NASSTRAC Notes: U.S. Chamber of Commerce head sounds off on economy, infrastructure, and fuel

Jeff Berman, Group News Editor -- Logistics Management, 4/28/2008

ORLANDO, Fla.—With no shortage of major topics impacting the freight transportation landscape, U.S Chamber of Commerce President and Chief Executive Officer Thomas J. Donohue offered his take on several of them as the keynote speaker earlier today at the National Shippers Strategic Transportation Council’s (NASSTRAC) annual conference.

The first subject Dononhue broached was the economy, which he described as uneven because some parts of it are doing well while others are not.

“Even with all the [corporate] writedowns, the subprime credit and mortgage issues, and issues affecting Wall Street, the market is actually doing well,” said Donohue. “At the same time, exports are also doing very well, due to the low value of the dollar. But dollar will not remain low forever, and it is starting to stabilize itself a little bit. Despite all the shocks we have had, the economy is still not in the can. It is global, and there is liquidity everywhere.”

He added that while some U.S. companies are doing particularly well with exports, it is a small number of companies. And this, he said, is putting a “countercyclical” trend into play for transportation and logistics services providers.

Perhaps where Donohue’s most passionate and topical comments were on display was when he discussed the current fuel situation, which has shippers and carriers on the ropes with the average price per gallon of diesel above the $4 mark and oil inching up on $120 per barrel.

“What is it about fuel?” asked Donohue. “Who are we blaming? Why are prices so high?”

In answering those questions, Donohue surmised that the majority of the fuel-related issues the United States is currently experiencing can be attributed to a national policy on energy that is a cross between stupidity and hypocrisy.

“Our issues on fuel are simple,” he said. “First of all, people don’t know where we get it. Only 16 percent comes from the Middle East. Most of it comes from Canada, Mexico, Venezuela, and the U.S.”

Donohue relayed that he was recently asked if anything could be done to drive down the price of oil and gas, and he said off-shore drilling in Alaska and the East Coast of the U.S. and “quietly and cleanly in the Rockies” should be considered as options the U.S. government needs to consider.  

Infrastructure issues: The subject of transportation infrastructure is front and center at NASSTRAC this week, and Donohue made his feelings on the subject very clear. He explained that the U.S. economy is currently at around $13-to-$14 trillion and will continue to grow roughly 2.5 percent annually. And in another ten or 11 years, he explained it will be a $20 trillion economy.

“For the period between $13-$20 trillion, the infrastructure in this country is going to be runnung into a wall,” said Donohue. “Air traffic control systems and electrical systems, refineries, and electrical lines are all going to be needed even more when we hit $20 trillion and the population has increased.”

And there also will be a significant need for more roads, bridges, ports, railroads, as well as broadband and telecommunications systems, will serve as the table that our whole economy is placed on, he said. If investments are not made toward these initiatives to meet the projected future growth, Donohue said that the U.S. will have made a huge mistake.

In order to make sure the funding is there to get things moving in the right direction, he proposed that the U.S. needs to “quit fooling itself,” when it comes to the federal motor fuels tax, which, if raised, could help fund future infrastructure projects.

“We have not passed a fuel tax on the federal level in this country for 14 years,” noted Donohue. “Infrastructure is the deal, and unless our fellow citizens look at it and deal with it, we will continue to have a problem.”

He likened it to if Social Security had a problem on a Monday, it would be fixed soon after. But if infrastructure problems persist, he said it will take years to fix the problem.