligible for distribution or related processing and where the Tucson BEA may be wellpositioned to expand.
The three main areas of potential are:
x
Increased role in outbound distribution by truck of Secondary Traffic, which is mostly composed
of consumer goods imports moving over West Coast gateways, particularly in Southern California
x
Processing of Farm Products moving northbound from Mexico over the Nogales gateway and
outbound distribution by truck of Food and Kindred Products
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
28
APPENDIX - PAGE 27
x
Outbound distribution via truck of products of existing manufacturing industries
In all of these cases, the Tucson BEA can benefit from the current imbalance of inbound over outbound
truck flows into and out of the area, resulting in a large potential supply of truck capacity for outbound
distribution and a competitive advantage over other areas. In these cases, Tucson officials must work
closely with motor carriers serving the region to achieve the necessary coordination of transportation
equipment and service.
The following is a further discussion of each of these potential opportunities, including the magnitude in
terms of projected freight volume, and the risks and limits.
Outbound Distribution of Secondary Traffic
The Tucson BEA received about 3.2 million tons of so-called Secondary Traffic in 2007. This freight is
composed of an assortment of consumer goods such as Apparel, Footwear, Consumer Electronics,
Furniture, etc., most of which was imported from overseas (especially Asia) through West Coast port
gateways, particularly the Ports of L.A. and Long Beach. Imported merchandise through L.A./Long Beach
that is ultimately destined for metro areas in the Southwest such as Tucson and Phoenix, is re-sorted by
destination, consolidated and potentially further manipulated (e.g., ticketed) in International DCs in
Southern California and shipped out via truck to these locations. Most of the destinations for these truck
shipments are either satellite warehouses or DCs, which, in turn, distribute the merchandise to retail
outlets in their metro area and in nearby metro areas, typically within one-day’s round trip by truck.
Of the 3.2 million tons of inbound Secondary Traffic received by Tucson, over half was from California
and most of the other half was from warehouses in Maricopa County. In most cases, the shipments from
California were sent to warehouses in the Tucson BEA while the shipments from Maricopa County were
shipped to Tucson retail stores. During the same time period, the Tucson BEA had outbound shipments of
nearly 1.0 million tons of Secondary Traffic to destinations in Arizona outside of the Tucson metro area,
and most of these went to retail outlets in Maricopa County. This “second-tier” distribution involves a
further re-sorting, consolidation and preparation of merchandise for shipment to retail locations.
During the next 20 years, the flows of Secondary Traffic into and out of Tucson are projected to grow at
an annual rate of 2.5 percent, which means total inbound Secondary Traffic will grow from 3.2 million
tons in 2007 to 5.3 million tons by 2027. Over the same period, inbound Secondary Traffic from California
is projected to grow from 1.5 million tons to 2.4 million tons, and from Maricopa County, from 1.2 million
tons to 2.0 million tons. Finally, Secondary Traffic from other port gateways such as New Orleans and
Houston is expected to grow from 0.1 million tons to 0.2 million tons.
A diversion of gateway port Secondary Traffic that is ultimately destined for Tucson away from satellite
warehouses or DCs in Maricopa County to, instead, a direct shipment to the Tucson BEA would be up to
an additional 1.2 million tons based on 2007 volumes and potentially 2.0 million tons by 2027. However,
it is unlikely that the total amount would divert, due to superior economies of scale at the DCs in the
more populous Maricopa County area. Nevertheless, there is still potential for a significant diversion of
this merchandise to Tucson area warehouses. To achieve this diversion, Tucson must be able to
demonstrate lower cost and superior service delivery when compared to service from DCs in Maricopa
County.
A potential limitation on the growth of this distribution activity is efforts by importers to implement “direct
distribution” for all or a portion of their imports.
Processing of Mexican Imports of Farm Products for Outbound Shipment
The large flow of Farm Products northbound over the Nogales border offers an opportunity for the
Tucson BEA to expand its Food Processing industry. This may be incremental or it may involve relocation
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
29
APPENDIX - PAGE 28
of food processing from other areas. The diversion could occur from other areas that have less of an
advantage in outbound truck freight costs.
The potential for outbound freight is significant. Under current conditions, Tucson has outbound
shipments of Food and Kindred Products of 2.9 million tons (in 2007) and this is projected to grow at a
2.0 percent annual rate to 4.3 million tons by 2027. This could be expanded by an additional 0.5 to 1.0
million tons by 2027, with an increase of food processing based on incremental flows of farm products
from Mexico.
Increased Outbound Distribution from Further Development of Existing Manufacturing
Industries
The manufacturing activity in the Tucson BEA accounts for outbound truck shipments of relatively highvalue commodities such as Electrical Equipment, Machinery, and Precision Instruments. These
commodities represent outbound truck tonnage of an estimated 1.2 million tons in 2007, and are
projected to grow 2.6 percent annually to 2.0 million tons by 2027. Further expansion could increase this
projected 2027 total by 0.2 to 0.5 million tons. Also, as noted in Section 3.1.6, in 2007, an estimated
38,000 tons of relatively high-value Mixed Shipments moved outbound via intermodal rail from the
Tucson BEA, most likely for export. This volume, although small, could be significantly expanded as well.
Coordination with Carriers
All of the above initiatives depend, at least in part, on the Tucson BEA taking advantage of its heavily
imbalanced inbound over outbound truck flows, which are likely to grow in percentage and absolute
terms over the next 20 years. This imbalance should lead motor carriers to offer relatively attractive rates
for outbound truck freight from Tucson, which would be backhaul in many cases. However, this will not
take place without negotiations with the carriers. Carriers serving the Tucson BEA, especially the longdistance truckload carriers, must be actively involved in structuring these expanded distribution
opportunities.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
30
APPENDIX - PAGE 29
Infrastructure Coordination
The infrastructure component defines and discusses physical assets in the region that impact and directly
affect the operations of freight. The Southern Arizona Inland Port must consider the freight
transportation system from two perspectives: from an internal perspective where the region’s
infrastructure directly reflects upon its capabilities and from an external perspective where the quality and
function of infrastructure outside the region can indirectly influence the perception of getting to the
region. These perspectives will help to define the Inland Port’s role and priorities in addressing these
infrastructure assets.
The term infrastructure has been used since 1927 to refer collectively to the roads, bridges, rail lines, and
similar public works that are required for an industrial economy, or a portion of it, to function. In other
words, infrastructure is the physical network that supports the movement of freight. It is interesting to
note that the term infrastructure was originally associated with the industrial economy, which is
consistent with the Inland Port’s perspective. Infrastructure is also considered an asset which must be
maintained, or improved along with developing new assets to accommodate growth.
Corridor and Facilities
The freight-related infrastructure in the region encompasses corridors for each of the modes including
highways, railways as well as key facilities such as air cargo transport and warehousing or distribution
centers, manufacturing and special facilities under the umbrella of Foreign Trade Zone No. 174.
Corridors
Major freight corridors are defined for each transport mode.
Highway
Traffic volumes (greater than 500 trucks per day on State routes) have been used to identify freight
corridors of importance. The data source is the Arizona Department of Transportation (ADOT). The
east-west I-10 corridor has the heaviest truck volumes in Tucson, peaking at 19,000 trucks per day. For
comparison, I-19 averages approximately 4,000 trucks per day along the majority of its length. Truck
traffic volumes per day are graphically shown in Exhibit 36 and are supplemented by truck traffic profiles
along I-10 and I-19 (which identify interchange locations for reference points) as shown in Exhibit 37.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
31
APPENDIX - PAGE 30
Exhibit 36 – Truck Volumes per Day
Source: TranSystems
Exhibit 37 – Truck Traffic Profiles
TruckTrafficͲ IͲ10
TruckTrafficIͲ19
20,000
20,000
18,000
16,000
16,000
14,000
14,000
Vehiclesperday
12,000
10,000
8,000
12,000
10,000
8,000
6,000
6,000
4,000
4,000
2,000
2,000
SanXavierRd
PimaMineRd
CanoaRanchRd
Chavez
Arivaca
SB19
Nogales
Kolb
CraycroftRd
IͲ19
PaloVerdeRd
BensonHwy/ParkAve
GrantRd
PrinceRd
CongressSt
InaRd
OrangeGroveRd
ElCaminoDelCarro
CortaroFarmsRd
AvraValleyRd
Marana
TangerineRd
PinalAirparkRd
RedRock
SR289/PenaBanca
0
0
SR189Mariposa
Vehiclesperday
18,000
Source: TranSystems
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
32
APPENDIX - PAGE 31
Railway
Up to 45 trains per day travel along Union Pacific’s Sunset Route which includes UP’s intermodal service
between Long Beach, CA and El Paso, TX, according to the Federal Railroad Administration (FRA). The
Port of Tucson provides intermodal service for the region. As many as 12 trains per day travel through
Nogales, located at the US and Mexico border. UP currently has a classification yard in downtown
Tucson, the Pacific Fruit Express (PFE) yard. Train volumes per day are graphically shown in Exhibit 38
and are supplemented by photographs of the rail facilities in Exhibit 39, as well as system maps in Exhibit
40. Note the industrial leads to mining operations in the region.
Exhibit 38 – Train Volumes per Day
Source: TranSystems
Exhibit 39 – Railroad Facilities (PFE Yard and Port of Tucson Intermodal)
Pacific Fruit Express Classification Yard
Port of Tucson Intermodal Yard
Source: Port of Tucson
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
33
APPENDIX - PAGE 32
Exhibit 40 – Union Pacific Routes – U.S. and in Mexico
Source: Union Pacific
Air
Air cargo facilities include more than 56,000 gross square feet (GSF) at the Tucson International Airport
(TUS). Domestic service is provided from DHL to Phoenix, Fed Ex to Memphis and UPS to Louisville. The
map shown in Exhibit 41 illustrates existing air cargo facilities as well as future expansion capabilities.
The main landside access road to these facilities is via Country Club Road. Tucson Blvd with its access to
the passenger terminal is designated a National Highway System (NHS) intermodal connector.
Exhibit 41 – Air Cargo Facilities
Source: Tucson International Airport, Master Plan Update Summary, June 2005
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
34
APPENDIX - PAGE 33
Facilities
Equally important are the facilities being connected such as distribution centers or warehouses. Exhibit
42 illustrates the nodal locations or concentrations of industrial land uses where many of these freight
nodes occur. Also noted are the locations of Foreign Trade Zones.
Exhibit 42 – Generalized Land Use (Pima County and Tucson)
Source: Pima County
Source: City of Tucson
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
35
APPENDIX - PAGE 34
Examples of these nodal facilities include the Target.com distribution center (DC), shown in Exhibit 43, with its access
from the Rita Road interchange at I-10.
Exhibit 43 – Distribution Center
Source: TranSystems
Other nodal facilities are where commodities represent a significant portion of the freight flows including
mining facilities such as Asarco with access from the Pima Mine Road interchange at I-19 as shown in
Exhibit 44. Many of the mining facilities are often served by roadways as well as railways.
Exhibit 44 – Asarco Mining
Source: TranSystems
The Port of Tucson is within a Foreign Trade Zone (FTZ) area that encompasses 263 acres at Center Park
Research Center that includes frozen food storage facilities, as shown in Exhibit 45.
Exhibit 45 – Port of Tucson part of FTZ 174 – Site 2
Source: TranSystems
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
36
APPENDIX - PAGE 35
A convenient means of tracking freight-related activities can include the review of Industrial Market
studies, such as the PICOR Real Estate Services information shown in Exhibit 46. This information is
divided into nine areas and inventories the more than 16.3 million gross square feet (GSF) of industrial
warehousing and office space located in Tucson.
Exhibit 46 – PICOR Warehousing Map and District Distribution
MillionGSF
5.00
4.00
3.00
2.00
1.00
0.00
Source: PICOR and TranSystems
Source: PICOR Real Estate Services
This data is a useful element in designating freight corridors of significance. A regional freight corridor of
significance is Valencia Road connecting Pella (west of I-19), the Tucson International Airport, Intuit and
several Foreign Trade Zones, including the Port of Tucson, as well as mining operations. Based upon the
PICOR data, a mile wide band on either side of Valencia with its access to concentrated industrial park
centers could serve up to half of all the industrial square footage in Tucson. Additional information is also
reported on gains or losses in total square footage as well as vacancy rates. Other regional freight
corridors of significance are shown in Exhibit 47. These corridors are defined by their means of access as
well as their concentration of industrial land use and development that is served.
Exhibit 47 – Regional Freight Corridors of Significance
Source: TranSystems
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
37
APPENDIX - PAGE 36
From a facilities perspective, opportunities exist in the region to create a state-of-the-art modern “freight
village”. Freight villages are a cluster of freight-related businesses of high quality located within a secure
perimeter under single management. Century Park Research Center, with Foreign Trade Zone status, is
such an existing facility.
Regional Assets
It is also important to have a larger view of how the region relates to a statewide as well as national and
international context. There are numerous freight corridors and supporting infrastructure projects to
consider in the region. Consequently this means interacting and coordinating with a variety of other
agencies and entities, such as the Arizona Department of Transportation (ADOT), Federal Highway
Administration (FHWA), the Arizona-Mexico Commission, Customs and Border Protection (CBP), Pima
Association of Governments (PAG), Regional Transportation Authority (RTA), the City of Tucson and
numerous other municipalities. Having a general awareness of the transportation infrastructure initiatives
will help advance the Inland Port, yet there is the need to prioritize at various levels. Consequently it is
recommended that active participation in the transportation review and selection process for projects
become a primary focus for the Inland Port. At the regional level, the priority is the involvement with the
I-10 Bypass study from its justification to the selection of a corridor route. At the international level, the
priority is with the CANAMEX corridor because of its established practices as well as its importance to the
region’s long-term growth in trade with Mexico.
Background
An important statewide initiative was ADOT’s 2006 Multimodal Freight Analysis. This report cites both the
basic transportation solutions that benefit freight including physical elements of pavement and bridge
conditions as well as operational issues affecting capacity. It also recommended a focus upon trade
corridors, like I-10. ADOT and other partners such as CBP are addressing infrastructure bottlenecks at
the Mariposa Port of Entry (POE) with an expanded facility. Analysis identified the following general and
specific transportation components related to freight:

General transportation solutions benefiting freight
Physical - Pavement and bridge conditions
Operations - Capacity
Specific freight needs/solutions
Plan major hub developments
Expand highway capacity
Expand NHS Intermodal Connectors
Separate/eliminate at-grade railroad crossings
Truck climbing lanes
Focus on trade corridors
Demands for Truck Parking
Support continued air cargo development
Relative to freight planning activities in many other states, ADOT is being very progressive and very proactive. A particularly positive aspect is the follow through on study recommendations that are leading to
specific physical improvements and continued investigations. An example is the coordination on the
redesign of the Mariposa POE with follow through on the I-19 Connector Route study. Opportunities exist
within the region to capitalize on adding new NHS Intermodal Connectors to freight concentrated activity
centers with its focus on trade corridors or the region’s freight corridors of significance as previously
shown in Exhibit 47. The issue of truck climbing lanes is important throughout the state as a whole, yet
is less on an issue in the Tucson region. Similarly, issues with demands for truck parking do not seem
apply to the Canoa Ranch Rest Area, located on I-19 in Pima County.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
38
APPENDIX - PAGE 37
Infrastructure Investment Process
There are many opportunities for the Inland Port to participate in the region’s transportation review and
selection process, ranging from the City of Tucson and Pima County’s Transportation Capital
Improvement Program, often referred to as a TIP or CIP, to PAG’s and the ADOT’s Long Range
Transportation Plan (LRTP) as well as the recently formed Regional Transportation Authority. These
agencies and their planning and construction processes are specifically designed to incorporate local
comment and input to determine where infrastructure investments are made. Currently, freight planning
is directly included within the ADOT’s and PAG’s planning process. Yet as noted above, many general
transportation improvements can benefit freight. Many railroad grade separation projects are considered
for their benefits of reducing vehicular congestion and improving safety, however such railroad grade
separation projects may also have direct benefits to freight mobility.
PAG’s long-range transportation planning process identifies roadway investments including maintenance,
proposed reconstruction and new construction. Safety projects like highway-rail grade separation projects
are also included. The Inland Port must take an active role in supporting and enhancing the region’s
freight-related infrastructure through PAG’s regional freight planning. In 2006, voters in Pima County
approved a half-cent excise tax to fund specific transportation projects which are overseen by the
Regional Transportation Authority (RTA). Currently there are 13 railroad crossing projects in various
stages of planning or construction in the PAG region. According to FRA and ADOT, there are nearly 200
rail crossings in eastern Pima County, with only 25 being grade separated. Consequently there are
numerous unfunded railroad crossing projects. A review of RTA’s project list includes several projects
with freight-related benefits, many of which eliminate at-grade railroad crossings or include modifications
to railroad underpasses. Eight of the 35 roadway improvement projects will have direct freight-related
benefits. Funding for the projects is currently at a 25%
commitment level. The cost of these eight projects
represent nearly one-third of the cost of all roadway
improvements identified on RTA’s list. Exhibit 48 includes a
map of the 2007 approved RTA projects as well as a chart
identifying specific freight-related projects.
Exhibit 48 – Freight-related RTA Projects
Project List
No.
Constant 2006 Dollars
Project
Budget
Description
Committed
6
Railroad overpass at Ina Rd
$34,218
$ 20,165
9
Ruthraff @ I-10/RR Overpass
$59,364
$
15
Railroad Underpass at Grant Rd – Expansion
to accommodate 6 lanes
$37,382
$ 319
19
22nd Street, I-10 to Tucson Blvd, 6 lane
bridge over railroad tracks
$104, 952
$3,000
23
Management, safety and intersection
improvements
$9,800
$ -
24
Valencia Road – Alvernon to Kolb Road
$43, 298
$3,000
32
Houghton Road – new bridge over rail
$95,342
$65,300
34
Sahuarita Road – new bridge over rail
Subtotal
All Roadway Improvement Elements
-
$30,785
$10,000
$415,141
$101,784
$1,168,889
$334,422
Source: TranSystems
Source: Regional Transportation Authority
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
34
APPENDIX - PAGE 38
Corridors
CANAMEX
The CANAMEX Corridor is a nationally
designated high priority route that is fostered
through a multi-state coalition. The CANAMEX
Corridor is shown in Exhibit 49. Its purpose is to
strategically invest in infrastructure and
technology to increase global trade
competitiveness, create jobs, and maximize
economic potential.
An accomplishment is the Mexican designation
of the Guaymas-Arizona Multimodal Corridor.
The priorities for Arizona include:
x Collaborate with Sonora to incorporate
Guaymas-Tucson Corridor Study into a
realistic approach for multi-modal
corridor growth
x Implement a Seal and Secure Pilot in
Mexico that expedites shipments to the
Mariposa POE in Nogales
x Develop a statewide freight and logistic
strategy and Multi-state International
Trade Strategy
Specific to physical infrastructure, CANAMEX
notes the challenge of funding and the need to
position itself in national policy discussions and
future funding opportunities.
Exhibit 49 – CANAMEX Corridor
Guaymas-Tucson Corridor Logistics
Capacity Study
This study identified infrastructure as well as
institutional bottlenecks. The infrastructure
bottlenecks included the Mariposa POE, the
railroad inspection procedures on the U.S. side
and the Port of Guaymas. Key institutional
issues include the lack of an integrated provider
and the operational schedule of customs officers
at DeConcini POE (rail) which in turn constrains
rail capacity. An alternative suggestion
regarding customs was to perform inspections in
Tucson.
The study area investigated roadway and
railway infrastructure between Guaymas and
Tucson as shown in Exhibit 50. The Port of
Guaymas needed quay cranes and container
moving equipment to be comparable with other
Mexican regional ports. The issue of an
integrated provider requires railroad service for
containers. The railroad companies are seen as
indispensible for the creation of an economically
feasible container corridor, particularly to make
the border crossing times more predictable. The
study also emphasized the strategic importance
of collaboration between Arizona and Sonora.
Exhibit 50 – Guaymas – Tucson Corridor
Source: CANAMEX
Source: Logistics Capacity Study of
Guaymas-Tucson Corridor
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
40
APPENDIX - PAGE 39
I-10 Corridor of the Future
In 2003, an I-10 Freight Study evaluated traffic operations and identified capacity issues for much of the
corridor between Phoenix and Tucson. In 2007, I-10 was designated a Corridor of the Future (COF).
With 2005 data, a Freight Performance Measurement was conducted for travel times in freight significant
corridors. This report with its graphic shown in Exhibit 51, illustrates that average truck speeds are
highest in western Arizona. The national freight gateways, such as Los Angeles, El Paso, New Orleans
and Jacksonville have significantly lower speeds. The data also notes that the highest truck traffic
volume on all of I-10 occurs in Tucson where I-19 comes in from the border crossing of Nogales.
Exhibit 51 - I-10 – Coast to Coast
Source: Freight Performance Measurement – Travel Time in Freight Significant Corridors
I-10 Phoenix/Tucson Bypass
The I-10 Phoenix/Tucson Bypass Study developed a Purpose and Need Statement consistent for
advancing future environmental documentation. The Bypass is to relieve traffic congestion by attracting
through truck trips as well as serving the Sun Corridor’s growth. Tucson is located in the east segment
which is approximately 150 miles long with a cost of $2 to $3 billion. The general west and south
corridor around Tucson is consistent with the local Pima Association of Government’s (PAG) Long Range
Transportation Plan (LRTP) as shown in Exhibit 52.
Exhibit 52 – I-10 Bypass Options compared to PAG’s LRTP
Source: I-10 Phoenix-Tucson Bypass
Source: PAG
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
41
APPENDIX - PAGE 40
Sun Corridor - Megapolitan
Exhibit 53 – Sun Corridor
A megapolitan area is defined as two or more
metropolitan areas 50 miles or more apart with
a population of 5 million by 2040. The Sun
Corridor examines one of the nation’s rapidly
growing regions, the Tucson-Phoenix Corridor.
The Sun Corridor is defined by water planning
areas and by highways, as shown in Exhibit 53.
Five areas of concern have been identified and
include:
1. The trend is global, but the Sun Corridor
lacks a global profile
2. There are 100’s of players, and no one
is in charge
3. Two trillion dollar questions
a. Can quality compete with easy
money?
b. Who will pay for public systems?
4. What about water?
5. The tragedy of sunshine is that each
new person adds and subtracts from the
area’s resources.
Source: Arizona Department of Water Resources –
Arizona Water Atlas
Mexican Infrastructure
In July 2007, Mexico announced its 2007-2012 National Infrastructure Program. It presents over $250
billion in business opportunities through the year 2012 and identifies over 300 infrastructure projects
representing over $141 billion. The program covers 34 key projects on the environmental, transportation
and energy sectors, including modernization or construction of almost 20,000 km of highways, improved
maintenance, expansion of the rail system by almost 1,500 km and at least three new airports and the
mega-port project of Punta Colonet, Baja California. Assessments indicate that the overland
transportation piece with its connections to existing rail networks on both sides of the border is likely to
make or break the new port. The program states that its objectives, strategies, goals and actions are
designed to increase the coverage, quality, and competitiveness of the country’s infrastructure.
Ten sectors are identified and are involved with highways, railways, ports and airports, including
telecommunications, water supply, flood control, electricity, oil & gas production, and petrochemicals.
The four traditional transportation infrastructure sectors account for 18% of the base investment. Nearly
5,500 km of national highway corridors were identified and are shown in Exhibit 54. One corridor
includes Mexico’s Nogales with a branch to Tijuana. Improvements to corridors through 2012 include a
corridor along the Arizona border from San Luis to the southeast. Railway investment seeks to increase
the average speed of the railway system, as well as developing 10 new multimodal corridors, with 12
intermodal cargo terminals. This includes the expansion of a corridor from Guaymas–Nogales-Arizona.
In terms of ports, Punta Colonet or Bahia Colonet is cited as a new port. Guaymas is listed for expansion
as well as new docks for cruise ships. For airports, Nogales is listed as an international airport. A new
Mar de Cortes airport is cited near the Arizona border. This airport’s runway is under construction.
Terminals will open in 2010, with service to resorts nearby. A goal is to increase air cargo transport
capacity by 50 percent.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
42
APPENDIX - PAGE 41
Exhibit 54 - Mexican National Corridors 2012
Source: National Infrastructure Presentation
Facilities
These key infrastructure points are located
outside the direct jurisdiction of the region.
Nonetheless, they can play a key role in the
region’s freight opportunities and development.
They include ports of entry (POE) at the USMexican border, Mexican ports, such as
Guaymas and the proposed Punta Colonet, as
well as the relocation of rail yards.
Exhibit 55 – Mariposa Port of Entry
US-Mexican Ports of Entry - Mariposa
The Guaymas-Tucson Logistics Capacity Study
identified the Mariposa POE as an infrastructure
bottleneck. It is one of the ten busiest ports on
the Mexican border. The redesigned POE, as
shown in Exhibit 55, will handle three times the
volume of traffic as it does today (by 2040).
The follow up Mariposa/I-19 Connector Route
Study to increasing the POE’s capacity has
identified that SR 189 will likely be at capacity
by the year 2020.
Source: Greater Nogales Santa Cruz County Port
Authority
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
43
APPENDIX - PAGE 42
Red Rock Classification Yard
Union Pacific has proposed to construct a new rail yard to meet the demand for increased freight rail
service in Arizona. The railroad’s current rail yards, located in Tucson and Phoenix, are at capacity with
no room for expansion. To meet growing demands, more rail infrastructure is needed.
Union Pacific performed an exhaustive search for a location in Central Arizona. The Red Rock Yard site
was chosen because it met the requirement of being between Phoenix and Tucson and situated along
UP’s Sunset Route, the main east-west rail corridor. The added rail capacity will enable UP to provide rail
service to new and existing businesses, spurring the creation of more jobs and more capital investments.
Based upon an economic employment and tax revenue impact analysis for the proposed Red Rock Yard,
the cumulative economic impact over 20 years is estimated at $25.6 billion. UP has submitted an
application with the Arizona State Land Department to purchase just over 900 acres for the yard. This
application initiates the public bid process for State Trust Lands. It is anticipated that the facility will be
open for use in 2011. The existing PFE Yard will remain as a satellite yard. The master planning for the
site also includes land areas for potential industrial leads. An overview of the land areas and the
proposed classification yard track layout is shown in Exhibit 56.
Exhibit 56 – Proposed Red Rock Classification Yard
Source: Arizona State Land Department
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
44
APPENDIX - PAGE 43
Coordination
The Inland Port should be knowledgeable and informed of internal and external initiatives yet focus on
actively influencing decision makers responsible for key, priority initiatives indentified by the organization
for their impact on freight and logistics in the region. With the identification of freight corridors and
assets comes the need to coordinate with City, County and State agencies regarding mobility and safety.
Inland Port’s Roles and Responsibilities
The Inland Port should focus its energies in three major areas, each representing the top priorities from a
local, regional and international perspective. At the local level, the Inland Port should review and
prioritize for PAG through a committee process all LRTP projects regarding potential freight benefits,
whether general or specific. At specific freight corridors, the Inland Port should be actively participating in
an Advisory Committee role and provide support to obtain funding for such projects. At the regional level,
the Inland Port should be actively involved with the Arizona DOT regarding the I-10 Bypass, specifically
as it relates to through-truck trips as well as corridor preservation and adjacent land uses. At the
international level, the Inland Port should coordinate with CANAMEX to support projects that improve
cross border exchanges as well as supporting the Mexican National Infrastructure Plan.
This active involvement can be achieved by leveraging PAG’s freight planner to establish a consistent
voice for the freight community in local transportation decisions and by attending public meetings,
participating in committees and writing letters of support for regional projects that benefit freight
movement and preserve corridors, like the I-10 Bypass. The purpose is to achieve an increase in state or
regional funding in freight-related infrastructure projects. Over time, the successful support of
infrastructure initiatives could be measured by tracking active committee participation in priority
initiatives and the number of significant corridor projects identified and successfully funded by local or
state agencies.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
45
APPENDIX - PAGE 44
How the Region Compares
Introduction
The goal of the Regional Freight Assessment is to perform a comparative assessment on three cities
throughout the United States to determine how Tucson competes or compares in relation to freight
activities and to use the comparison to gain an understanding of Tucson’s strengths, weaknesses,
opportunities and threats. Albuquerque was compared because of its similar size to Tucson and
relative proximity to the Mexican border. Interest in Kansas City SmartPort led to the selection of this
city for comparison. Finally, San Antonio was compared because it has a strong presence in inland
port activities and sits in close proximity to the Mexican border. The results of the analyses will
determine how Tucson can further define itself and determine how to expand its growth in freight
movement development.
Albuquerque
Albuquerque is located at the intersection of Interstate 25 and Interstate 40 providing transportation
connectivity that makes Albuquerque the economic hub of New Mexico. Albuquerque's International
Airport connects the region to the national and global market place by providing over 30 direct flights
and 160 daily departures. The Albuquerque metro area accounts for nearly half of all the economic
activity in New Mexico. The more than 840,000 people living in Albuquerque contribute to the
region’s high-tech economy. Major manufacturing companies such as Intel, GE, General Mills, and
Tempur-Pedic are located in the greater Albuquerque metro area. The University of New Mexico and
Sandia National Laboratories are located in Albuquerque giving it a strong presence in science and
technology activities. The largest employer in the region is Kirtland Air Force Base.
Kansas City
Kansas City is connected to three interstate highways including I-70, I-35 and I-29. This access
provides it with a connection to most metropolitan area markets as well as access to transcontinental
routes. Kansas City sits at the crossroads of railroads serving the East and West coasts. This
connection point is valuable in moving freight across the United States. Kansas City also has a well
defined north-south corridor which gives them the opportunity to play an important role in goods
movement between Canada, the United States and Mexico. Companies such as YRC Worldwide,
Garmin, Cerner Corporation and Sprint are headquartered in Kansas City.
San Antonio
San Antonio has a diverse economy with four primary focuses: financial services, health care,
national defense, and tourism. It is also an inland location for services promoting the transportation,
distribution, logistics facilities, and services that provide the community with a unique capacity to
serve international trade. San Antonio's central location between the East and West coasts of the
United States and its close proximity to Mexico makes it a strategic location for transshipment,
distribution, logistics and international trade processing activities. It is at the crossroads of several
major UP railroad lines and I-35, I-37 and I-10 interstate highways, which allow the city direct
connections to various North American shipping routes. Fifty percent of the total goods flowing
between the U.S. and Mexico travel through San Antonio before reaching their final destinations.
Quantitative Evaluation
A variety of criteria were used to identify the most suitable locations for freight-related development.
Key criteria are market coverage (population within a specified driving distance of the location),
transportation costs relative to major markets and rail connectivity. Labor availability and quality,
building lease rates and availability of developed infrastructure are also important. Other
considerations include tax rates and quality of life factors.
This comparative assessment uses major criteria readily defined and measured using published data
sources. A full list of criteria used in this study is provided in Exhibit 57. The data for each of the
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
46
APPENDIX - PAGE 45
criteria listed was gathered on each of the study cities and at the end of this comparative
assessment, a weighted analysis shows how each of the cities compared to one another. Companies
seeking to locate their distribution, manufacturing and warehousing facilities may utilize some or all
of these criteria when deciding their location choices. Other measures beyond the evaluation criteria
listed are included in the overall assessment in order to provide more in-depth information, but not
all of that data was used in the weighted evaluation component of this study, which ranks Tucson
against the three other cities.
Exhibit 57
Evaluation Criteria
Criteria
Definition
Data Source
Local Market Coverage
“Local Market” is defined as the population
falling within a one-way driving time of
four hours. Statistics for 2007 and 2012.
Based on U.S. Census
Bureau population data.
Next-Day Market
Coverage
“Next-Day Market” (or overnight market)
is as the population falling within a oneway driving time of eight hours. Statistics
for 2007 and 2012.
Based on U.S. Census
Bureau population data.
Truckload Shipment
Costs
Transportation costs to major regional
centers. Based on representative truckload
rates.
Truckloadrate.com
Labor Availability
Size of the labor force. Statistics for 2007
and 2012.
U.S. Census Bureau
Based on the number of Class I Railroads
directly serving each city, number of
Intermodal facilities in each city and access
to transcontinental or major intermodal
route.
Class I Railroads
Labor Costs
Mean wage per hour for warehouse
employees in 2007, and union profile.
U.S. Department of Labor
Lease Rates
Average lease rates for warehouse /
distribution facilities.
Published reports on
industrial property.
Tax Environment
Sales, property and other taxes.
Sperling.
Cost of Living
Local and regional cost of living index.
Sperling.
Source: TranSystems
Methodology
This comparison relies on data obtained from a variety of different sources – the U.S. Census Bureau,
state and local government agencies, and commercial data sources. Some of the data is based on the
Metropolitan Statistical Area (MSA). MSAs are geographic areas defined by the U.S. Office of
Management and Budget (OMB) for use by federal statistical agencies in collecting, tabulating, and
publishing federal statistics. An MSA consists of one or more counties and includes the counties
containing the core urban area, as well as any adjacent counties that have a high degree of social
and economic integration (as measured by commuting to work) with the urban core. The MSAs
studied and the counties that comprise them are shown in Exhibit 58.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
47
APPENDIX - PAGE 46
Exhibit 58
Counties in the Metropolitan Statistical Areas
Tucson MSA
Pima County
Albuquerque
MSA
Bernalillo County
Sandoval County
Torrance County
Valencia County
Kansas City MSA
Bates County MO
Caldwell County MO
Cass County MO
Clay County MO
Clinton County MO
Jackson County MO
Lafayette County MO
Platte County MO
Ray County MO
Franklin County KS
Johnson County KS
Leavenworth County KS
Linn County KS
Miami County KS
Wyandotte County KS
San Antonio
MSA
Atascosa County
Bandera County
Bexar County
Comal County
Guadalupe
County
Kendall County
Medina County
Wilson County
Source: Office of Management and Budget
Market Coverage
A key decision-making factor in identifying suitable locations for the movement of freight is the ability
of a city to be connected to a large customer base within two trucking service levels. The “Local
Market” is defined as the population within a one-way driving time of four hours and the “Next-Day”
or overnight market is defined as the population within a driving time of eight hours. The amount of
mileage covered within these two driving times varies and depends largely on driving speed which is
influenced by road type (i.e. interstate highway vs. local road), road conditions and traffic congestion.
The analysis presented in this section is generally based on current conditions. Exhibits 59-62 depict
both the local and next-day market coverage for each of the study cities. The red-line is
representative of the local market base, and the blue line is representative of the next-day market.
The defined local and next-day markets were combined with population statistics to determine the
size and growth of each location’s potential customer base. The results of the local market coverage
analysis are summarized in Exhibit 63. Of the four locations reviewed, San Antonio has the largest
population within one-day service, providing access to 6.7 million people. Tucson is second in the
number of people served within a four-hour drive of the city. Tucson will expand its market served
by over 17% compared to Kansas City’s projected 4.6% growth. Albuquerque and San Antonio will
see steady growth with 7.5% and 10.7% growth rates respectively from 2007 to 2012.
Exhibit 59. Tucson Local and Next-Day Markets
Exhibit 60. Albuquerque Local and Next-Day Markets
Source: TranSystems
Source: TranSystems
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
48
APPENDIX - PAGE 47
Exhibit 61. Kansas City Local and Next-Day Markets
Exhibit 62. San Antonio Local and Next-Day Markets
Source: TranSystems
Source: TranSystems
Exhibit 63
Local Market Coverage (within one-way driving time of 4 hours)
Tucson
Albuquerque
Kansas City
San Antonio
Population 2007
5,518,405
1,600,888
5,057,424
6,707,034
Population 2012
6,466,906
1,721,593
5,291,057
7,426,738
Population Change
948,501
120,705
233,633
719,704
Population Growth
17.2%
7.5%
4.6%
10.7%
Source: TranSystems and U.S. Census Bureau
The results of the next-day market coverage assessment are summarized in Exhibit 64. Of the five
locations reviewed, San Antonio has the largest current next-day market with an estimated
population of 23.0 million people. This is due to its close proximity to major metropolitan areas such
as Houston, Dallas and Austin. Tucson is projected to have the largest next-day market growth in the
future which will provide the city with a larger market than Albuquerque in year 2012. Like local
market coverage, Tucson has a far greater forecasted growth rate than any of the other cities
studied. This is likely due to the overall robust population growth expected in the southwest region of
the United States. It is important to note that the population statistics presented in Exhibits 63 and
64 do not include populations in Mexico. The growing Mexican population will provide an even
greater market opportunity for Tucson.
Exhibit 64
Next-Day Market Coverage (within one-way driving time of 8 hours)
Tucson
Albuquerque
Kansas City
San Antonio
Population 2007
7,997,774
8,052,397
19,982,721
23,001,042
Population 2012
9,205,484
8,639,434
20,829,809
25,377,697
Population Change
1,207,710
587,037
847,088
2,376,655
Population Growth
15.1%
7.3%
4.2%
10.3%
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
49
APPENDIX - PAGE 48
Transportation costs are one of the most critical aspects of determining where to locate freightintensive businesses. Estimated transport costs to major regional destinations are shown in Exhibit
65. The rates represent full truckload shipments from one destination to another and reflect current
market conditions such as equipment availability, cargo flow balances and backhaul options. The
destinations were chosen based on location to the various markets studied. It should be noted that
shipping rates could be affected by volume of business, origin-destination requirements and unique
service needs.
Albuquerque and Kansas City have the best overall transportation cost profiles. Kansas City’s low
costs are likely due to its central location within the United States and connectivity to major markets
enhanced by its proximity to major interstate routes including I-70, a major east-west route, and I35, which spans from Canada to Mexico. Distance plays an integral role in determining shipping
costs. Distances to the various markets are shown in Exhibit 66. Not surprisingly, Kansas City has the
lowest overall travel distances to the various markets which directly correlates to its low shipping
costs. Albuquerque and San Antonio are equally located away from the various markets studied. One
reason for Tucson’s high shipping costs is the imbalance of inbound and outbound goods shipments.
The large inbound vs. low outbound shipments drive up shipping costs to the various markets. This
can present a great opportunity for growth if the region can develop new initiatives to capture more
outbound shipments.
Exhibit 65
Representative Truckload Rates to Major Markets
Tucson
Albuquerque
Kansas City
San Antonio
Atlanta, GA
$2,947
$2081
$1579
$1827
Chicago, IL
$3233
$2014
$958
$2088
Dallas, TX
$1718
$999
$1191
$591
Denver, CO
$1801
$829
$1696
$1886
Houston, TX
$1982
$1436
$1774
$528
Memphis, TN
$2360
$1785
$967
$1277
Los Angeles, CA
$916
$1173
$2782
$2354
New York, NY
$4748
$4049
$2881
$3545
New Orleans, LA
$2808
$2736
$1857
$883
Phoenix, AZ
$480
$792
$2775
$2070
St. Louis, MO
$2703
$1551
$570
$1613
Seattle, WA
$3513
$2506
$3916
$4245
Tulsa, OK
$2003
$1052
$613
$1220
$31,212
$23,003
$23,559
$24,127
-26%
-25%
-23%
Total:
Difference:
Source: TranSystems and Truckloadrate.com
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
50
APPENDIX - PAGE 49
Exhibit 66
Highway Distances (Miles)
Tucson
Albuquerque
Kansas City
San Antonio
Atlanta, GA
1733
1397
802
998
Chicago, IL
1837
1343
529
1250
Dallas, TX
960
662
551
284
Denver, CO
938
443
596
958
Houston, TX
1071
903
799
212
Memphis, TN
1413
1009
522
734
Los Angeles, CA
487
787
1618
1361
New Orleans, LA
1411
1179
915
548
New York, NY
2526
2035
1231
1846
Phoenix, AZ
117
466
1250
990
St. Louis, MO
1536
1041
250
911
Seattle, WA
1619
1457
1892
2822
Tulsa, OK
1144
650
245
578
Total:
16792
13372
11200
13492
-20%
-33%
-20%
Difference:
Source: TranSystems and Truckloadrate.com
Tucson is directly served by Union Pacific which includes UP’s intermodal service between Long
Beach, CA and El Paso, TX. The Port of Tucson provides intermodal service for the region. Union
Pacific currently has a classification yard in downtown Tucson, the Pacific Fruit Express (PFE) yard.
Plans are now being developed to create a larger and more efficient yard near Red Rock, half-way
between Tucson and Phoenix.
Kansas City has a strong intermodal infrastructure that makes it a leading cargo center with four
Class I Railroads maintaining facilities in the metro area. Those facilities include single intermodal
facilities operated by BNSF, KCS and NS and two facilities operated by UP as shown in Exhibit 68.
KCS has recently relocated its facility to the former Richards-Gebaur Memorial Airport site and BNSF
will relocate its facility to a new logistics park south of the Kansas City metropolitan area. Of the cities
studied, Kansas City has the most connected rail network with direct service by BNSF, KCS, NS and
UP.
San Antonio is directly served by the Union Pacific railroad. BNSF has trackage rights over the UP line
through San Antonio to Eagle Pass on the border with Mexico. UP is currently constructing a new
intermodal facility, 13 miles from downtown San Antonio, to replace two smaller existing terminals.
Albuquerque currently has one intermodal facility located northwest of Albuquerque International
Airport. It is operated by BNSF, the only Class I railroad serving the city. The BNSF offers a northsouth line that connects in Albuquerque allowing for direct connection to Mexico through El Paso.
There is also a BNSF east-west line which connects about 40 miles south of Albuquerque.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
51
APPENDIX - PAGE 50
Exhibit 67: Rail Connectivity of Class I Railroads
Source: TranSystems
Exhibit 68
Intermodal Terminals by MSA
Tucson
Albuquerque
Kansas City
San Antonio
BNSF
0
1
1
0
CSX
0
0
0
0
KCS
0
0
1
0
NS
0
0
1
0
UP
1
0
2
1
Source: Class I Railroad Web sites
Labor Force
Availability of skilled and unskilled labor is considered one of the most important factors in
manufacturing and logistics development. Based on U.S. Census Bureau data, an analysis of labor
availability is presented in Exhibit 69. The Kansas City MSA has the largest available workforce,
topping one million workers with San Antonio expected to top one million workers by 2012. Tucson’s
civilian labor force currently exceeds Albuquerque’s. Though it is projected that Tucson will have a
smaller labor force growth than Albuquerque, they will still have a larger civilian labor force in 2012.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
52
APPENDIX - PAGE 51
Additional information on unemployment is presented in Exhibit 70 in support of the labor availability
assessment.
Exhibit 69
Labor Force in 2007 and 2012
Tucson
Albuquerque
Kansas City
San Antonio
Labor Force 2007
432,400
407,150
1,032,745
908,811
Labor Force 2012
478,830
459,786
1,104,476
1,007,260
Labor Force Change
46,430
52,636
71,731
98,449
Labor Force Growth
10.7%
12.9%
6.9%
10.8%
Exhibit 70
Unemployment as of August 2008
Tucson
Albuquerque
Kansas City
San Antonio
Persons Unemployed
24,900
19,900
65,400
47,300
Unemployment Rate
5.4%
4.8%
6.3%
5.0%
Source: Bureau of Labor Statistics
Labor Cost
Labor cost is the second largest cost component after transport costs in attracting freight-intensive
businesses to a city. Exhibit 71 shows the number of warehouse employees by location and the mean
hourly wage. Tucson has a greater number of warehouse employees than Albuquerque, a city of
comparable size. Its wages are very competitive with both Albuquerque and San Antonio.
Arizona, Kansas and Texas are all right to work states as summarized in Table 11. Research has
indicated that states with Right-to-work laws have higher economic growth and greater job creation
than do states with no laws in place. Therefore, whether or not a state is governed by these statutes
might indicate its ability to draw new businesses to its cities; especially those in the manufacturing,
distribution and logistics markets.
Exhibit 71
Labor Cost of Warehouse Employees as of 2007
Tucson
Albuquerque
Kansas City
San Antonio
Warehouse Employees
6,240
5,950
23,770
15,580
Mean Wage per Hour
$11.25
$10.79
$13.39
$11.04
Annual Wage
$23,396
$22,448
$27,866
$22,964
-$948.00
$4,470.00
-$432.00
Difference
Source: Bureau of Labor Statistics and TranSystems
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
53
APPENDIX - PAGE 52
Exhibit 72
2007 Union Profile
Right to Work State
Share of Workforce in Union
Private Sector Workforce in
Union
Public Sector Workforce in Union
Tucson
Albuquerque
Kansas City
San Antonio
Yes
No
No/Yes*
Yes
7.0%
9.6%
8.4%
5.1%
4.0%
5.1%
6.7%
2.6%
18.1%
24.5%
21.1%
18.4%
Source: www.unionstats.com
*Kansas City MSA falls in Missouri and Kansas: Missouri is NOT a RTWS and Kansas is a RTWS
Lease Rates
Another cost element that is reviewed by companies seeking freight-related space is the lease rate
for industrial property, which generally falls into the following property types:
x
x
Warehouse / Distribution and Manufacturing – these buildings are typically one-story and
have low internal specifications with high ceiling clearance, heavy power, and various other
building amenities including suitable storage and manufacturing activities.
Flex / Service – higher end properties commonly distinguished from warehouse/distribution
and manufacturing facilities by high build-out of office space (typically 50% or more). Tech
space and multi-stories are also common features. They are typically used for more
specialized activities, for example, technical sectors.
A location’s lease rates will be driven by factors that include supply and demand of properties, supply
and demand of land, land costs, construction costs, transportation access (road and rail), age and
condition of the property, and building characteristics (ceiling height, etc.). The rate paid by a
company will also reflect building location and characteristics, and specific customization needs.
Representative lease rates for Tucson and the three other locations are shown in Exhibit 73. Kansas
City offers the most competitive lease rates for warehouse/distribution buildings. San Antonio is
slightly higher than Kansas City. The high lease rates for Tucson possibly reflect the fact that existing
space continues to be leased and new construction remains at a lower level. The lower lease rates in
the other cities reflect the availability of lower cost land and local building supply and demand
factors.
Exhibit 73: Average Lease Rates
Source: CBRE Market Reports for each MSA, Third Quarter reports
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
54
APPENDIX - PAGE 53
Cost of Living
A cost of living comparison is provided in Exhibit 74. Overall, Tucson has the second highest cost of
living among the study cities spurred mostly by relatively high healthcare, food, transportation and
utility costs. Even though it is second highest it still falls below the US Index.
Tucson’s low median household income in comparison to the other study cities might contribute to its
lower than US average home ownership rate. All of the study cities fall below the US average home
ownership rate as reflected in Exhibit 75.
Exhibit 74
Cost of Living as of 2007
Tucson
Albuquerque
Kansas City
San Antonio
US Index
Overall Cost of Living
Index
95
96
80
75
Food (30%)
105
108
103
87
100
Housing (30%)
82
85
43
47
100
Utilities (6%)
105
97
94
82
100
Transportation (10%)
105
101
104
90
100
Health (7%)
111
107
98
87
100
Miscellaneous (32%)
96
97
102
100
100
100
Source: Sperling
Exhibit 75
Home Ownership and Median Household Income as of 2007
Tucson
Albuquerque
Kansas City
Owned
50.49%
56.10%
52.6%
54.8%
64.1%
Rented
42.33%
36.23%
38.7%
38.7%
21.5%
Vacant
7.87%
7.62%
9.0%
6.4%
14.5%
$34,335
$44,404
$42,331
$42,945
$44,684
Median Household Income
San Antonio
U.S. Average
Source: Sperling
Tax Environment
Tax rates by location are shown in Exhibit 76. Typically state and local tax are one of the top five site
selection factors in determining location decisions. Various types of state and local taxes can have
differing impacts on projects, but each can play a part in attracting a business to a certain
metropolitan area. Therefore, when performing a specific inventory of locations where a freightrelated business might locate, financial impacts with a more detailed approach should be taken.
However, that approach is too refined and narrow for this overview, so only state level taxes were
considered.
Albuquerque has the lowest sales tax rate while San Antonio has the highest. Tucson’s sales tax rate
is slightly lower than San Antonio. Tucson has a very competitive property tax rate comparing to San
Antonio and Kansas City while Albuquerque has the lowest property tax rate among the study cities.
Texas does not have state income tax and the state of Arizona has the second lowest of all the states
in which the comparative cities reside.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
55
APPENDIX - PAGE 54
Exhibit 76
Tax Environment as of 2007
Albuquerque
6.75%
Kansas City
Sales Tax %
Tucson
7.6%
San Antonio
7.35%
7.8%
Property Tax*
$10.09
$8.82
$12.91
$20.66
Income %
3.90%
7.10%
7.00%
0%
Source: Sperling
*Per $1,000 of property value as reported by Principal City
Ranking of Locations
A weighted scoring system was used to rank Tucson and the other three locations. This approach
assigns greater importance to the major evaluation criteria (market coverage, transportation costs,
rail facilities and labor availability/costs) and lower importance to the others. The weights used in this
analysis are shown in Exhibit 77. They are broad based given the macro nature of the evaluation in
this study and they are derived from the project team’s experience in the logistics industry and past
interviews conducted with shippers. In practice, each shipper will create its own weighting system
based on individual requirements. Furthermore, a shipper may only focus on the major criteria during
the first phase of site selection; once it has determined a short list of candidates it will start
evaluating the minor criteria, such as tax environment and quality of life factors, in more detail.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
56
APPENDIX - PAGE 55
Exhibit 77: Weighting of Evaluation Criteria
Criteria
Sub-Criteria
SubCategory
Weight
Criteria Weight
Market Coverage
25%
Local Market Coverage Population 2007
15.00%
Local Market Coverage Population 2012
35.00%
Percent Local Market Coverage Growth 2007-2012
5.00%
Next-Day Market Coverage Population 2007
15.00%
Next-Day Market Coverage Population 2012
Percent Next-Day Market Coverage Growth 20072012
35.00%
5.00%
25%
15%
Number of Class I Railroads
40.00%
Number of Intermodal Facilities
Access to Transcontinental or Major
Intermodal Route
40.00%
20.00%
Labor Availability
12%
Civilian Labor Force 2007
30.00%
Civilian Labor Force 2012
Percent Civilian Labor Force Growth 20072012
Labor Costs
50.00%
20.00%
12%
Warehouse Employees - Mean Wage per Hour
80.00%
Right to Work State (Y/N)
Percent of population represented by Unions
(2007)
10.00%
10.00%
Lease Rates
6%
Tax Environment
3%
Cost of Living
2%
Source: TranSystems
A numeric quintile distribution was developed for each criteria and sub-category, and each location
was assigned to a quintile. For example, Table 16 shows the quintile distribution for transportation
costs.
Exhibit 78: Example of Quintile Distribution for Transportation Costs Criteria
Quintile
4
3
2
1
Quintile
Low
$23,003
$25,055
$27,107
$29,159
Quintile
High
$25,055
$27,107
$29,159
$31,212
Tucson
Albuquerque
4
Kansas
City
4
San
Antonio
4
1
Source: TranSystems
Tucson
Regional
Inland
Port
Documentation
Tucson
Regional
Inland
Port
Strategic
Implementation Plan
Page
57
APPENDIX - PAGE 56
An evaluation of Tucson under the location selection criteria used when cities compete for warehouse
and distribution investments was performed. As described above, a weighted scoring system was
used to rank Tucson along with the other four locations. The results of the ranking analysis are
presented in Exhibit 79. The ranking analysis evaluated Tucson using the criteria described
previously. As part of the ranking analysis a weighted scoring is used to rank Tucson again the three
other locations.
Exhibit 79: Results of Ranking Analysis
Source: TranSystems
Conclusions to Comparative Evaluation
The comparative assessment comparing these four cities reveals that Tucson has strengths in several
areas, including warehouse employee wages and tax structure. Companies seeking to locate their
manufacturing, distribution or warehouse facilities will find that those attributes make the region very
attractive. The areas where Tucson falls below the other three cities are in truckload shipment costs
and industrial space rent.
As indicated in the freight flow analysis and confirmed in this assessment, the imbalance in inbound
and outbound shipments is a threat to the region’s growth potential. However, this can also present a
great opportunity for growth if the region can capture more outbound shipments. Wages and tax
environment are two measures that should be promoted when attracting new business or promoting
expansion of an existing business that may increase outbound shipments. Additionally, when more
businesses locate in the region’s industrial space, rents should decrease because more competition
will be introduced into the market.
Qualitative Evaluation
Highways and Congestion
Highway accessibility is also an important factor when determining whether or not a city has the
capability of handling freight. Being well linked to other major metropolitan areas determines how
efficiently freight can be transported between markets. Furthermore, highway conditions including
levels of congestion, access to interstate highway interchanges and access to ports can all play a part
in the determination of how suitable a city can be at handling freight. Tucson and the three other
locations benchmarked in this study are located on major interstate highway systems. In order to
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
58
APPENDIX - PAGE 57
assess highway traffic volumes, issues that may impact freight movement information on traffic
volumes and urban mobility was evaluated.
Traffic flowband maps are provided in Exhibits 80-83 for Tucson and the three comparative cites. The
maps illustrate heavier traffic flows in the major urban centers and relatively lighter traffic flows
outside the major urban centers. The colors on the maps below illustrate average daily traffic
volumes on each of the major roads. Blue represents the lowest average daily volumes while red
represents the largest amount of average daily traffic volumes.
Exhibit 80. Tucson Highway Flowband Map
Source: TranSystems and ESRI Data Maps 2007
Exhibit 81. Albuquerque Highway Flowband Map
Tucson
Regional
Inland
Port
Documentation
Tucson
Regional
Inland
Port
Strategic
Implementation Plan
Page
59
APPENDIX - PAGE 58
Exhibit 82. Kansas City Highway Flowband Map
Exhibit 83. San Antonio Highway Flowband Map
The Texas Transportation Institute conducts an annual study of urban mobility that measures travel
times in major urban areas around the country. The latest report release was in 2007, containing
data for 2005 and historical data. Two measures of mobility conditions are used in this analysis – the
travel time index presented in Exhibit 84 and the annual hours of delay per traveler shown in Exhibit
85. San Antonio ranked the highest in this study in terms of deterioration of travel conditions
between 1995 and 2005. This reflects the strong growth of the city, which has placed stress on
highway infrastructure. Tucson was a bit better than San Antonio coming in fourteenth nationally in
worsening travel conditions. Albuquerque and Kansas City continue to enjoy low travel congestion
and the information below shows that they have experienced very low deterioration of travel
conditions between 1995 and 2005 as well.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
60
APPENDIX - PAGE 59
Exhibit 84
Travel Time Index*
1995
1.13
1.16
1.07
1.10
Tucson
Albuquerque
Kansas City
San Antonio
2004
1.22
1.16
1.08
1.23
2005
1.23
1.17
1.08
1.23
Points Change
1995-2005
0.10
0.01
0.01
0.13
National
Rank
14
62
62
8
Source: 2007 Urban Mobility Report and TranSystems
*Travel Time Index – The ratio of travel time in the peak period to the travel time at free-flow
conditions. A value of 1.35 indicates a 35 percent increase in travel time, which would adjust a 20minute free-flow trip upward to 27 minutes during peak conditions. Free-flow speeds (60 mph on
freeways and 35 mph on principal arterials) are used as the comparison threshold.
Exhibit 85
Annual Hours of Delay per Traveler
1995
23
30
54
19
Tucson
Albuquerque
Kansas City
San Antonio
2004
39
30
56
38
2005
42
33
54
39
Hours Change
1995-2005
19
3
0
20
National
Rank
7
50
68
6
Source: 2007 Urban Mobility Report and TranSystems
Air Service
Tucson and the three study cities do not have direct international cargo service; however the cities
are all served by FedEx UPS, DHL and other carriers. San Antonio and Kansas City are placed among
the Top 40 North American Shippers even without direct international service as illustrated in Exhibit
86. This is not surprising considering the size of the cities analyzed; both cities have the largest
populations to serve. Tucson has the opportunity to focus on expanding its air cargo traffic in order
to become more competitive with Albuquerque.
Exhibit 86
Air Cargo Traffic as of 2007
Metric Tons
North American Rank
Tucson
36,508
75
Albuquerque
69,218
59
Kansas City
127,620
37
San Antonio
127,808
36
Source: Airports Council International, airport reports
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
61
APPENDIX - PAGE 60
Summary
Using the comparative assessment, input received during the planning process, and other research
into Tucson’s logistics and freight-based industry an analysis of the region’s strengths, weaknesses,
opportunities and threats (SWOT) was completed. The intent of this SWOT analysis is to focus on
Tucson’s strengths and opportunities rather than dwelling on the weaknesses and threats. Making the
region stronger by capturing opportunities that are available will boost the region’s overall
competitiveness and create a stronger market for logistics and freight-based industry.
Strengths
Tucson’s proximity and relationship with Mexico and Phoenix are major advantages to promoting the
strength of its regional economy. Tucson is in the location to position itself as a center for domestic
and international companies from which to manage operations in Mexico. Tucson’s quality of life and
livability factors are also positive defining characteristics of its regional economy. Its cultural diversity
includes a mix of Native American, Spanish, Mexican and Anglo influences. Another strength is its
existing logistics and freight-based industry. There are over 150 logistics-based businesses serving
the needs of freight movement in the region, and there are over 72,000 employees in the
manufacturing, warehouse and transportation sectors. Furthermore, it has attractive average annual
warehouse employee wages.
Weaknesses
Two areas where Tucson can improve its economic future include high transportation costs and high
building lease rates. Tucson’s high transportation costs are the result of the imbalance in the
inbound/outbound shipments as discussed in several sections of this study. The building least rates
reflect a fairly low vacancy rate. As more industrial space square footage is developed, the lease
rates will be driven down.
Opportunities
Like its strengths, one of Tucson’s leading opportunities is its prime location on major trade corridors
including its rail and road connectivity to Mexico as well as its proximity to major markets. This gives
Tucson a distinct opportunity to grow its international and domestic trade capacities. Balancing out
the disproportionate inbound/outbound traffic is also a way that Tucson could capitalize on its prime
location on major trade corridors. Another leading opportunity in Tucson is the area’s strong
academic and research presence. Focused strategy incorporating emerging areas of research into
Tucson’s inland port strategies opens up new possibilities for distribution.
Threats
The region’s leading threat includes the numerous initiatives focused on similar efforts but not
leveraged in a coordinated manner. Failure to commit to a focused vision will inhibit inland port
development efforts. Overall, Tucson’s location provides a quality of life desired by many but that
desire by people to locate here also puts pressure on vital resources, like water availability, that could
compromise this valuable asset.
Tucson Regional
Tucson
RegionalInland
InlandPort
PortDocumentation
Page
62
APPENDIX - PAGE 61