After years of fits and fumbles, Congress is finally getting serious about the nation’s crumbling infrastructure, moving forward with a $1 trillion funding package. What’s at the top of the list, and where do truckers and logistics service providers fit in?
Gary Frantz is a contributing editor for DC Velocity and its sister publication CSCMP's Supply Chain Quarterly, and a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
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.”
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
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.”