Transportation leaders say next president must improve U.S. infrastructure

by John D. Schulz, Contributing Editor -- Logistics Management, 10/7/2008 8:20:00 AM

WASHINGTON -- Whether it’s Sen. Barack Obama or Sen. John McCain sitting behind the Oval Office next Jan. 20, he will find one problem that is bipartisan. The nation’s roads, bridges, airports, ports, intermodal links and waterways are deteriorating to an embarrassing point where it threatens U.S. competitiveness.

“It's no secret we need our leaders in Washington to focus on improving the nation's infrastructure,” American Trucking Associations President and CEO Bill Graves told Logistics Management Magazine.

In one of the rare instances of truck-rail unanimity, Graves’ opposite number at the Association of American Railroads, Edward R. Hamberger, agrees.

“We hope that the next Congress and administration will recognize the importance of expanding the nation's transportation infrastructure, including the capacity of the rail freight network,” Hamberger told LM. “Economic growth depends on reliable freight transportation, and freight rail must be part of that equation. Expansion of our transportation infrastructure should be one of the top domestic priorities.”

That’s for sure. Bridges are falling literally into rivers. The nation hasn’t added a runway at a significant U.S. airport since Denver International Airport opened in 1995. A coalition of engineers estimates it would take an investment of $1.2 trillion over the next 10 years to bring U.S. infrastructure open to standards. The Texas Transportation Institute has estimated congestion costs this country $168 billion annually, with 40 percent of that due to bottlenecks in our system.

“We can build a lot of roads for that amount of money,” said Pat Quinn, co-chairman of U.S. Xpress, the nation’s 16^th-largest trucking company with $1.6 billion revenue last year. said. “It’s not just for trucks, either. It has to be improvements in conduits to ports and rails--our entire transportation system.”

So as the nation prepares to elect its 44^th president, transportation leaders are asking themselves, “Who would be better for my industry or my company, Barack Obama or John McCain?”

The difference between the two candidates on transportation and infrastructure is startling. On the Barack Obama web site, there is a richly detailed, four-page single-space plan on how President Obama would strengthen and revitalize the nation’s highways, roads and bridges.

By contrast, the John McCain web site says nary a word about transportation. Even though there are plans on many issues ranging from ethics reform to Second Amendment gun rights, the McCain site shows no detailed plan for transportation. A campaign spokeswoman emphasized, however, that Sen. McCain does believe improving the country’s transportation links is vital to national security, but she did not provide specifics

Sen. Obama is calling for creation of a “National Infrastructure Reinvestment Bank” to expand and enhance—but, importantly, not supplant-- existing federal transportation investments. This independent entity would invest in most challenging transportation infrastructure needs. The infrastructure bank will receive an infusion of federal money--$60 billion over 10 years--to provide financing to transportation infrastructure projects across the nation. These projects will create up to 2 million new direct and indirect jobs per year and stimulate approximately $35 billion per year in new economic activity.

There are also highly detailed plans on how an Obama administration would modernize the nation’s outdated air traffic control system, increase Amtrak funding, support development of high-speed rail, modernize infrastructure on the Mississippi and Illinois Rivers for barges as well as how to improve public transportation and transportation planning.

While it’s difficult to say how individual industries and their employees vote, in general transportation executives tend to favor Republicans while their workers usually vote Democratic.

To be sure, transportation contributions tend to favor Republicans. According to the Center for Responsive Politics, contributions from the trucking industry (including Political Action Committees, businesses and individuals) were running 28 percent to Democrats and 72 percent Republicans in this election cycle. That compares with trucking’s 15 percent Democratic contributions and 85 percent Republican four years ago.

By contrast, rail interests were nearly split – 44 percent for Democrats and 56 percent for Republicans—in this cycle. Air interests were nearly exactly the same, according to the bipartisan CRP.

The Teamsters were listed as the 11^th biggest donor in this election cycle, with 90 percent going to Democrats. UPS and FedEx were the 21^st and 22^nd largest contributions, with roughly one-third of their donations going to Democrats and the rest to Republicans.

Shortly before the election, the National Industrial Transportation League (League) called upon both candidates to describe what specific measures they would take as president to address the problems of the nation's freight transportation system. NIT League President Bruce Carlton said “few details” from the candidates have been heard during the course of the campaign.

Carlton the current surface transportation authorization law, "SAFETEA-LU" expires next year, and with such problems as congestion worsening and infrastructure in all modes in dire need of simple maintenance, "bold new leadership and new ideas on effective ways to meet these national challenges must be offered.

"The NIT League would like to see a “national freight transportation policy” with

clear goals and effective tools to achieve infrastructure improvements. That has been tried before. Under the first President Bush, Transportation Secretary Samuel K. Skinner spent more than a year producing a national transportation policy. Unfortunately, it had limited appeal and a very short shelf life in the Washington issues process.

Carlton of the NIT League said he believes the “stakes have never been higher” for transport.

With 80 percent of the nation's freight moving by truck, ATA’s Graves says the nation needs a focus on freight movement. As the federal highway program comes up for reauthorization next year, the ATA is emphasizing as one of its top priorities the nation's decaying infrastructure.

“We need a highway program that directs our diesel and gasoline tax revenues to eliminating the bottlenecks and chokepoints in the system,” Graves said. “We need a highway program that expands capacity. We need a highway program that restores trust to the Highway Trust Fund. The nation's infrastructure is our work place and eliminating congestion is our top priority.

That Highway Trust Fund is essentially broke. The federal tax on fuel – currently 18.4 cents a gallon on gasoline, 24.4 cents on diesel – has not kept pace with inflation. Republicans generally favor new funding mechanisms--higher tolls, congestion pricing and privatization—while Democrats do not generally resist raising user fees. The last time the federal fuel tax was changed was 1993 in the first year of the last Democratic administration, Bill Clinton’s.

Truckers have been sending signals for years in Washington that they would accept a higher tax on fuel – truckers already spend more than $35 billion in federal and state fuel taxes, accounting for more than 36 percent of the Highway Trust Fund – if they received assurances that all those taxes were spent on surface transportation projects.

“We need a lot of work done to maintain the roads we have,” Graves said. “And we need additional funds to expand capacity nationwide. But to do that, we need more resources. We understand that you can’t have something for nothing. But we would like to see reform to the current highway program, to get more bang for our buck and ensure that revenue streams are spent appropriately.

Hamberger of the Association of American Railroads said it is “readily apparent that congestion is a serious problem,” one that flows across all modes of transportation.

Highway traffic has doubled over the past 25 years, yet highway capacity has increased only marginally. Nationally, the cost is staggering --- 2.9 billion gallons of gasoline and 4.2 billion hours wasted every year.

Meanwhile, freight density on the nation's railroads has tripled over the past 25 years. Railroads spend billions of dollars every year to maintain and upgrade track and equipment and to increase capacity, Hamberger said.

“Yet many rail corridors either are already at capacity or are close to it,” Hamberger said. “The result is that they experience congestion at peak traffic times.

It’s not much better at the ports. The explosion in international trade has resulted in a tripling of container volume since 1990. Ports are straining to keep up with that volume.

“Freight rail can be an important part of the solution to these problems, but only if the capacity of the network is expanded,” Hamberger said.

There are important public benefits to be gained from such an expansion. Hamberger noted that last year, freight railroads moved a ton of freight an average of 436 miles on each gallon of diesel fuel, more than three times as far as by highway. If just 10 percent of the long-distance freight currently moving by highway moved instead by rail, 1 billion gallons of diesel fuel could be saved annually.

Moreover, he said, if just 10 percent of the long-haul freight moving by highway were to shift to rail, greenhouse gas emissions would be reduced by more than 12 million tons annually. Because a single intermodal train can remove 280 trucks from the highways, reducing highway congestion, fuel consumption and energy use all at the same time.

But in order to realize all of these public benefits, rail freight capacity must be increased by more than can be justified on strictly economic grounds. Hamberger is pushing Washington to pass the tax incentives like those contained in the bi-partisan Freight Rail Infrastructure Capacity Expansion Act, which would offer rails a 25 percent investment tax credit, as an efficient and economical way to gain those public benefits.

At press time, a month before the election, Obama was holding a small but growing lead over McCain. If Obama wins, that would mean transportation companies might see increased union organizing efforts, as the Democrat has indicated his preference for the Employee Free Choice Act (or Card Check). One of Obama’s first major endorsements came from the Teamsters union, which is pushing for the card check process of organizing.

While in the Senate, both candidates voted in favor of 100 percent cargo inspection for air cargo containers, which that industry opposes because of costs. But it’s already law. The Transportation Security Administration (TSA) must achieve 100 percent air cargo screening by August 2010, but it’s unclear exactly how that screening will be performed.

Sen. Obama has been an outspoken critic of the North American Free Trade Agreement (NAFTA). In a memorable quote from the campaign, Obama declared: “Trade deals like NAFTA ship jobs overseas and force parents to compete with their teenagers to work for minimum wage at Wal-Mart.” Conversely, Senator McCain has spoken out in favor of NAFTA and other free trade accords.

If NAFTA’s impact would be decreased, that could affect import levels. If that were to happen, third-party logistics companies might lose customers and shippers of north-south border trade might lose a competitive edge as they could be facing higher costs.

The new president, whoever it is, will be facing daunting challenges ranging from fighting two wars to climate change to the health of the overall U.S. and world economic systems. Transportation has its own issues, but its leaders are trying to get the ear of Washington by reminding the new president of transport’s importance in the overall economic scheme.

“At the end of the day,” said ATA’s Graves, a former Republican governor of Kansas, “we need our freight modes to be able to work for the U.S. economy.”