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The Evolution of Running an Errand – and Its Impact on the Future of Transportation

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[5 Minute Read]

We have all participated in some form of buying groceries, grabbing lunch, picking up a birthday gift and/or making a Costco run. In recent years, we have witnessed the disruption of these traditional everyday activities. Our ability to purchase items online and receive them within hours rather than days has redefined our definition of running an errand. 

The resulting shift in consumer behavior has continued to impact the demand on express delivery options. The coronavirus pandemic has only increased this demand according to research from Edison Trends, which studies anonymized and aggregated e-receipts from millions of U.S. consumers.

This increased consumer demand for speed and convenience has required various industries including e-commerce, retail, pharma, food and grocery to be more agile and evolve their supply chain operations. The adoption of the Hub and Spoke Distribution Model, and the use of independent contractors as last mile carriers, who use personal vehicles to transport goods are examples of this evolution.

Our transportation system can be directly impacted by these changing trends. A number of challenges come to the forefront for policy makers, responsible agencies and transportation planning in general For example, Metropolitan planning organizations (MPOs) will need to consider the increased daily truck traffic generated from these distribution centers being located in urban locations and the corresponding employee commuter impact on congestion. In addition, the increased consumer adoption of express delivery options coupled with strategically located package delivery lockers could result in the reduction of consumer shopping trips. Noncommercial vehicles being used for commercial delivery will impact trip generation, distribution and assignment. As a result, travel demand models will need to account for these shifts in behavior.

Transportation planners designing a vision that supports the future of life for the next 20, 30 years will need to create a system supporting the changing distribution of vehicle types and density from the proliferation of e-commerce delivery. 

Have a question or comment? We’d love to hear from you. You can reach us at info@ecointeractive.com.

CARES ACT – Direct Federal Aid for New Digital Solutions Promoting Telework

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[10 Minute Read]

Through the 2020 CARES Act, the federal government has set aside $150 billion in the Coronavirus Relief Fund for much-needed direct federal assistance to state and local governments to address challenges from COVID-19. Agencies looking to transition to digital solutions to support safe, effective telework and remote collaboration have been able to access the emergency relief funds for federal support to fund new technology solutions.

In this blog post, we’ll cover 1) a high-level overview of the Coronavirus Relief Fund, 2) examples of state governments successfully accessing funds for software expenditures that promote remote collaboration, and 3) individual states’ guidelines for directing relief fund allocations.

Coronavirus Relief Fund: High-Level Spending Guidelines

Each state receives a minimum allocation of $1.25 billion, with actual allocations varying by state and outlined in this Treasury document.

Three main principles qualify expenditures, which must be:

  • Directly related to COVID-19
  • Not accounted for in budget approved prior to March 27, 2020, and
  • Incurred between March 1, 2020 and December 30, 2020

At the time of this blog post, less than 3 months remain until expenditures can be incurred for emergency relief fund. As of August 24, 2020, the level of expenditure activity varied greatly across each state – ranging anywhere from only 0.2% of total allocations spent in Alabama to 74.5% spent by California. Click here to see how much your state has spent its share of allocated relief fund as of August 24, 2020.

Many states have not spent the majority of their relief fund allocations – providing both opportunity and urgency for state and local governments to quickly move forward identified expenditure needs before December 30, 2020.

We maintain the view that Congress will extend the last expenditure date beyond December 30, 2020. Many state governments have yet to spend most of their allocated funds, and states will continue to grapple with public health and fiscal fallout from COVID-19 well into 2021. However, it would be prudent for agencies to plan without expectations of an extension, and expedite requests for expenditure needs in the remaining months of 2020 to advance much needed projects.

Utilizing Relief Funds to Transition to Digital Solutions That Accelerate Telework and Remote Collaboration

One of the eligible expenses stated under the Coronavirus Relief Fund is “Expenses to improve telework capabilities for public employees to enable compliance with COVID-19 public health precautions”:

Many government agencies have accelerated plans to adopt new digital technology solutions that enable effective remote work for public employees to facilitate safe, social-distancing during the pandemic.

Software solutions that help agencies conduct workflows digitally, collaborate remotely with internal and external stakeholders on the cloud, and provide more information to the public digitally are helping agencies transform their workforce and workflows to better adapt to COVID-19 and evolving future needs.

With the Coronavirus Relief Funds, state and local agencies are able to access direct federal aid to help fund important digital transitions. Successful examples are:

Details on State-Level Implementation of Relief Funds

Every state is making relief funds accessible to any state and local agencies that meet federal guidelines for eligible expenditures, as well as its own state agenda if one exists.  

Each state has devised guidelines for how its relief funds will be disbursed, what authority will be approving, disbursing and overseeing payment of funds in which manner. A complete list of each state’s guidelines for relief funds allocation can be found here. Examples of these are:

For transportation planners looking to transition to new digital solutions that support remote collaboration and telework, we strongly urge you to act now to explore options within your state for accessing remaining federal relief funds to support these important transitions.  

Have a question or comment? We’d love to hear from you. You can reach us at info@ecointeractive.com.

Future of Travel: Transportation’s Pandemic New Normal

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[3 minute read]

As the pandemic rages and certainty on almost everything is a daily moving target, one thing appears certain: we will not be returning to ‘normal’ anytime soon. And that means, the way we travel, commute, and vacation, at least in the medium-term, has changed.

WHAT’S ‘NORMAL’ ANYWAY?   

While the world waits for a vaccine, travelers and commuters are increasingly hesitant to use traditional modes of transportation. A June 2020 survey of 11,000 people released by Dynata, a global online market research firm, found that:

  • 30% surveyed do not feel comfortable flying until restrictions are lifted
  • 40% surveyed no longer use taxi or rideshare services
  • Public transportation usage is at only 60% of normal levels

Additionally, >80% of respondents indicated they would ‘definitely not’ plan a vacation during the pandemic.

Figure 1

SAME ROADS, DIFFERENT VEHICLES

Reluctance to engage in air travel, public transit, taxi / ridesharing, and traditional vacation-planning has led consumers to seek alternative modes of transportation. This shift in behavior has resulted in an unprecedented shortage of bicycles and RVs. In April, U.S. bicycle sales (including accessories) hit $1 billion, up 75% from previous years. As of late-June, RV dealers have seen a 170% jump in RV turnover compared to the previous year. RV rentals have increased 1,600% since April.

These trends are a by-product of an overwhelming belief that private vehicles are safer. In another April survey by consultancy, Capgemini, 75% of people indicated ‘greater control of hygiene in a vehicle I own’ as a key-driver for a car purchase.

Figure 2

IMPLICATIONS ABOUND

So, what are some potential implications of these trends? Severe bicycle shortages with record sales and spiking rentals indicate a ‘back-to-basics’ transportation approach for many. Travelers eschewing traditional vacation plans in favor of domestic travel in RVs and campers will mean vacationers hitting the highways and heading to (presumably) outdoor attractions. Increased private vehicle usage coupled with decreased ridesharing and public transit will potentially create congestion issues for commuters. Decreased public transit use will also mean a sizeable fare, toll, and dedicated tax revenue loss. An analysis of New York’s M.T.A. finances by consultancy McKinsey & Company projects losses as high as $8.5B by end of year.

SHIFTING GEARS

With this confluence of implications, how can transportation planners adapt? Planners in some of the hardest hit cities around the world from Paris to Oakland to Montreal have quickly pivoted to expanding bicycle and pedestrian options. In Paris, a plan to implement more than 400 miles of brand-new pop-up bike lines is already underway. Oakland has committed to making ~10% of streets car-free for the foreseeable future. Montreal is adding 70 extra miles of new bicycle and pedestrian paths. In Milan, a radical plan to shrink a major four-lane car road to only two, will support an effort to install six-foot wide bike lanes and pedestrian walkways.

CHANGING LANES

Ultimately these planners hope to not only adapt to the new travel implications, but to catalyze a paradigm shift in transportation. And while encouraging a shift to bike and pedestrian lanes will not address all pandemic-related transportation implications, a failure to do so could certainly aggravate conditions. And these changes will have to be implemented quickly. Former commissioner of NYC Transportation Department, Janette Sadik-Khan has stated that, “what might have been a 2030 plan is now a 2020 plan.” The U.K. has committed $2.6B to walking and cycling projects in the country, with $315M already fast-tracked for new bike and pedestrian infrastructure.  

DRIVING A NEW FUTURE

While the future is far from certain, what we do know is that the future of travel is changing. What is required of transportation planners, now more than ever, is an ability to quickly adapt and collaborate. Technology will certainly play a key role in this. Especially as we remain sequestered at home waiting for a vaccine. Even once a vaccine has been approved, it may be some time before the threat of the virus is eradicated, if ever. What we can confidently say here at EcoInteractive is that we are with you, and we have your back. As transportation planners plan for a shifting future, our technology and transportation expertise are here to help in any way we can. Have thoughts? We’d love to hear from you. You can reach us at info@ecointeractive.com.

Local Taxes and Investors Fund Transportation During COVID-19

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[5 minute read]

As Capitol Hill continues to haggle over the final form of federal aid in the next stimulus bill – state and municipal transportation agencies are taking matters into their own hands to meet the significant budget shortfalls they’re potentially bracing for 2020 and 2021.

COST CONTAINMENT

State DOTs have prepared budget revisions or draft requests that reflect cuts to capital investment plans where appropriate. Municipal and transit agencies facing sharper revenue declines have implemented furloughs or voluntary buyouts to more aggressively cut costs.

While politically and financially difficult to pass everywhere during a public health crisis, some regions are raising local taxes or putting tax measures up for vote on the November ballot to plug revenue shortfalls.  

LOCAL TAXES

In San Francisco, city supervisors just passed a $40 million sales tax measure to help shore up the battered regional commuter train Caltrans’ finances, where ridership dropped 97% as a result of COVID-19.

In a bolder move, the Portland Metro Council unanimously voted in July to refer a historic $5 billion tax measure to the November ballot that would make significant investments in regional transportation infrastructure for roads and transit routes.    

FRIENDLY MUNICIPAL BOND MARKET

Some agencies are finding that voters may be not be the only ones willing to invest in transportation. One unexpected bright spot lately in government financing has been tapping the capital markets at relatively affordable rates to sell transportation bonds.

Investment managers responsible for leading taxable municipal bond sales have reported strong demand from investors for the foreseeable future. Transportation bonds still present a value buy for many yield-starved investors, compared to other more expensive government debt with higher risk profile.

Strong investor appetite thus far has ensured that newly issued transportation debt from state or local agencies are purchased quickly. The broader market rally driven by the enormous financial support from the Federal Reserve since March has benefited government-backed bonds as well– providing a much-needed source of financing for transportation and transit agencies.

In the next several weeks, more than $14 billion in municipal bonds are expected to be sold. These include the Texas Transportation Commissions’s ~$1 billion taxable general obligation bonds, the Michigan Department of Transportation’s $3.5 billion bond for road repairs, and Alaska’s $88.9 million bond for highway and rail line projects.

Some state legislatures see not only the need to support transportation infrastructure, but also the job creation benefit of transportation investments during an economic recovery. The Massachusetts Senate recently approved a $17 billion transportation bond bill to invest in major infrastructure projects including construction, regional initiatives, traffic congestion and transportation network company data sharing. Connecticut approved $650 million in state borrowing for transportation improvements among other aid initiatives.

While broad-based investor enthusiasm continues for the foreseeable future, state and local transportation agencies vested with borrowing authorities should quickly take advantage of low borrowing rates by selling new bonds. As second waves of COVID-19 potentially threaten nascent economic re-opening in certain regions, it is prudent for agencies to secure capital while it is abundantly available to future-proof against the uncertainties of fighting COVID-19, or fickle investor sentiment.

Evolving Transportation Planning to Reflect Acceleration of Telework

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[10 minute read]

COVID-19 has drastically changed how people work and live during the pandemic. Corporate adoption of remote work or telework significantly accelerated. And we predict the trend will last long after the pandemic is over – with far reaching consequences for the future of cities and transportation planning.

As planners envision the future of transportation infrastructure in Long Range Plans and TIP/STIP, it’s critical to consider how the nature of work and living are changing, and ensure that infrastructure programs will adapt to support the changing needs of local communities.

Mass Remote Work Has Been A Surprising Success for Employers and Employees During Pandemic

With 46% of American businesses having implemented remote work policies as of mid-February -– the mass transition to remote work during COVID-19 has proven surprisingly successful for employers and employees.

Employers with primarily knowledge workers reported no hit to productivity levels and in fact – in some cases saw increases in worker productivity due commute time savings.

Historically, the biggest barriers to remote work for employers were 1) risk of lower productivity, and 2) technology enablement. With the first concern eliminated, and many tech companies like Zoom rising to alleviate the second issue – many employers are finally ready to implement remote work at scale at last.

Furthermore, decreased resistance from managers, substantial savings on real-estate costs and lower-cost hiring in remote locations are additional reasons that companies especially in knowledge economies will find the benefits of remote work far too great to ignore.

For some employees, while telework was challenging during the pandemic especially with closure of childcare centers, most experienced benefits including commute time savings and more casual work environments. In the long-run, a majority of employees believe the pandemic will permanently change the nature of how they work according to a global survey from Salesforce Research:

To what extent do you agree or disagree with the following related to your career?


Source: Salesforce Research COVID-19 Global Survey

Significantly Accelerated Adoption of Telework to Drive Greater Migration to Suburbs and Lower-Cost Cities

In response, more employees in cities may take advantage of moving to suburbs where they can find more affordable, larger housing because their longer commute happens less frequently now if at all.

National real estate broker Redfin has already seen this buyer trend playing out during May in the San Francisco Bay Area. Some employees will make bigger moves to lower-cost cities, rural locations close to nature, or even lower-cost countries as full-remote provides literally a world of relocation opportunities.

For employers, more will transition from establishing a monolithic single headquarter with large footprint, to a network of satellite office hubs across cities hosting concentrations of employees.

Transportation Planners Should Re-Evaluate Infrastructure and Development Programs

For transportation planners in high-cost cities, there’ll be added risk in over-designing expensive downtown facilities. Instead, there may be a greater need for suburban developments with large multi-story buildings, and robust commercial centers to support a greater portion of people’s workweeks spent at home .

Less commuting will produce lower congestion during peak periods, which leads to less vehicle emissions and lower toll/gas tax revenues. While the former is a pleasant benefit, the latter requires creative planning earlier on to identify sources of new replacement funding to ensure long-term infrastructure viability. Cities weighing the merits of congestion pricing models may also need to re-evaluate projected revenue scenarios.

In smaller cities and towns expecting greater migration inflows, planners may want to consider strengthening long-distance commute infrastructure to create greater appeal for workers who need to travel to company headquarters farther away.    

Be Prepared to Meet More Evolving Needs

In addition to telework, there are other trends accelerated by the pandemic that will have long-lasting consequences for city and transportation planning. These include the acceleration of e-commerce, e-grocery and restaurant delivery, as well as changes to methods of learning and people’s preferences for transportation modes that will shape the future of infrastructure.

The key to understand and meet evolving community needs is to keep a close pulse on what’s happening. Luckily, there are more technology solutions available today than ever to help transportation planners engage the public, communicate a compelling story, solicit feedback and gather useful datapoints about meaningful trends taking hold in the communities they serve.

Here at EcoInteractive, we’re working with transportation planners on a daily basis to address their evolving needs by leveraging modern cloud technologies. We are privileged to continue supporting transportation planning agencies, and would welcome any questions or comments to help better serve transportation planners.

Early Look At Transportation Revenue Changes

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[10 Minute Read] 

As state and local officials passed SIP or stay-home mandates throughout April, many feared the ensuing economic devastation and budget hits to state and local governments.

In the recently published April 2020 Federal Highway Trust Fund (HFT) receipts and outlays, we see an early look at fuel tax revenue during recent public health-related lockdown.

Compared to the same period last year, total net tax receipts to the HTF in April 2020 dropped 14% year-over-year, with a 15% drop in gasoline tax receipts. This was a much better-than-expected number, given gasoline consumption has plunged by 30% from pre-COVID levels.  

Source: Treasury.gov
Note: Trust Fund receipts reflect economic activity in the latter half of March plus first half of April 2020

The lower-than-expected reduction in fuel tax receipts may be a result of increased freight truck demand during the early days of the public health crises, as shops and consumers raced to aggressively stock up on goods. Data from the California Truckers Association shows that commercial flatbed load-to-truck ratio saw a spike in the early days of COVID-19 severity:

Source: California Truckers Association Briefing for California Transportation Commission, April 17, 2020

Since there was more demand for goods (load) than trucks available to transport early on, it may be contributing to better-than-expected fuel tax receipts from the April HFT report. 

However, as April unfolded, demand for commercial trucking dropped steadily to 4.38 load-to-truck ratio by week of 4/19 – which is 75% lower than the same period in 2019. 

Source: California Truckers Association Briefing for California Transportation Commission, April 17, 2020

Anecdotally, analysts in the trucking industry are seeing a 50% decrease in sales of trucks and tractors, as capital budgets are usually the first to be cut. This would suggest future excise tax receipts on trucks for HFT will likely worsen significantly in the coming months. 

Outside of fuel tax revenue, the resilience and impact to other sources of funding for transportation projects will be tested in the coming months. The question of federal assistance for state and local governments is expected to be hotly debated in Congress. The $50 billion in revenue replacement grant requested by AASHTO for state DOTs remains outstanding, as well as transit agencies’ request for a 2nd stimulus aid to replace revenue lost from lower sales taxes.

Meanwhile, the Federal Reserve’s actions to provide liquidity for municipal bonds has temporarily helped stabilize a market frequently tapped by state and local agencies for funding including transportation projects. 

New transportation bond issues from Connecticut state and NYC MTA this month will put investor appetite to the test. 

As MPOs and state DOTs look ahead to re-forecast fiscal year budgets for capital projects and operating costs, it has become critical to stay nimble with scenario planning for future funds availability for STIP, TIP and CIP plans.

For transportation planners, and leaders at MPO and state DOTs managing against evolving uncertainty – we’d like to share a scenario planning framework we’ve found helpful in weathering past recessions. Our scenarios cover three cases: base, upside and downside. 

  1. Base case – represents your best guess at what will likely happen as of today.
  2. Upside case – reflects favorable macroeconomic and funding conditions returning much quicker. Performing this exercise helps to identify which transportation projects can be moved forward earlier and which internal efforts should be prioritized – if more funding becomes available, quickly adjusting to play offense to accelerate your agency’s vision.
  3. Downside case – should reflect a worst-case scenario that goes beyond even the worst of what you can imagine today. While not a pleasant exercise on its own, it forces healthy stakeholder discussions to agree on which projects are candidates for postponement, and how to come up with greater operating efficiencies (however dramatic they may be) should the situation merit it. 

Given the multi-variable nature of predicting near-term funding for transportation projects – i.e., speed of control over the public health crisis, federal stimulus, consumer and business sentiment, etc., we recommend revisiting key assumptions in each of the three scenarios on a monthly basis. Additionally, while we never have perfect information before making decisions, it is essential to zone in on the most important, key data points and to keep a close pulse on how they change. 

Finally, while how the picture will change for transportation plans like TIP and STIP remains uncertain, what is guaranteed is that more amendments must be processed in the future as the situation evolves. 

It is imperative that transportation planning teams revisit how they coordinate amendments and process revisions to ensure they can adapt quickly to unexpected changes by having the right setup and tools for efficient and accurate multi-stakeholder coordination.

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