Ritchie Bros. and Caterpillar Inc. Announce Strategic Alliance

Ritchie Bros. to Become Preferred Provider to Caterpillar and Participating Dealers for Caterpillar Equipment Upon Closing of Ritchie Bros.’ Acquisition of IronPlanetStrategic Relationship to Accelerate Caterpillar’s IoT Connectivity Offerings for Used Equipment Owners
VANCOUVER and PEORIA, IL, Aug. 29, 2016 /CNW/ – Ritchie Bros., the world’s largest industrial auctioneer and a leading equipment distributor (NYSE & TSX: RBA), and Caterpillar Inc. (NYSE: CAT) today announced that they have entered into a strategic alliance agreement. The strategic alliance is expected to deliver significant benefits to both companies, Caterpillar’s independent dealers and their respective customers, continuing an accelerated delivery of Caterpillar’s Internet of Things (IoT) connectivity offerings to improve customer fleet utilization.
Under the terms of the agreement, Ritchie Bros. will become Caterpillar’s preferred global partner for live onsite and online auctions with respect to used Caterpillar equipment, and will complement Caterpillar’s existing dealer channels. Ritchie Bros. will provide Caterpillar and its dealers with access to proprietary auction platforms, software and other value-added services, thereby enhancing the exchange of information and services between customers, dealers and suppliers. The strategic alliance is also expected to strengthen Ritchie Bros.’ relationship with Caterpillar’s independent dealers around the world by providing them enhanced and continued access to a global auction marketplace to sell their used equipment.
Ritchie Bros. also announced today that it has reached an agreement to acquire IronPlanet®, a leading online marketplace for used heavy equipment and other durable asset sales, of which Caterpillar and its dealers own a minority position. The combined company, with its trusted brands, will deliver a multi-channel marketplace that will provide a full range of equipment asset management and disposition solutions. The new strategic alliance between Ritchie Bros. and Caterpillar replaces and expands on existing agreements in place between Caterpillar, its dealers and IronPlanet. The new strategic alliance will become effective when Ritchie Bros. completes its acquisition of IronPlanet, which is subject to regulatory clearances and the satisfaction of other customary closing conditions.
“Ritchie Bros. is proud to enter into this historic alliance, which will strengthen our relationship with Caterpillar, its dealers and end users, as well as help expand our global reach and footprint,” said Ravi Saligram, Chief Executive Officer of Ritchie Bros. “Our marketing capabilities, unrivaled suite of technology and powerful multi-channel transactional platforms will add tremendous value and make us a trusted strategic partner to the Caterpillar family.”
“A key element of our digital strategy is connecting more products in our customers’ fleets, allowing us to help improve their productivity, increase safety and drive sustainability. This alliance will ensure that more used equipment buyers have access to our best-in-class products, digital offerings and world class customer support through the Cat dealer network,” said Rob Charter, group president with responsibility for Caterpillar’s Customer and Dealer Support. “Ritchie Bros. and Caterpillar are beginning an exciting new chapter in our relationship to better serve our global customers.”
The strategic alliance between Ritchie Bros. and Caterpillar will have an initial five-year term. After completing the acquisition of IronPlanet, Ritchie Bros. will operate live onsite auctions at participating Caterpillar dealers’ locations under the Cat Auction Services brand and also encompass Ritchie Bros.’ other onsite and online brands.
About Ritchie Bros.:
Established in 1958, Ritchie Bros. (NYSE and TSX: RBA) is the world’s largest industrial auctioneer, and one of the world’s largest sellers of used equipment for the construction, transportation, agriculture, energy, mining, forestry and other industries. Ritchie Bros.TM asset management and disposition solutions include live unreserved public auctions with on-site and online bidding; EquipmentOneTM, an online auction marketplace; Mascus, a global online equipment listing service; private negotiated sales through Ritchie Bros. Private Treaty; and a range of ancillary services, including financing and leasing through Ritchie Bros. Financial Services. Ritchie Bros. has operations in 19 countries, including 45 auction sites worldwide. Learn more at rbauction.com, EquipmentOne.com, mascus.com, rbauction.com/privatetreaty and rbauction.com/financing.
About Caterpillar:
For 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2015 sales and revenues of $47.011 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three product segments – Construction Industries, Resource Industries and Energy & Transportation – and also provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect with us on social media, visit caterpillar.com/social-media.
About IronPlanet:
IronPlanet is a leading online marketplace for selling and buying used equipment and other durable assets and an innovative participant in the multi-billion dollar used equipment market. Founded in 1999 to transform the global used equipment market, IronPlanet has built a database of more than 1.5 million registered users worldwide. IronPlanet connects buyers and sellers of used equipment with its exclusive IronClad Assurance® equipment condition certification and family of brands, including IronPlanet®, GovPlanet®, TruckPlanet®, Cat Auction Services, Kruse Energy & Equipment AuctioneersSM, allEquip® and Asset Appraisal ServicesSM. IronPlanet is backed by Accel Partners, Kleiner Perkins Caufield & Byers, Caterpillar and Volvo. For more information, visit www.ironplanet.com.

Wells Fargo Reports The Ups and Downs of Home Sales

 

Wells_Fargo_Securities_logoNew Homes Sales Jump 12.4 Percent in July

New home sales took off in July, as strong job growth, low mortgage rates and increased construction brought buyers back in droves. The South accounted for most of the gain, with sales surging 18.1 percent.

Momentum Is Shifting Back Toward New Homes

  • Momentum is finally shifting back toward the new home market, particularly in the South, which has seen job growth surge this past year. Overall sales rose 12.4 percent in July, following a 1.7 percent gain in June. Sales through the first seven months of 2016 are up 12.4 percent from one year ago.
  • Home sales also rose solidly in the Northeast, surging 40 percent in July, and inched 1.2 percent higher in the Midwest.

Home Sales Heat Up in the South

  • While the Northeast posted the largest percentage gain in July, that region accounts for the smallest share of new home sales. The South accounts for well over half of all new home sales and has seen sales and new construction take off this year as job growth and in-migration have strengthened.
  • Home price appreciation moderated in July, likely reflecting the shift in sales to lower priced markets in the South.

New Homes Sales Jump 12.4 Percent in July New Homes Sales Jump 12.4 Percent in July New Homes Sales Jump 12.4 Percent in July New Homes Sales Jump 12.4 Percent in July

Existing Home Sales Stumble in July

Existing home sales fell 3.2 percent in July, following four consecutive monthly gains. Home sales continue to have trouble accelerating, reflecting a lack of inventories, appraisal issues and affordability challenges.

Tight Inventories Restrain Existing Home Sales

Existing home sales fell 3.2 percent in July to a 5.39-million unit annual pace (Top Chart), with sales of single-family homes falling 2.0 percent and sales on condominiums and co-ops tumbling 12.3 percent. Both declines marked the first drops since February.

While sales came in below expectations, the lower figures appear to have more to do with a lack of inventories than they do a lack of demand. Overall sales, which reflect closings, are down 1.6 percent from their year ago level. The number of homes available for sale, however, is down a whopping 5.8 percent from its already historically low level. As a result, homes are selling quickly. The average home stayed on the market for just 36 days and 47 percent of homes sold in July were on the market for less than one month.

On a regional basis (Middle Chart), the Northeast saw the sharpest drop, with sales plunging 13.2 percent. Sales fell 5.2 percent in the Midwest and declined 1.8 percent in the South. Sales rose in the West, however, climbing 2.5 percent. The West is home to many of the nation’s hottest housing markets, including Denver, the San Francisco Bay area and Seattle, all of which saw listings remain on the market for a median of just 32 days.

The big drop in the Northeast is likely due to a slowdown in international buyers in New York City. All-cash sales accounted for 21 percent of transactions in July, down from 22 percent in June and 23 percent one year ago. Cash sales, which are primarily investors and international buyers, accounted for the smallest share of overall sales since November 2009. Distressed sales also continued to decline. Foreclosures and short sales accounted for just 5 percent of sales in July, down from 6 percent in June and 7 percent one year ago.

While the overhang of distressed properties has largely cleared the market, the housing crash still casts a large shadow over the housing market, making it difficult for the housing market to rev completely back up. Mortgage underwriting remains stricter than it has in the past and appraisals are often too cautious as well. New home construction has also been slow to come back online, worsening supply constraints.

Moreover, the reluctance of homeowners to put their homes on the market has meant that home prices have risen much faster than income growth, which has reduced housing affordability, particularly in rapidly growing parts of the country such as the West Coast and parts of the Southeast (Bottom Chart). The run-up in home prices has also made it difficult for appraisers to evaluate properties. With many homes selling at or above asking prices, homes are often not appraising at high enough values to qualify for a mortgage, which has led to delays in closings.

Existing Home Sales Post Fourth Straight Monthly Gain Existing Home Sales Post Fourth Straight Monthly Gain Existing Home Sales Post Fourth Straight Monthly Gain

TRIP Reports: Extending the Mon-Fayette Expressway and Busway East (E/BEE): Reducing Traffic Congestion, Enhancing Economic Vitality, Improving Public Safety, and Accommodating Desirable Development in the Mon Valley in the Pittsburgh Area

TRIP Reports: Extending the Mon-Fayette Expressway and Busway East (E/BEE): Reducing Traffic Congestion, Enhancing Economic Vitality, Improving Public Safety, and Accommodating Desirable Development in the Mon Valley in the Pittsburgh Area

Executive Summary

Improving the efficiency of a region’s transportation system by expanding the capacity of highways, transit and intermodal facilities has been found to be an effective way to enhance economic development opportunities and improve quality of life.

  • This report looks at the impact of the proposed 13-mile extension of the Mon- Fayette Expressway from PA-Route 51 to I-376 in Monroeville as proposed by the Pennsylvania Turnpike Commission.
  • This report also looks at the benefit of the extension of the Martin Luther King Jr. Busway East by 2.8 miles from its current terminus in Swissvale to the extended Expressway in East Pittsburgh as a separate project.
  • The proposed busway extension would include a park-and-ride lot at the Busway’s junction with the Expressway. The proposed busway extension would be a separate project of the Port Authority of Allegheny County (PAT). PAT is currently undertaking a feasibility study of the busway extension.

The key findings of the report include:

The proposed extension of the Mon-Fayette Expressway and the extension of Busway East (E/BEE) will play a critical role in enhancing economic development opportunities in the Mon Valley by improving transportation access in the region.

  • The E/BEE would extend the Mon-Fayette Expressway 13 miles from PA-Route 51 to I-376 in Monroeville and extend the Martin Luther King Jr., Busway East 2.8 miles from its current terminus in Swissvale to the extended Expressway in East Pittsburgh.
  • The Expressway proposal replaces an earlier proposal that included the Expressway expansion to Monroeville and a second additional Expressway spur heading west into central Pittsburgh.
  • The Federal Highway Administration is currently conducting a re-evaluation of the new Expressway proposal.
  • The expanded portion of the Expressway would be a tolled highway, administered by the Pennsylvania Turnpike Commission, which also administers the existing portion of the Mon-Valley Expressway.
  • The estimated cost of the Expressway is approximately $1.7 billion.
  • The estimated cost of the Busway East is approximately $100 million.

The benefits of the Expressway completion include:

  • The improvement of access and mobility in the economically distressed Mon Valley area, including industrial brownfield sites in Duquesne, McKeesport and Keystone Commons in East Pittsburgh. This would result in increased economic development opportunities along the corridor.

The completion of the entire Mon Valley Expressway system from I-68 in West Virginia to I-376 in Monroeville

The benefits of the Busway East extension include:

  • The improvement of mobility between East Pittsburgh and Oakland
  • Improved transit access from the proposed Expressway project north of PA Route 51 as well as completed sections south of PA Route 51.
  • Significantly enhanced transit access for the Monroeville, East Pittsburgh and Duquesne areas and communities located along the Expressway and busway extension.
  • Some traffic congestion relief on the Parkway East.
  • Construction of the Mon-Fayette Expressway or construction of the combined Expressway and Busway (E/BEE) will significantly reduce travel time in key travel corridors in East Pittsburgh.
  • The following chart indicates one-way travel times between key destinations in East Pittsburgh using the current transportation system, estimated one-way travel times with completion of either the Expressway extension or the combined Expressway/Busway extension (E/BEE) and reductions of one-way travel times as a result of improved transportation in the region:
Travel time improvements with Mon-Fayette Expressway Extension (in minutes)
From/To Current With Extension Time Savings
Monroeville Convention Center / East Pittsburgh 20 7 13
East Pittsburgh / Duquesne 17 3 14
Duquesne / Monroeville Convention Center 30 10 20

 

Travel time improvements with E/BEE (in minutes)
From/To Current With Extension Time Savings
East Pittsburgh / Pittsburgh 30 20 10
Duquesne / Pittsburgh 30 20 10
  • The selection of travel destinations is based on access of major Mon Valley economic assets to Monroeville. The City of Duquesne is the location of City Center Industrial Park and Keystone Commons is located in East Pittsburgh. The travel distance from Duquesne to Monroeville on existing roads is nine miles; from East Pittsburgh to Monroeville is four miles; and from East Pittsburgh to Duquesne is six miles. Existing roads include multiple traffic lights and two lane roads over and around hilly terrain that can compromise travel safety, particularly in winter months.
  • Traffic congestion in the Pittsburgh urban area causes 45 million hours of delay annually — an average of 39 hours per commuter — at an annual cost of approximately $1 billion in the value of lost time and wasted fuel.

Completion of the Mon-Fayette Expressway and the extension of the Busway East (E/BEE) would stimulate the development of underutilized property in the Mon Valley region and significantly improve mobility and connectivity in the Mon Valley and surrounding areas, improving access to jobs for the area’s residents.

  • The Expressway would improve access for the 1,500 current manufacturing and related firms in the Mon Valley that employ approximately 22,000 people and help to retain and grow these companies.
  • The Expressway would provide direct access to 1,000 acres of brownfield redevelopment sites including Duquesne City Center and Keystone Commons.
  • The Expressway extension would serve as the crucial eastern leg of the Southern Beltway system.
  • The Expressway would promote just-in-time production and shipping. In a survey of Mon Valley firms, 71 percent of the respondents said they would use the Expressway.
  • The Expressway would increase employment by existing firms. Twenty-five percent of Mon Valley firms surveyed said they would hire additional employees if the Expressway was completed.
  • The Expressway would improve access for intermodal commerce at facilities such as the Norfolk Southern Pitcairn Intermodal Terminal.
  • The E/BEE would promote community redevelopment in Mon Valley communities including infill development and transit-oriented development.
  • Good highway access is critical for manufacturers or companies reliant on goods distribution. Of the $1.1 trillion of goods shipped annually from and to sites in Pennsylvania, 79 percent were transported by truck and 14 percent were shipped by multiple modes, including trucks.

The completion of the Mon-Fayette Expressway and the extension of the Busway East (E/BEE) would create numerous jobs during the estimated four-year construction phase as well as numerous long-term jobs created as a result of both projects.

  • Based on the most recent estimate of the employment impacts of highway and transit investment generated by the Council of Economic Advisors (CEA) with the Executive Office of the President, TRIP estimates that the construction of the Expressway and Busway Extension (E/BEE) would support approximately 5,850 jobs annually in the construction and related sectors over a four-year period.
  • The following chart provides employment estimates during the four-year construction period anticipated for completing the Expressway and Busway extensions.
Annual Jobs Created
Total Construction Cost (Over 4-Year Period)
Construction of Mon-Fayette Expressway Extension $1.7 Billion 5,525
Construction of Busway East Extension $100 Million 325
Construction of E/BEE $1.8 Billion 5,850
  • Based on the Transportation Research Board’s extensive analysis of the impact of improved transportation access on employment, TRIP estimates that the completion of the E/BEE would result in the creation of approximately 20,880 long-term jobs: including 12,960 long-term jobs along the E/BEE corridor and approximately 7,920 jobs outside of the E/BEE corridor.
  • The following chart provides estimates of long-term jobs created by the completion of the E/BEE:

The need for the Mon-Fayette Expressway was born of the historic and unprecedented economic challenges encountered by the Mon River corridor.

  • Fifty years ago, the Mon Valley suffered the shutdown of the US Steel Donora Works, the first integrated steel mill in the United States to close. In the mid- 1980s, the entire corridor saw the near-collapse of basic manufacturing.
  • While there has been significant economic progress in Pittsburgh and southwestern Pennsylvania, the ramifications of the economic losses in the 1960s and 1980s still reverberate in the Mon Valley.
  • The improved access provided by the E/BEE will be crucial to the redevelopment of Mon Valley communities and will attract and promote economic development in the region.

According to a 2012 national report, “Interactions Between Transportation Capacity, Economic Systems and Land Use,” prepared by the Strategic Highway Research Program for the Transportation Research Board, improved access as a result of highway and transit capacity expansions provides numerous regional economic benefits. Those benefits include higher employment rates, higher land value, additional tax revenue, increased intensity of economic activity, increased land prices, and additional construction as a result of the intensified use.

  • The report, reviewed 100 projects, costing a minimum of $10 million, which expanded transportation capacity either to relieve congestion or enhance access.
  • The projects analyzed in the report were completed no later than 2005 and included a wide variety of urban and rural projects, including the expansion or addition of major highways, beltways, connectors, bypasses, bridges, interchanges, industrial access roads, intermodal freight terminals and intermodal passenger terminals.
Long-Term Jobs Long-Term Jobs Total Long-Term
Construction of Mon-Fayette Expressway Extension Created in Corridor 12,240 Created Outside Corridor 7,480 Jobs Created 19,720
Construction of Busway East Extension 720 440 1,160
Construction of E/BEE 12,960 7,920 20,880
  • The expanded capacity provided by the projects resulted in improved access, which resulted in reduced travel-related costs, faster and more reliable travel, greater travel speeds, improved reliability, and increased travel volume.
  • The report found that improved transportation access benefits a region by: enhancing the desirability of an area for living, working or recreating, thus increasing its land value; increasing building construction in a region due to increased desirability for homes and businesses; increasing employment as a result of increased private and commercial land use; and, increasing tax revenue as a result of increased property taxes, increased employment and increased consumption, which increases sales tax collection.
  • The report found that benefits of a transportation capacity expansion unfolded over several years and that the extent of the benefits were impacted by other factors including: the presence of complementary infrastructure such as water, sewer and telecommunications; local land use policy; the local economic and business climate; and, whether the expanded capacity was integrated with other public investment and development efforts.
  • For every $1 million spent on urban highway or intermodal expansion, the report estimated that an average of 7.2 local, long-term jobs were created at nearby locations as a result of improved access. An additional 4.4 jobs were created outside the local area, including businesses that supplied local businesses or otherwise benefited from the increased regional economic activity.
  • The report found that highway and intermodal capacity projects in urban areas created a greater number of long-term jobs than in rural areas, largely due to the more robust economic environment and greater density in urban communities.

The efficiency of a region’s transportation system, particularly its highways, is critical to the state’s economy. Businesses are increasingly reliant on an efficient and reliable transportation system to move products and services. A key component in business efficiency and success is the level and ease of access to customers, markets, materials and workers.

  • Businesses have responded to improved communications and greater competition by moving from a push-style distribution system, which relies on low-cost movement of bulk commodities and large-scale warehousing, to a pull-style distribution system, which relies on smaller, more strategic and time-sensitive movement of goods.
  • Increasingly, companies are looking at the quality of a region’s transportation system when deciding where to re-locate or expand. Regions with congested or poorly maintained roads may see businesses relocate to areas with a smoother, more efficient and more modern transportation system.
  • Highway accessibility was ranked the number two site selection factor behind only the availability of skilled labor in a 2015 survey of corporate executives by Area Development Magazine.
  • The Federal Highway Administration estimates that each dollar spent on road, highway and bridge improvements results in an average benefit of $5.20 in the form of reduced vehicle maintenance costs, reduced delays, reduced fuel consumption, improved safety, reduced road and bridge maintenance costs and reduced emissions as a result of improved traffic flow.

 

ARTBA Reports: FHWA Proposal Breaks With 2012
Transportation Bill Directives

29d04b3d-4453-4557-a059-9cf73a6a6df3The American Road & Transportation Builders Association (ARTBA) challenged the Federal Highway Administration’s (FHWA) proposal to measure greenhouse gas emissions from new transportation projects.The proposal is part of larger performance measures required under the 2012 “Moving Ahead for Progress in the 21st Century” (MAP-21) surface transportation reauthorization law. In Aug. 19 comments to the agency, ARTBA charged the proposal “exceeds both the authority of the FHWA and the intent of MAP-21.”

ARTBA warned of this three years ago, when it urged the U.S. Department of Transportation (U.S. DOT) not to jeopardize the broad bipartisan congressional support for MAP-21 by including extraneous issues—such as climate change— in the law’s implementation. Specifically, a 2013 ARTBA task force cautioned:

“Focus on the goals enumerated in the law. The authors of MAP-21 had the opportunity to include a host of external goals such as livability, reduction of transportation-related greenhouse gas emissions, reduction of reliance on foreign oil, adaptation to the effects of climate change, public health, housing, land-use patterns and air quality in the planning and performance process….the U.S. Department of Transportation should focus on implementing the goals and standards as spelled out in MAP-21.”

In its latest comments, ARTBA noted that neither Congress nor the administration sought emission measurements in the MAP-21 performance management process, and that such proposals were not included in the “Fixing America’s Surface Transportation” (FAST) Act reauthorization law passed in December 2015.

ARTBA also raised a variety of concerns about the proposed measurement system. Specifically, it “does not define what exactly it will measure and how it will measure it,” ARTBA stated, and “[i]t is unfair to ask the regulated community to provide specific comments on such an abstract proposal.” Further, the association warned that the proposal could lead to a cumbersome regulatory process that undercuts progress from both MAP-21 and the FAST Act on expediting transportation project delivery and delay transportation improvements.

ARTBA concluded “it is hard to see this proposal as anything other than a maneuver to achieve a policy objective the administration failed to initiate during the MAP-21 and FAST Act deliberations.” The association has asked FHWA to withdraw its proposed measurement system.

Established in 1902 and headquartered in Washington, D.C., ARTBA is the “consensus voice” of the U.S. transportation design and construction industry before Congress, federal agencies, the White House, news media and the general public.

TRIP Report: DEFICIENT, CONGESTED ROADWAYS COST CALIFORNIA DRIVERS $53.6 BILLION ANNUALLY – AS MUCH AS $2,800 PER DRIVER. COSTS WILL RISE AND TRANSPORTATION WOES WILL WORSEN WITHOUT INCREASED FUNDING

CA_Statewide_TRIP_Infographic_August_2016Roads and bridges that are deficient, congested or lack desirable safety features cost California motorists a total of $53.6 billion statewide annually – more than $2,800 per driver in some urban areas – due to higher vehicle operating costs, traffic crashes and congestion-related delays. Increased investment in transportation improvements at the local, state and federal levels could relieve traffic congestion, improve road, bridge and transit conditions, boost safety, and support long-term economic growth in California, according to a new report released today by TRIP, a Washington, DC based national transportation organization.
The TRIP report, “California Transportation by the Numbers: Meeting the State’s Need for Safe, Smooth and Efficient Mobility,” finds that throughout California, 37 percent of major locally and state-maintained roads are in poor condition. One quarter of California’s bridges are structurally deficient or functionally obsolete. The state’s major urban roads are becoming increasingly congested, with drivers wasting significant amounts of time and fuel each year. And, more than 14,000 people were killed in crashes on California’s roads from 2010 to 2014.
CA 1
Driving on deficient roads costs California drivers in the form of extra vehicle operating costs (VOC) as a result of driving on roads in need of repair, lost time and fuel due to congestion-related delays, and the costs of traffic crashes in which roadway features likely were a contributing factor. The TRIP report calculates the cost to motorists of insufficient roads in the Los Angeles-Long Beach-Santa Ana, Sacramento, San Diego, San Francisco- Oakland and San Jose urban areas. A breakdown of the costs per motorist in each area along with a statewide total is below.
The TRIP report finds 37 percent of major roads are in poor condition, while 42 percent are in mediocre or fair condition and the remaining 21 percent are in good condition. Driving on deteriorated roads costs California drivers a total of $18.3 billion each year in extra vehicle operating costs, including accelerated vehicle depreciation, additional repair costs, and increased fuel consumption and tire wear.
“The TRIP report confirms what everyone in California knows: the transportation system in this state is in bad shape,” said Will Kempton, executive director of Transportation California. “It is past time for our elected officials in Sacramento to step up and deal with this problem.”
Traffic congestion in California is worsening, delaying personal and commercial travel. California drivers lose $28 billion annually in lost time and wasted fuel as a result of traffic congestion.
A total of 25 percent of California’s bridges show significant deterioration or do not meet modern design standards. Eight percent of California’s bridges are structurally deficient, with significant deterioration to the bridge deck, supports or other major components. An additional 17 percent of the state’s bridges are functionally obsolete, which means they no longer meet modern design standards, often because of narrow lanes, inadequate clearances or poor alignment.
Traffic crashes in California claimed the lives of 14,437 people between 2010 and 2014. California’s overall traffic fatality rate of 0.92 fatalities per 100 million vehicle miles of travel is lower than the national average of 1.08. The fatality rate on California’s rural non-Interstate roads was 2.72 fatalities per 100 million vehicle miles of travel in 2014, nearly four times higher than the 0.70 fatality rate on all other roads and highways in the state.
The efficiency and condition of California’s transportation system, particularly its highways, is critical to the health of the state’s economy. Annually, $2.8 trillion in goods are shipped to and from sites in California, mostly by truck. Sixty-eight percent of the goods shipped annually to and from sites in California are carried by trucks and another 19 percent are carried by courier services or multiple mode deliveries, which include trucking.
“These conditions are only going to get worse if greater funding is not made available at the state and local levels,” said Will Wilkins, TRIP’s executive director. “Without adequate investment, California’s transportation system will become increasingly deteriorated and congested, hampering economic growth and the quality of life of the state’s residents.”
Executive Summary
Eight years after the nation suffered a significant economic downturn, California’s economy continues to rebound. The rate of CA_TRIP_Infographics_August_2016-1economic growth in California, which will be greatly impacted by the reliability and condition of the state’s transportation system, continues to have a significant impact on quality of life in the Golden State.
An efficient, safe and well-maintained transportation system provides economic and social benefits by affording individuals access to employment, housing, healthcare, education, goods and services, recreation, entertainment, family, and social activities. It also provides businesses with access to suppliers, markets and employees, all critical to a business’ level of productivity and ability to expand. Reduced accessibility and mobility – as a result of traffic congestion, a lack of adequate capacity, or deteriorated roads, highways, bridges and transit facilities – diminishes a region’s quality of life by reducing economic productivity and limiting opportunities for economic, health or social transactions and activities.

With an economy based largely on agriculture, manufacturing, biotechnology, aerospace- defense, and tourism, the quality of California’s transportation system plays a vital role in the state’s economic growth and quality of life.

In this report, TRIP looks at the top transportation numbers in California as the state addresses its need to modernize and maintain its system of roads, highways, bridges and transit.

In December 2015 the president signed into law a long-term federal surface transportation program that includes modest funding increases and allows state and local governments to plan and finance projects with greater certainty through 2020. The Fixing America’s Surface Transportation Act (FAST Act) provides approximately $305 billion for surface transportation with highway and transit funding slated to increase by approximately 15 and 18 percent, respectively, over the five-year duration of the program. While the modest funding increase and certainty provided by the FAST Act are a step in the right direction, the funding falls far short of the level needed to improve conditions and meet the nation’s mobility needs and fails to deliver a sustainable, long-term source of revenue for the federal Highway Trust Fund.

COST TO CALIFORNIA MOTORISTS OF DEFICIENT ROADS
An inadequate transportation system costs California motorists a total of $53.6 billion every year in the form of additional vehicle operating costs (VOC), congestion-related delays and traffic crashes.

  • Driving on rough roads costs all California motorists a total of $18.3 billion annually in extra vehicle operating costs. Costs include accelerated vehicle depreciation, additional repair costs, and increased fuel consumption and tire wear.
  • Traffic crashes in which roadway design was likely a contributing factor cost California residents a total of $7.3 billion each year in the form of lost household and workplace productivity, insurance costs and other financial costs.
  • Traffic congestion costs California residents a total of $28 billion each year in the form of lost time and wasted fuel.
  • The chart below details the average cost per driver in the state’s largest urban areas as well as statewide.

VOC

Safety

Conge stion

Total

Los Angeles-Long Beach-Santa Ana

$ 892

$ 223

$ 1,711

$ 2,826

Sacrame nto

$ 638

$ 674

$ 958

$ 2,270

San Diego

$ 722

$ 249

$ 887

$ 1,858

San Francisco-Oakland

$ 978

$ 171

$ 1,675

$ 2,824

San Jose

$ 863

$ 186

$ 1,422

$ 2,471

STATEWIDE TOTAL

$18.3 Billion

$7.3 Billion

$28 Billion

$53.6 Billion

POPULATION AND ECONOMIC GROWTH IN CALIFORNIA

The rate of population and economic growth in California have resulted in increased demands on the state’s major roads and highways, leading to increased wear and tear on the transportation system.

  • California’s population reached approximately 39.1 million residents in 2015, a 16 percent increase since 2000.
  • California had 24.8 million licensed drivers in 2014.
  • Vehicle miles traveled (VMT) in California increased by 15 percent from 2000 to 2015 –from 306.6 billion VMT in 2000 to 354.1 billion VMT in 2015.
  • By 2030, vehicle travel in California is projected to increase by another 15 percent.

CALIFORNIA ROAD CONDITIONS

A lack of adequate state and local funding has resulted in 37 percent of major locally and state-maintained roads and highways in California having pavement surfaces in poor condition, providing a rough ride and costing motorists in the form of additional vehicle operating costs.

  • The pavement data in this report, which is for all arterial and collector roads and highways, is provided by the Federal Highway Administration (FHWA), based on data submitted annually by the California Department of Transportation (Caltrans) on the condition of major state and locally maintained roads and highways in the state.
  • Pavement data for Interstate highways and other principal arterials is collected for all system mileage, whereas pavement data for minor arterial and all collector roads and highways is based on sampling portions of roadways as prescribed by FHWA to insure that the data collected is adequate to provide an accurate assessment of pavement conditions on these roads and highways.
  • Statewide, 37 percent of California’s major locally and state-maintained roads and highways are in poor condition, while 42 percent are in mediocre or fair condition. The remaining 21 percent are in good condition.
  • Fifty percent of California’s major urban locally and state-maintained roads are in poor condition, while 37 percent are in mediocre or fair condition. The remaining 12 percent are in good condition.
  • Twenty-two percent of California’s rural locally and state-maintained roads are in in poor condition, while 48 percent are in mediocre or fair condition. The remaining 30 percent are in good condition.
  • The chart below details the share of major roads in poor, mediocre, fair and good condition in the state’s largest urban areas.

Poor

Me diocre

Fair

Good

Los Angeles-Long Beach-Santa Ana

60%

23%

8%

9%

Sacrame nto

35%

33%

8%

25%

San Diego

46%

21%

10%

23%

San Francisco-Oakland

71%

15%

6%

8%

San Jose

59%

20%

9%

13%

• Roads rated in mediocre to poor condition may show signs of deterioration, including rutting, cracks and potholes. In some cases, these roads can be resurfaced, but often are too deteriorated and must be reconstructed.

• Driving on rough roads costs California motorists a total of $18.3 billion annually in extra vehicle operating costs. Costs include accelerated vehicle depreciation, additional repair costs, and increased fuel consumption and tire wear.

CALIFORNIA BRIDGE CONDITIONS

One quarter of locally and state-maintained bridges in California show significant deterioration or do not meet current design standards often because of narrow lanes, inadequate clearances or poor alignment. This includes all bridges that are 20 feet or more in length.

  • Eight percent of California’s bridges are structurally deficient. A bridge is structurally deficient if there is significant deterioration of the bridge deck, supports or other major components. Structurally deficient bridges are often posted for lower weight or closed to traffic, restricting or redirecting large vehicles, including commercial trucks and emergency services vehicles.
  • Seventeen percent of California’s bridges are functionally obsolete. Bridges that are functionally obsolete no longer meet current highway design standards, often because of narrow lanes, inadequate clearances or poor alignment.
  • The chart below details bridge conditions statewide and in California’s largest urban areas.

Structurally Deficient

Functionally Obsolete

Los Angeles-Long Beach-Santa Ana

8%

23%

Sacrame nto

9%

15%

San Diego

3%

13%

San Francisco-Oakland

10%

24%

San Jose

8%

17%

STATEWIDE TOTAL

8%

17%

HIGHWAY SAFETY AND FATALITY RATES IN CALIFORNIA

Improving safety features on California’s roads and highways would likely result in a decrease in the state’s traffic fatalities and serious crashes. It is estimated that roadway features are likely a contributing factor in approximately one-third of all fatal and serious traffic crashes.

• A total of 14,437 people were killed in California traffic crashes from 2010 to 2014, an average of 2,887 fatalities per year.California’s overall traffic fatality rate of 0.92 fatalities per 100 million vehicle miles of travel in 2014 was lower than the national average of 1.08.

  • The fatality rate on California’s non-interstate rural roads in 2014 was nearly four times higher than on all other roads in the state (2.72 fatalities per 100 million vehicle miles of travel vs. 0.70).
  • Roadway features that impact safety include the number of lanes, lane widths, lighting, lane markings, rumble strips, shoulders, guard rails, other shielding devices, median barriers and intersection design. The cost of serious crashes includes lost productivity, lost earnings, medical costs and emergency services.
  • Several factors are associated with vehicle crashes that result in fatalities, including driver behavior, vehicle characteristics and roadway features. TRIP estimates that roadway features are likely a contributing factor in approximately one-third of fatal traffic crashes.
  • Where appropriate, highway improvements can reduce traffic fatalities and crashes while improving traffic flow to help relieve congestion. Such improvements include removing or shielding obstacles; adding or improving medians; improved lighting; adding rumble strips, wider lanes, wider and paved shoulders; upgrading roads from two lanes to four lanes; and better road markings and traffic signals.
  • Investments in rural traffic safety have been found to result in significant reductions in serious traffic crashes. A 2012 report by the Texas Transportation Institute (TTI) found that improvements completed recently by the Texas Department of Transportation that widened lanes, improved shoulders and made other safety improvements on 1,159 miles of rural state roadways resulted in 133 fewer fatalities on these roads in the first three years after the improvements were completed (as compared to the three years prior). TTI estimates that the improvements on these roads are likely to save 880 lives over the next 20 years.CALIFORNIA TRAFFIC CONGESTION
    Increasing levels of traffic congestion cause significant delays in California, particularly in its larger urban areas, choking commuting and commerce. Traffic congestion robs commuters of time and money and imposes increased costs on businesses, shippers and manufacturers, which are often passed along to the consumer.

    • Based on Texas Transportation Institute (TTI) estimates, the value of lost time and wasted fuel in California is approximately $28 billion per year.
    • The chart below details what congestion costs the average driver in the state’s largest urban areas in the form of lost time and wasted fuel and the number of hours lost annually to congestion..

Congestion Cost

Hours Lost

Los Angeles-Long Beach-Santa Ana

$1,711

80 Hours

Sacrame nto

$958

43 Hours

San Diego

$887

42 Hours

San Francisco-Oakland

$1,675

78 Hours

San Jose

$1,422

67 Hours

  • Increasing levels of congestion add significant costs to consumers, transportation companies, manufacturers, distributors and wholesalers and can reduce the attractiveness of a location to a company when considering expansion or where to locate a new facility. Congestion costs can also increase overall operating costs for trucking and shipping companies, leading to revenue losses, lower pay for drivers and employees, and higher consumer costs.
  • The average daily commute to work for California residents is 27.6 minutes, the seventh longest among all states.TRANSPORTATION FUNDING IN CALIFORNIAInvestment in California’s roads, highways and bridges is funded by local, state and federal governments. The recently approved five-year federal surface transportation program includes modest funding increases and provides states with greater funding certainty, but falls far short of providing the level of funding needed to meet the nation’s highway and transit needs. The bill does not include a long-term and sustainable revenue source.
  • Signed into law in December 2015, the Fixing America’s Surface Transportation Act (FAST Act), provides modest increases in federal highway and transit spending, allows states greater long-term funding certainty and streamlines the federal project approval process. But the FAST Act does not provide adequate funding to meet the nation’s need for highway and transit improvements and does not include a long-term and sustainable funding source.
  • The five-year, $305 billion FAST Act will provide approximately a 15 percent boost in national highway funding and an 18 percent boost in national transit funding over the duration of the program, which expires in 2020.
  • In addition to federal motor fuel tax revenues, the FAST Act will also be funded by $70 billion in U.S. general funds, which will rely on offsets from several unrelated federal programs including the Strategic Petroleum Reserve, the Federal Reserve and U.S. Customs.
  • According to the 2015 AASHTO Transportation Bottom Line Report, a significant boost in investment in the nation’s roads, highways, bridges and public transit systems is needed to improve their condition and to meet the nation’s transportation needs.

AASHTO’s report found that based on an annual one percent increase in VMT annual investment in the nation’s roads, highways and bridges needs to increase 36 percent, from $88 billion to $120 billion, to improve conditions and meet the nation’s mobility needs, based on an annual one percent rate of vehicle travel growth. Investment in the nation’s public transit system needs to increase from $17 billion to $43 billion.

  • The Bottom Line Report found that if the national rate of vehicle travel increased by 1.4 percent per year, the needed annual investment in the nation’s roads, highways and bridges would need to increase by 64 percent to $144 billion. If vehicle travel grows by 1.6 percent annually the needed annual investment in the nation’s roads, highways and bridges would need to increase by 77 percent to $156 billion.TRANSPORTATION AND ECONOMIC GROWTH IN CALIFORNIAThe efficiency of California’s transportation system, particularly its highways, is critical to the health of the state’s economy. Businesses rely on an efficient and dependable transportation system to move products and services. A key component in business efficiency and success is the level and ease of access to customers, markets, materials and workers.
    • Annually, $2.8 trillion in goods are shipped to and from sites in California, mostly by truck.
    • Sixty-eight percent of the goods shipped annually to and from sites in California are carried by trucks and another 19 percent are carried by courier services or multiple mode deliveries, which include trucking.
    • Increasingly, companies are looking at the quality of a region’s transportation system when deciding where to re-locate or expand. Regions with congested or poorly maintained roads may see businesses relocate to areas with a smoother, more efficient and more modern transportation system.
    • Highway accessibility was ranked the number two site selection factor behind only the availability of skilled labor in a 2015 survey of corporate executives by Area Development Magazine.
    • The Federal Highway Administration estimates that each dollar spent on road, highway and bridge improvements results in an average benefit of $5.20 in the form of reduced vehicle maintenance costs, reduced delays, reduced fuel consumption, improved safety, reduced road and bridge maintenance costs and reduced emissions as a result of improved traffic flow.Sources of information for this report include the California Department of Transportation (Caltrans), the Federal Highway Administration (FHWA), the American Association of State Highway and Transportation Officials (AASHTO), the Bureau of Transportation Statistics (BTS), the U.S. Census Bureau, the Texas Transportation Institute (TTI) and the National Highway Traffic Safety Administration (NHTSA).