Monday, July 6, 2015

U.S. NEEDS AN INTEGRATED LOGISTICS INFRASTRUCTURE POLICY



The United States is a major global economy and trade participant.  Despite this ranking, the logistics infrastructure—ports, roads, bridges, railways, airports, and waterways—is in serious need of repair, upgrading, and replacement.

The American Society of Civil Engineers, for its 2013 report, graded the U.S. infrastructure at D+.  In the Executive Summary, for Transportation (and excluding “transit” as not a logistics issue), the ASCE said—

Transportation
Aviation: Despite the effects of the recent recession, commercial flights were about 33 million higher in number in 2011 than in 2000, stretching the system’s ability to meet the needs of the nation’s economy. The Federal Aviation Administration (FAA) estimates that the national cost of airport congestion and delays was almost $22 billion in 2012. If current federal funding levels are maintained, the FAA anticipates that the cost of congestion and delays to the economy will rise from $34 billion in 2020 to $63 billion by 2040. Aviation again earned a D.
Bridges: Over two hundred million trips are taken daily across deficient bridges in the nation’s 102 largest metropolitan regions. In total, one in nine of the nation’s bridges are rated as structurally deficient, while the average age of the nation’s 607,380 bridges is currently 42 years. The Federal Highway Administration (FHWA) estimates that to eliminate the nation’s bridge backlog by 2028, we would need to invest $20.5 billion annually, while only $12.8 billion is being spent currently. The challenge for federal, state, and local governments is to increase bridge investments by $8 billion annually to address the identified $76 billion in needs for deficient bridges across the United States. However, with the overall number of structurally deficient bridges continuing to trend downward, the grade improved to C+.
Inland Waterways: Our nation’s inland waterways and rivers are the hidden backbone of our freight network – they carry the equivalent of about 51 million truck trips each year. In many cases, the inland waterways system has not been updated since the 1950s, and more than half of the locks are over 50 years old. Barges are stopped for hours each day with unscheduled delays, preventing goods from getting to market and driving up costs. There is an average of 52 service interruptions a day throughout the system. Projects to repair and replace aging locks and dredge channels take decades to approve and complete, exacerbating the problem further. Inland waterways received a D- grade once again as conditions remain poor and investment levels remain stagnant.
Ports: This new category for 2013 debuted with a grade of C. The U.S. Army Corps of Engineers estimates that more than 95% (by volume) of overseas trade produced or consumed by the United States moves through our ports. To sustain and serve a growing economy and compete internationally, our nation’s ports need to be maintained, modernized, and expanded. While port authorities and their private sector partners have planned over $46 billion in capital improvements from now until 2016, federal funding has declined for navigable waterways and landside freight connections needed to move goods to and from the ports.
Rail: Railroads are experiencing a competitive resurgence as both an energy-efficient freight transportation option and a viable city-to-city passenger service. In 2012, Amtrak recorded its highest year of ridership with 31.2 million passengers, almost doubling ridership since 2000, with growth anticipated to continue. Both freight and passenger rail have been investing heavily in their tracks, bridges, and tunnels as well as adding new capacity for freight and passengers. In 2010 alone, freight railroads renewed the rails on more than 3,100 miles of railroad track, equivalent to going coast to coast. Since 2009, capital investment from both freight and passenger railroads has exceeded $75 billion, actually increasing investment during the recession when materials prices were lower and trains ran less frequently. With high ridership and greater investment in the system, the grade for rail saw the largest improvement, moving up to a C+ in 2013.
Roads: Targeted efforts to improve conditions and significant reductions in highway fatalities resulted in a slight improvement in the roads grade to a D this year. However, forty-two percent of America’s major urban highways remain congested, costing the economy an estimated $101 billion in wasted time and fuel annually. While the conditions have improved in the near term, and federal, state, and local capital investments increased to $91 billion annually, that level of investment is insufficient and still projected to result in a decline in conditions and performance in the long term. Currently, the Federal Highway Administration estimates that $170 billion in capital investment would be needed on an annual basis to significantly improve conditions and performance.

As clear as the need is, infrastructure investment has become stalled by politics.  Spending money versus creating jobs, and other rhetoric, has paralyzed action.  The situation is a trade impediment and increases supply chain costs for all.  The inaction negatively impacts the U.S.’s status and competitive position in the world economy.  The inefficiency created by the poor infrastructure also adds to the costs of the supply chains for manufacturers, retailers, and wholesalers.  This adds unnecessary costs for consumers and businesses in the prices they pay.  And, unfortunately, at the rate the issue is being properly addressed, we may face a financial catastrophe on many levels before the needed actions are taken.

Politicians do not recognize logistics as an economic cluster—and the importance of infrastructure in that role.  Unchecked, this “penny wise, pound foolish” short-sightedness has long term implications.
All this should be addressed as national policy.  There is none presently.  Without it, investment is fragmented, subject to political vagaries, and not part of a comprehensive national approach for the flow of goods and people.  The importance is both domestic and international.

Even more, the need is for an integrated policy so that priorities and resources can be properly identified and allocated.  An example of this is the ports.  Investing in ports is not enough—and is not a standalone question.  There are also the corresponding issues of roads and rail access to and from the ports and to handle the volumes of cargo/traffic that they generate.