Duncan: U.S. needs a unified transportation strategy

John Schulz, Contributing Editor -- Logistics Management, 2/1/2006

WASHINGTON—Logistics Management Contributing Editor John Schulz recently spoke with Douglas G. Duncan, president and chief executive officer of FedEx Freight. Duncan is a staunch transportation industry advocate and takes a leadership role in the trucking industry. He serves as Chairman of the American Transportation Research Institute (ATRI) and is a member of the executive committees of the American Trucking Associations (ATA) and the Transportation Research Board (TRB).

During Duncan's recent visit to Washington, D.C., he spoke out on the abysmal level of spending on the nation’s infrastructure and the pressing need for shipper and carrier communities to pull together to ensure that transportation receives the attention it deserves on Capitol Hill.

Q. How’s business?

A. Business is very good. We had a good peak season. In our quarter that ended in November we were up 14 percent year over year, which is very good. Retail season was very strong. All the signs we look at indicate a pretty strong economy. But that’s not where all our growth is coming from.

Q. What is your growth forecast for the next 12 months?

A. Our economist describes the economy in its mid-cycle of an expansion. Retail and industrial production would indicate that’s so. But the LTL business has become such a value-added piece of the supply chain. A lot of our growth is fueled by that.

Q. Is this country spending enough on its transportation infrastructure?

A. In general, it’s not spending enough and it’s not spending it in the right places. The Interstate Highway System was a gift to us that was basically a post-war jobs program. We’ve been harvesting it and haven’t been plowing back for the future. The recently passed ($286 billion over six years) highway-spending bill was three years late. It’s probably enough for maintenance on the system but it doesn’t address our needs for growth.

Q. What does that lack of spending mean for logisticians?

A. Logistics managers have done a marvelous job speeding things throughout the supply chain. We in the trucking industry have done a great job meeting those needs. But we’re on a collision course if we want to continue to make those improvements. There is gridlock on the highways in certain parts of this country. If you look at the forecasts of freight growth that coming our way in the next 10 years, there’s going to be a real collision. The spending just is not there to meet the needs

Q. What is most needed?

A. Obviously there’s congestion that’s getting worse in some areas. Rather than having a highway-spending program that simply turns back money to the states, we have to look at priorities on a national basis, not a state-by-state basis. We have issues at ports and connectivity at the ports that’s a problem. The amount of traffic in and out of ports is going to grow more than the central parts of this country. We need to prioritize where the needs are, rather than spend the same across the country.

Q. Does this country need a National Transportation Policy?

A. It gets to that. But it starts with a national transportation strategy. We have to understand the constraints we have and what we need to support commerce in this country. You can’t look at it by mode. You have to look at it as a national system. Intermodal, [passenger] transit, you have to look at it all together. There has to be a strategy of meeting tomorrow’s transportation needs.

Q. What are the roadblocks to that?

A. I really think it’s a case of education and research. We just have to make the case. When I joined the Transportation Research Board, freight transportation was kind of an interesting point on the outline. Now it’s a dominating theme. Now people are predicting what congestion will be, and it’s scary. This country is really great at responding. We have to do a better job of making the case for the need for freight infrastructure spending.

Q. But freight doesn’t vote…

A. It’s an obstacle you can overcome. We can do a better job promoting our interests as an industry. We can work with other modes. There are research groups to help us make the case. It’s easy to criticize government for not doing something, but we can do a better job as an industry.

Q. Is there a role for shippers?

A. There is. Embarrassingly, they are probably ahead of the carriers on this issue. It behooves us at the [American Trucking Associations] to have a proactive strategy. There are a lot of organizations willing to support that strategy. We as an industry have to take the first step. The shipper groups will work very hard to help us.

Q. What is the likelihood of more productive, longer combination vehicles any time soon?

A. It’s part of the strategy. It’s not just expanding highways; it’s making more productive use of the highways we have. The ban on longer combination vehicles [since 1992] has been counterproductive to what we’re talking about?

Q. Is the trucking industry still split on the need for more LCV’s?

A. There’s progress being made, but not enough to suit me. The agreement with the railroads [not to pursue more use of LCV’s] has expired. Now we have a free forum to explore all possibilities. I have a hunch we’ll be more successful within the ATA to be more unified on the size and weight issue.

Q. This is the 50^th anniversary of the National Defense Highway Act, which created our current Interstate Highway System. How visionary was that act?

A. It’s been huge. There are times to be bold in things like that. There weren’t that many environmental studies and return-on-investment issues back then. It was a defense and jobs program. It gave jobs to thousands and thousands of returning veterans. That same issue is there today. Highway construction builds tremendous number of jobs, and they won’t reside in China. It takes a lot of vision to do that. We may be there again.

Q. Has transportation lost its priority on Capitol Hill?

A. When you try to meet everybody’s priorities, nobody’s priorities are met. Today we have to be much better at prioritizing where we need to spend and where we need to save. Transportation is important, and most people realize that. But there are other issues like homeland security, terrorists, and the war on terrorism. It’s not that transportation has become less important. Other things have taken the headlines, and rightfully so. We haven’t lost our importance on transportation the importance of supply chain. I couldn’t be prouder of the gains we’ve made and how far the trucking industry has come. But there are some issues that have to be dealt with.

Thank you.