Thoughts and Opinions On Today's Important Issues

Tuesday, February 26, 2008

Marshalling Traffic To The DRIC Bridge

This whole DRIC border project is becoming stranger and stranger.

We have just had the Canadian Border Services Agency effectively kill any thought of a DRIC bridge when they told Windsor that they had no plans at this time to staff the six new booths that the Ambassador Bridge just built. Clearly, the lack of traffic concerns them ie. why would Customs officers sit in booths if there was not enough border traffic to justify it.

I will comment on this in another BLOG but did you read the Detroit media about the DRIC bridge:
  • "Building a publicly funded border crossing in southwest Detroit could eliminate 340 to 414 homes, five to seven churches, Rademacher Park and 685 to 920 jobs, according to a study released Monday."

I ask the obvious question then how can anyone justify building a new DRIC bridge that would require staffing for more than six booths if there was not enough traffic to justify the staffing of six. It doesn't make any sense to me. Not only would the Government have to duplicate the actual Customs facilities but now it would have to duplicate staffing as well. At about $1 million per lane when one takes into account salaries and benefits for staffing a lane with officers and support staff over 24 hours, that's a fair bit of money.

And wiping out Delray too!

There is no doubt that when legislators in United States see some of this information they will be hard-pressed to support MDOT moving ahead as well. Already at least the Republicans see no purpose in moving forward on the DRIC project. They can use the money required for better purposes.

And just so you know, US DRIC has estimated that the U.S. cost of the combined bridge, plaza, interchange, utilities and associated property acquisition ranges from $1.277 billion to $1.488 billion. Add in the Canadian side and we have an International Mega-Project in the billions.

But we have to keep on playing the game don't play we. We need to pretend that the DRIC bridge has a some possibility of being built because otherwise what will put pressure on the owner of the Ambassador Bridge to sell out at a cheap price. As I Blogged the other day, the way to do so is to generate traffic numbers about how much of the volume the new DRIC bridge will take away from his crossing.

According to DRIC, their new bridge would cause significant traffic shifts over the entire area from the Blue Water bridge right to the Windsor crossings. Dealing with truck traffic, the bridge in Sarnia could lose up to 18% of their traffic or more. The City of Windsor owned Detroit/Windsor Tunnel could lose up to 26% of its total traffic. The Ambassador Bridge could lose up to 75% of its truck traffic and 39% of its car traffic. Mind you, I thought part of the DRIC exercise was to remove traffic from Windsor too eg to rail, marine and to other crossings. So much for that when bridge economics come into play. We cannot have car and truck numbers crossing the bridge go down now can we!

The new bridge good carry as much as 80% of the truck traffic carried by the two bridges and 60% of the car traffic.

Now those are pretty impressive numbers don't you think. If I was a P3 operator, I'd be salivating waiting for the Governments to ask me to invest my money in a new DRIC bridge. The only fly in the ointment however is that damned Ambassador Bridge whose tolls for using their bridge would be about a third of what I would have to charge, assuming that there was fair competition. I guess that the Alinda people might want to compete as well at the Tunnel and probably the Sarnia folks might have some concerns about going bankrupt also.

P3 operators generally like monopolies and don't want to compete in the marketplace for traffic. A number of the agreements with respect to roads have clauses in them which require that the governmental authority not build a road that competes with the toll road. After all how can the P3 operator make money if there is a free road nearby.

Now that won't work with respect to border crossings because as MDOT said the new DRIC bridge would be paid for by tolls. I don't know about you but if I have a choice between two equally efficient crossings I'm going to take the one that is cheapest especially the cost is one third of the other. So how then does a DRIC bridge stay in business?

The answer came from the Leakor in another Todays Trucking Magazine online article. I am sure that the article has been distributed to government people with a cover note saying this is how we will guarantee that the new DRIC bridge is financially successful. Let me attach a few excerpts from that article:

  • "ONLINE EXCLUSIVE: Windsor truck marshalling hub closer to reality

    WINDSOR, Ont. -- It's no secret that the biggest problem with the Windsor-Detroit gateway is the lack of infrastructure available for the number of trucks that bottleneck at the mouth of the border.

    For decades, there's been an avalanche of "solutions" proposed to fix the situation. Some of them make sense -- expanding border capacity with a new bridge or twinning the current Ambassador, for example -- but almost all attempt to put the trailer before the tractor, so to speak.

    That, anyway, is what Ann Arquette and Kathy Ouellette believe. They have a point -- and, of course, their own plan.

    "It's a matter of building foundations first," says Arquette, director of corporate affairs for Border Gateways, a Windsor firm that's been pitching an ITS-based truck traffic management system for southern Ontario border crossings.

    An MTO truck marshalling facility would be located off of the highway and meter pre processed trucks to the border.

    The company is vying to manage a public-private "truck marshalling yard" being proposed by the Ontario Ministry of Transportation in Windsor, Sarnia-Port Huron, and Fort Erie-Buffalo. The facility -- to be located on the outskirts east of Windsor, off Highway 401 -- would act as the staging area for a complete "trade corridor management system," as Ouellette dubs the concept.

    The theory is that a truck marshalling yard in the Windsor-Essex area would reduce border queuing by ensuring all truckers' administrative and Customs reporting info is completed before approaching the border. It would also provide truck storage real estate during periods of high congestion. Once cleared, the trucks would be metered through to the border, resulting in more efficient flow and less trucks idling close to homes and businesses inside the city.

    The concept has been discussed for a while, but moved a step closer to reality this month when Border Gateways secured capital financing by signing a partnership agreement with John Laing PLC, a UK-based specialist in public sector infrastructure assets. The up-front capital could make Border Gateways the frontrunner for a long-term concession agreement with provincial and federal governments...

    the facility's main purpose would be to assist truckers -- especially owner-operators -- with the myriad pre-crossing processes, explains Ouellette. Effectively, RFID and weigh-in-motion technology would electronically capture carrier and shipment information from the highway and by cross-linking the info with Customs databases, the center would clear drivers to proceed to the border or, as needed, assist them with paperwork or e-manifest transmissions."

Just in passing, the Ambassador Bridge Company already has set up these pre-processing centers so that the "main purpose" to assist truckers is already being fulfilled.

Do you get it? The way to guarantee success of the DRIC bridge is to force trucks to use a certain crossing. And obviously the crossing of choice would be the Government bridge. That's how they would get the numbers. It would have to be made mandatory to use that staging area and the means to do that is Bill C-3 as I have said before [BLOGs December 04, 2006 "Clever Bureaucrats" November 27, 2006 "Who Is In Control AT MTO"].

I am not going into all of the arguments why staging area would not make any sense, especially for Windsor. The one however that is the most important from a business perspective is how much it would cost for a truck to use the mandatory staging area. Now remember, the area has to be paved to be big enough in case there is a huge backup at the border. Of course there may never be a backup if the border is running smoothly but it doesn't matter, that facility has to be paid for.

I've seen estimates of the cost being in the range of $20-$25M or more and naturally not even a private investor like John Laing PLC is going to risk their money on that. So it will have to be government financed.

Every truck that uses the facility will have to pay a fee to pay for it. How much will that fee be... who knows. Obviously truckers will try and avoid the area if possible which means that instead of using main highways they will take back roads. After all they don't want to be stuck at some staging facility at $100-125 an hour while a bureaucrat figures out which border crossing they should take it assuming that the bureaucrat believes there is no truck back up.

In the end, I could see a whole bunch of truckers saying that it just doesn't make sense to go across the border any longer. The costs are too high and the wait periods too uncertain. They would just pull out the marketplace leaving fewer truckers for shippers to use. With fewer truckers, the obvious result is that shipping prices are higher meaning that it is more expensive to do business in this country.

If it is too expensive do business in Ontario or in Canada, then why would anyone locate their plant here or why would anyone remain here if by going south of the border the Company can deal with their customers without the border hassle.

The concept is wonderful in a world designed to meet the needs of the bureaucrat. However, unless the bureaucrat understands business and in particular transportation that business model may not bear any relationship to reality. We saw that in Canada before with the National Energy Program which was designed to protect the Canadian oil industry but in fact destroyed it and allowed foreign companies to take over a good part of the oil patch.

This is an old story that we saw about a year and a half ago with the same players being mentioned. The only difference is that there is a private investor involved that may have put in some money into the project, how much we do not know.

While it is designed obviously to ease the concerns P3 investors and to cause aggravation to the owners of the Ambassador Bridge, it does nothing except make the bureaucrats look even more foolish than they are.

As someone knowledgeable in the trucking industry told me:

  • "Don't believe everything you read, the "marshalling yard" idea is as dead as the dodo. Frankly, it never was alive depite the lip service occasionally paid to it by some politicians, again, no one I know in government ever thought this was anything but silly."