An insider's take on the great highway debate: interview with Mortimer L. Downey III
When it comes to handicapping the upcoming battle over highway spending, veteran public servant turned consultant Mort Downey may have the ultimate inside track.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
The nation is gearing up for one of the most critical periods in the history of U.S. infrastructure. And sitting in the sweet spot where influence and investment collide is one of the most knowledgeable authorities on infrastructure of the last 25 years: Mortimer L. Downey III.
Downey is a senior adviser to Parsons Brinckerhoff, providing advisory and management consulting services to the firm and its clients, which include public and private entities, developers, financiers, and builders of infrastructure projects worldwide.
Although he works in the private sector today, Downey has had a long career in public service. From 1993 to 2001, he served as deputy secretary of transportation, the longest-serving individual to ever hold the Department of Transportation's number-two job. As its chief operating officer, he developed the agency's highly regarded strategic and performance plans and had program responsibilities for operations, regulation, and investments in land, sea, air, and space transportation. His reputation is such that in 2008, he was named to the transportation policy committee for the Obama presidential campaign, and during the presidential transition was appointed leader of the DOT's agency review team.
Previously, Downey was for 12 years the executive director and chief financial officer of the New York Metropolitan Transportation Authority (MTA), the nation's largest independent public authority.
Downey has received numerous professional awards, including election to the National Academy of Public Administration, where he has served as chairman of the board of directors. He is a member of the board of directors of the Eno Transportation Foundation and has served on the National Academy of Science's Committee on Science & Technology Countermeasures to Terrorism. He has served on a DOT special panel to report on the safety impact of Mexican truck operations in the United States, he recently joined the Industry Leaders Council of the American Society of Civil Engineers, and he has served on the board of directors of the National Railroad Passenger Corp. (Amtrak).
Downey spoke recently with DC Velocity Group Editorial Director Mitch Mac Donald about his career, the nation's "vintage" transportation policy, and why he thinks freight interests might finally get a voice in the next round of transportation policy discussions.
Q: How did you end up in your current role as it relates to transportation and logistics?
A: I have been in the transportation world now for a little over 50 years in one role or another, a lot of it in the public transportation area in New York. I was executive director of the Metropolitan Transportation Authority, but I served during the Clinton administration as deputy secretary at U.S. DOT and got a much better appreciation of the goods movement side of the transportation world. I have kept part of my brain focused on that since I left DOT and entered consulting.
Q: You served on the transportation policy committee for the Obama presidential campaign and then worked as part of the DOT agency review team during the transition. What can you tell us about your work there? A: It was an interesting experience revisiting federal policy and the Department of Transportation. During the campaign, the Obama folks had a very active group exchanging ideas and throwing in ideas about transportation policy. They published several fact sheets and working papers, more than have come out of any other presidential campaign that I can recall. I was fortunate enough to be asked to head up the DOT transition team.
Around this time last year, we began to organize that effort. Immediately after election day, we dropped everything and spent the next couple of months at DOT meetings with the career staff, meeting with virtually every interest group in the world who cared about transportation policy, and preparing documents that were handed over to the incoming secretary, Ray LaHood, when he came on board. We also had the opportunity to brief him. It was a great chance to re-immerse in the policy issues and throw in my two cents' worth on some of the directions. His team is off and running now, and I think the subject of goods movement and logistics is going to be an important part of its policy thinking.
Q: It has long been argued that freight "needs a seat at the table" when national transportation policy is developed, but that has yet to come to pass. What, in your view, makes things different this time around? A: The two catch phrases one usually hears are "freight deserves a seat at the table" and "freight doesn't vote." But the developments over the last eight or 10 years are changing things in a positive way. In the last round of transportation legislation —the so-called SAFETEA-LU bill, which is now mercifully expiring —there was an effort to bring freight into the picture, and those of us who worked on it felt it was moderately successful.
The other thing that came out of that legislation was the naming of two study commissions to prepare policy views in time for the next round of legislation because Congress couldn't agree on a single charter. We had a commission devoted to policy and program development, and a separate commission that looked at financial issues.
I think from a freight standpoint, the policy commission was the more interesting one. Out of a combination of presidential and congressional appointees, that commission wound up with some people who were articulate on these subjects, including [Burlington Northern Santa Fe CEO] Matt Rose. They continued to follow up individually on the implementation of their recommendations and made a very strong case for a better focus on freight. They crystallized the connection between freight and the national economy, and the importance of addressing freight capacity issues as part of the policy debate.
I am not too optimistic that we will see anything but a short-term extension [of the current highway reauthorization bill]. But the major piece of work has been done, which is the development of surface transportation legislation from the House. The House Transportation and Infrastructure Committee has picked up on a lot of our recommendations regarding ways of bringing freight to the table.
Q: This is consistent with the comment I've heard you make that the objective here is to avoid new authorization of old thinking. A: Right. The House in its wisdom has really picked up on that, and Jim Oberstar [chairman of the House Transportation and Infrastructure Committee] refers to it as an authorization bill, not a reauthorization. He has very significantly changed the way programs will be delivered. He hasn't come up with a secret formula for paying for it yet. That remains an open issue, but he has really begun to change things around and he has created within the program structure a nationwide freight program operated through the states. He has also opened the door to federal support for important intermodal improvement projects in the freight arena.
Q: How can the freight community be confident that money appropriated for freight will be spent on freight-only projects? A: I think the discussion about freight fees as well as a freight trust fund, which is not currently in Oberstar's legislation because that is not his jurisdiction, is an effort to assure the freight community that if they agree that improvements are needed and if they pay in, the funds will be segregated and used for that purpose.
The thinking is that if there is an outreach to that source of money, the funds will not simply be another bucket in the highway trust fund but instead be dedicated to good solid freight projects. Now you get into some nuances there. The truckers, for example, are very strong advocates for investment that would improve trucking. They actually are supportive right now of a diesel fuel tax increase. Not very many people in Washington are.
Q: At a recent conference, you noted the need for the nation to align its trade and transportation policies, but you added that while our trade policy is aimed at 2009, our transportation policy is vintage 1956. Can you elaborate? A: That comes from thinking about how U.S. trade policy has developed, the fact that we are now much more involved in foreign commerce, both oceangoing commerce with the other continents and NAFTA-related trade. It is a very different world from where the United States was when the last significant investments were made —basically, the establishment of the Eisenhower interstate highway system.
But we haven't caught up. We don't necessarily frame the debate in the right terms when we make judgments. For example, we agreed that NAFTA should go forward, but we didn't really debate how to make that work. So here we are, still fighting over access for Mexican trucks to U.S. highways. There are good arguments on both sides, but we really should have thought that through.
What strikes me, and it is brought home every time I hear about it, is that our neighbor to the north gets it. In Canada, questions surrounding foreign trade and the handling of import and export shipments are an important part of national policy discussions. If you look at the steps the Canadians have taken to beef up the capability of [the Port of] Prince Rupert and to beef up the capability of Halifax, they are doing things that we have yet to really contemplate, and we are going to be handed our lunch.
Q: Wouldn't it be interesting if the two primary maritime gateways to North America were not in the United States? A: Yes, or the three primary gateways. The Mexicans are looking to develop their facilities as well. I think much of the thinking both from Canada and Mexico is driven by how they handle their imports. I think we also have to figure out how we keep ourselves in the export business with something other than scrap paper.
Q: Any closing thoughts? A: There are some important issues here. I believe we will see in the next six to 18 months a piece of legislation that shapes what goes on for probably the next 20 years. That is usually the pattern when one of these bills passes —it stays in place for a long time. This is an important round of policy discussions. I hope those who care about freight issues will find a way to be participants in that discussion.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."