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ASCE report points to the need for increased infrastructure investment

By Jeff Berman, Group News Editor
January 16, 2013

To say that the United States is severely underfunding its infrastructure needs and requirements would be an understatement of the highest order. That was made clear in a report released this week by the American Society of Civil Engineers (ASCE).

Entitled “Failure to Act: The Impact of Current Infrastructure Investment on America’s Economic Future,” the report takes a deep dive into the economic consequences of continued underinvestment in the country’s infrastructure along with providing an overall picture of the economic opportunity related to infrastructure investment and the cost of failing to fill the investment gap.

The ASCE said that with an additional investment of $157 per year—in conjunction with expected U.S. spending of roughly $207 billion per year—between now and 2020 could eliminate a drag on economic growth and protect $3.1 billion in GDP, $1.1 trillion in U.S. trade value, 3.5 million jobs, $2.4 trillion in consumer spending, and $3,100 in annual personal disposable income.

What’s more, it said that in tandem with current investment trends cumulative infrastructure investment needs will be about $2.7 trillion by 2020 and rise to $10 trillion by 2040. ASCE said it is expected that there will only be available funding to cover 60 percent—or about $1.7 trillion—of those needs through 2020, which will subsequently drop to 53 percent by 2040, leading to the expected investment gap of $1.1 trillion by 2020 and $4.7 trillion by 2040.

Projections provided by the ASCE in this report include the cost of building new infrastructure to service increasing populations and the cost of expanded economic activity and for maintaining or rebuilding existing infrastructure that needs repair or replacement. And it added that this report focuses on the incremental and gradual decline of infrastructure systems under current investment scenarios.

The data and projections in this report were welcome news to Leslie Blakey, executive director of the Coalition of America’s Gateways and Trade Corridors.

“I am so glad that ASCE is again highlighting the cost of deferred action on addressing our nation’s critical infrastructure needs,” said Blakey. “In light of these costs to our economic vitality, it is hard to understand how anyone would think we can afford to delay these essential investments.”

Blakey’s comments in prescient, considering the ongoing game of kick the can played by Congress when SAFETEA-LU, a six-year, $285 billion transportation authorization expired September 30, 2009 and remained intact through nine continuing resolutions until MAP-21 (Moving Ahead for Progress in the 21st Century) a 30-month, $118 billion authorization was signed into law by President Obama last July. MAP-21 will keep funding at current levels through the end of Fiscal Year 2014.

Lack of adequate infrastructure investment also results in higher costs for businesses and households for various reasons, said ASCE, including unreliable transportation services, less reliable water and electricity services, and unmet maintenance needs and outdated facilities for airports, marine ports, and inland waterways.

And the report noted that cumulative impact of deficient infrastructure due to continued underinvestment in the transportation, water, energy, and port sectors is predicted to result in the loss of $3.1 trillion in U.S. GDP, with losses comprised of $484 billion in exports and $1.1 trillion in total trade, among others.

In a the U.S. Chamber of Commerce’s Free Enterprise blog, Janet Kavinoky, Executive Director, Transportation & Infrastructure for the Chamber, wrote that the supply chain benefits of a properly funded infrastructure network are vast.

“Retailers need a multi-modal, intermodal system—one where ports, trucks, and trains move goods quickly and seamlessly to store shelves,” wrote Kavinoky. “Manufacturers’ supply chains are complex, and the efficient management of those supply chains through sophisticated logistics systems are challenged by infrastructure that underperforms.”

What’s more, she said that it is time to bridge the gap between recognition of the needs and willingness to act, pointing out that the ASCE report cites large needs, which can be met if our elected and appointed officials are willing to:
-show leadership and address the revenue needs as soon as possible rather than waiting for the next infrastructure crisis;
-tap private sector project delivery and financing resources to get projects done sooner so that the benefits start to add up; and
-get out of the way when the private sector is trying to invest in its own networks.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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