For the past several years, the running joke in Washington was that “infrastructure week” basically was a collection of PR stunts: White House meetings and congressional hearings that got a lot of press coverage but accomplished little; industry advocacy groups making recommendations that went unheeded; and officials inside and outside the Beltway warning of impending doom from the state of America’s critical infrastructure, which the nation’s top engineers graded overall as a C-.
Yet as we enter the fall of 2021, a $1 trillion infrastructure policy package—with $550 billion in new funding for transportation programs—has successfully cleared the U.S. Senate, passing with a solid 69–30 bipartisan vote on Aug. 10, and is now headed to the U.S. House of Representatives for deliberation. If passed by the House, the more than 2,000-page measure will go to President Biden’s desk for signature.
For trucking and logistics service providers, it’s a sign that the nation’s infrastructure, particularly roads and bridges, is finally getting the attention—and new investment—it deserves.
Within what would be the largest infrastructure investment package since the U.S. Interstate Highway System was created in the 1950s are some $110 billion for roads and bridges, $39 billion for public transit, $66 billion for freight and passenger rail, $46 billion for projects related to improving resilience to severe-weather events, and $55 billion for projects to upgrade and expand clean water resources and manage wastewater. Also included are billions in funding for airports and seaports, electric vehicle charging stations, and the expansion of broadband internet.
Among the trucking-specific components of the bill are sections requiring automatic emergency braking systems on new commercial vehicles, improved rear underride guards on freight trailers and studies on side underride guards, and the establishment of a truck-leasing task force. The bill also would mandate a Department of Transportation review analyzing the cost and effectiveness of electronic logging devices (ELDs) and a review of processes to protect personally identifiable ELD data, and, in an effort to address the driver shortage, establish a CDL (commercial driver’s license) apprenticeship pilot program for CDL holders under 21 years of age.
ADDRESSING THE BACKLOG
The package has garnered praise for its scope, if not its scale. “The breadth and depth [of the legislation] is very encouraging,” observes Brian Tynan, corporate vice president of government relations for Aecom, one of the nation’s largest engineering and construction firms with experience across virtually all elements of infrastructure. “The strength of it is that it’s a comprehensive package that addresses roads, bridges, transit, freight and passenger rail, electrification, resiliency, clean drinking water, and broadband. It’s an opportunity for a generational investment.”
However, Tynan is quick to point out that it shouldn’t be seen strictly as an infrastructure expansion package; much of the funding will go toward the decidedly less-glamorous work of shoring up existing roads and bridges. The biggest challenge today is dealing with the severe backlog of aging infrastructure “that is living beyond its useful life,” he says. “We have to get rid of this backlog as well as continue to upgrade and expand our capacity” across all major infrastructure categories. “This is about … having an infrastructure that a growing economy can operate on.”
Troy Rudd, Aecom’s chief executive officer, has been actively advocating for critical infrastructure improvement and making it more resilient as well. In testimony before Congress earlier this year, Rudd stated: “Pursuing more resilient infrastructure is an important area … where government can make a significant impact. In 2020 alone, the United States faced 22 natural-disaster events with losses exceeding $1 billion each—the highest number ever in a single year.”
Rudd went on to say that building resilient infrastructure and unlocking innovation not only can yield significant benefits, “[but also] plays to American ingenuity and a bipartisan spirit in supporting transportation infrastructure that keeps our country moving forward.”
SET CLEAR OBJECTIVES, FIX WHAT’S FAILING FIRST
From a trucking company perspective, executives welcomed the bill’s progress but cited the need for clear objectives and echoed the emphasis on building in more resiliency and addressing the backlog of deficient, pothole-ridden highways and overtaxed bridges—all of which slow the nation’s truckers, increase greenhouse gas emissions, create delays, and raise costs for everyone.
“Traffic is increasing every year; there are more vehicles on the road than ever before,” notes Greg Orr, president of truckload carrier CFI, adding that CFI, whose trucks run some 200 million miles annually, is willing to pay its fair share toward highway repair, improvement, and expansion.
Then there’s the impact of Amazon and the pandemic-induced explosion of e-commerce shipments. Truckers are hauling more goods more often over shorter routes, and there are more cargo vans on the road making more residential deliveries than ever. “And we’re doing it dealing with congested, 50-year-old roads and bridges that stress out our drivers, beat up our equipment, and stifle productivity,” says Orr.
To illustrate, he cited the average speed for a truck on a 1,500-mile run. “Even with route optimization technology and doing all we can to avoid poor roads and congested areas, we’re hitting an average speed of 48 miles per hour,” reflecting the impact of construction delays and heavy traffic over longer periods of the day. Five years ago, that average was 51 mph, Orr notes.
“There is no doubt that congestion is the enemy of on-road productivity in parcel, LTL (less-than-truckload), and truckload,” says Dick Metzler, president and chief executive officer of regional parcel carrier LSO. That’s especially true as the use of crowdsourced drivers for last-mile deliveries increases, he says. And it’s a factor in the overall shortage of qualified truck drivers. “No driver finds sitting in traffic to be a great lifestyle, be it in a parcel cargo van or a Class 8 rig,” he notes.
One benefit of renewed infrastructure investment over time, Metzler believes, is more efficient supply chains and better transportation networks to support them, potentially forestalling significant ongoing increases in trucking rates. There is much debate over how to pay for improvements, but at the end of the day, “You pay me now, or pay me [a lot more] later,” he says.
SOLVING THE FUNDING RIDDLE
As Metzler’s comment suggests, financing has long been a sticking point in discussions surrounding infrastructure. “The key question is how does [infrastructure improvement] get funded,” notes Michael Regan, cofounder and chief of relationship development for transportation spend management software company TranzAct Technologies and chair of the advocacy committee of NASSTRAC (National Shippers Strategic Transportation Council), an association for transportation and logistics professionals who manage freight across all modes. “We were given a gift in the ’50s when the Eisenhower administration built the Interstate Highway System. But we have not [substantially] built upon it since.”
He cites overwhelming support among NASSTRAC members and other colleagues in transportation for infrastructure initiatives—and paying their fair share. Yet the primary funding mechanism—a federal tax on diesel and gasoline fuels—has not been updated since 1993. That tax generates revenues for the Highway Trust Fund, which finances the maintenance and construction of the nation’s roads and bridges. Without additional resources, the Highway Trust Fund is projected to run out sometime next year.
The gas tax “is based on a model that clearly is not relevant today,” says Regan. While more vehicles are on the roads now, gas tax receipts have not kept up. The reason: More-efficient vehicles and improvements in fuel mileage with today’s commercial vehicles and passenger cars, causing less fuel to be consumed (a good thing for the environment). Then add to that the impact of gas/electric hybrids and the proliferation of all-electric vehicles, which use the nation’s highways the same as a fossil-fueled car but pay nothing into the Highway Trust Fund.
Regan suggests several alternative or additional funding methods that could be considered, such as a vehicle-use or “mileage traveled” tax, or even a tax at the “barrel level” on crude oil. He also points to the potential for technology—such as automatic toll collection tags that work in multiple states—to ease the funding challenge. “I use my Illinois I-Pass in at least five states,” Regan says.
“The immediate return [on infrastructure improvements] is fundamentally making sure our road systems are upgraded to a point where they are safe and effective,” says Brent Hutto, chief relationship officer at freight marketplace operator Truckstop.com and a member of NASSTRAC’s advocacy committee. “If Covid taught us anything, it’s that we need trucks as consistently and frequently as possible.”
He also believes an increase in the gas tax is long overdue. “How much is a nickel or 10 cents going to make in a person’s decision [to buy] fuel?” he asks. “It’s not a rational position. You have to be able to pay for [infrastructure]. It’s an investment, not a cost.”
WELCOME PROGRESS
The legislation’s recent progress is a welcome and positive development, notes Darren Roth, vice president of highway policy for the American Trucking Associations (ATA). Between rising congestion and the 60,000 bridges around the country that are either deficient or closed, trucks are running more miles and traveling on the highways for longer than ever before. The current bill’s allocation of about $7.5 billion for new bridge grants as well as provisions to streamline environmental review into a two-year path (down from seven) all will help address and resolve bottlenecks.
“We are generally supportive of the bill moving forward,” says Sean McNally, the ATA’s vice president of public affairs and press secretary. “It’s not perfect, but we are ready to help whoever is at the table to get this across the finish line.”
Gartner, Inc.
