The end of the road may be closer than you think.
That warning comes not from a wild-eyed street-corner prophet, but from some of the nation's most prominent logistics experts—high-ranking public officials, heads of trade groups, and executives from several of the country's largest carriers. And what has them concerned is not the approach of Armageddon, but the likelihood that the United States' physical infrastructure is nearing the breaking point.
Take Mike Eskew, for instance. Eskew, who is CEO of UPS, the nation's largest transportation company, characterizes the current U.S. transportation network as shockingly inadequate. "Our highways, waterways, railroads and aviation networks are simply not keeping up with ordinary demands," he told business leaders in Houston during an address in March.
Eskew says he worries that continued neglect of the transportation infrastructure will put the economy at risk. But he adds that he still considers the problem to be solvable ... assuming we act soon. "We can't wait on this," he warns. "We need to move forward now."
Eskew is hardly alone in his assessment. John Bowe made much the same point when he addressed the National Industrial Transportation League's third annual Transportation Policy Forum last month. Bowe, who is regional president for the Americas for APL and its sister company, APL Logistics, warned his audience that the clock is ticking. In fact, he said the nation's logistics system could enter a "crisis zone" as early as 2008 to 2010.
No time to waste
Speaker after speaker voiced similar concerns over the two days of the Transportation Policy Forum. For example, Jeffrey Shane, the Department of Transportation's under secretary for policy, called clogged roads, rails and ports a threat to the nation's economy. "We have to address supply chain issues, and we have to address them now," he said. "If we don't, economic growth will be compromised."
Patrick Quinn, co-chairman of truckload carrier U.S. Xpress Enterprises and current chairman of the American Trucking Associations (ATA), was even more blunt. "Congestion, in my opinion, is a cancer on our economy," he said. "We have 233 million hours of idle time each year. [Yet] we have accepted congestion as being part of life. It is criminal that we haven't taken more action. It is time to build roads again."
Joni Casey, president and CEO of the Intermodal Association of North America, also spoke about the congestion problem. In her speech, Casey emphasized congestion's financial toll on business, citing a study by the Texas Transportation Institute that estimates congestion now costs the economy more than $65 billion a year in the 85 urban areas studied.
Too little, too late
As for the government's efforts to address the problem to date, no one had much good to say. Several speakers at the policy forum disparaged the most recent highway funding bill, characterizing it as too little too late. For example, in his keynote address, John Engler, president of the National Association of Manufacturers and former governor of Michigan, urged the federal government to do a better job of planning for long-term capital projects like highway construction. "In the United States, we pass a highway bill two years late, then think we don't have to worry about it for five years. We cannot think that way," he said. "To compete, we need every edge possible. If we get this wrong, we will make ourselves less and less competitive."
Casey was equally candid in her criticism of the highway bill, charging that its funding for critical infrastructure improvements was woefully inadequate. Casey said she was particularly perturbed by a last-minute decision to eliminate funding for intermodal connectors. "We need to improve the policy process," she said.
Tim Lynch, vice president of the American Trucking Associations, agreed. "A popular expression in Washington is that freight doesn't vote," he said. "That was clear in the last highway bill. There was clearly a lack of attention to freight transportation."
Lynch urged shippers and others to begin thinking about the next reauthorization in 2009, noting that the ATA will focus on ways to expand highway capacity and make better use of the system. "The trucking industry will make a major effort over the next three years," he said. "[But] we need all the players to participate in this. If we miss this opportunity, the next bill will be in 2015 or 2016."
Erik Autor, too, encouraged shippers and others to get into the act. "We need a national goods movement policy," said Autor, who is vice president and international trade counsel for the National Retail Federation. He reminded his audience that they must take the initiative and begin prodding Washington to take action. "Government action," he said,"is not going to happen until retailers and others make this a priority."
In the meantime, it appears that the DOT, at least, has taken preliminary steps toward developing a national policy. Shane told the forum that his department had unveiled the initial draft of its proposed Framework for a National Freight Policy. Shane noted that the DOT is now soliciting comments on the framework. The full policy has been posted on the DOT's Web site, www.dot.gov. Viewers can use a link at the end of the document to submit comments.
Gartner, Inc.
