Congress seeks to find path from freight transport “patchwork” to seamless “network”
July 16, 2013
How does this country get from its current “patchwork” of individual modal networks to a coordinated “network” of streamlined efficiency to aid, instead of hamper, our freight and logistics supply chain system?
Great question and Congress appears to want to know.
Prior to leaving town for its lengthy summer recess before returning to work on Sept 5, top Congressional representatives on an important transportation committee visited a FedEx hub and a leading intermodal port to get a feel for the importance of logistics to the overall U.S. economy.
Led by Rep. John J. Duncan, Jr., R-Tenn., chairman of the House Transportation and Infrastructure’s “Panel on 21st Century Freight Transportation,” the group toured a FedEx hub in Memphis and the Port of Memphis, and meeting with representatives of the region’s freight transportation community.
After visiting the Port of Memphis, the fourth largest inland port in the United States, the panel also received briefings on inland waterways issues in general. It learned that port such as Memphis primarily handle bulk freight, compared to ports that handle containerized freight, such as Los Angeles/Long Beach. After that tour, the group crossed the Mississippi River to West Memphis, Ark. to meet with various representatives of the Arkansas and Tennessee transportation and business communities to discuss freight transportation challenges.
“The movement of goods across our nation may not always grab headlines, but the efficiency of freight transportation impacts the lives of every American on a daily basis,” Duncan said in a statement afterward.
He noted that transportation accounts for up to 10 percent of a product’s total cost, so bottlenecks and limitations in transportation system can significantly drive up the cost of everything consumers buy.
“By coming to Memphis, an important hub for U.S. freight transport, the Panel was able to see firsthand how efficiencies can be replicated and where challenges continue to exist throughout our national transportation system,” Rep. Duncan said afterward.
While the tour was largely viewed as a photo op, logisticians and advocates of a smoother, more efficient domestic transportation system said that while such “listening sessions” are useful to a degree, the real work for these congressmen and women remains when they return to their desks in September.
“Supporting infrastructure is a no-risk proposition,” said Mike Regan, president of Chicago-based TranzAct Technologies and head of the advocacy committee for the National Shippers Strategic Transportation Council (NASSTRAC). “In my opinion, what you’re seeing is a lot of gesturing for the cameras with no substantive plan on how to pay for it.”
Regan should know. He helped organize a one-day “fly-in” last year to help educate Congress on the importance of sufficiently funding a long-term transportation bill. What he and other NASSTRAC members got was a 20-month highway bill that basically frozen highway funding at previous spending levels.
While that 20-month bill was better than the nine previous stopgap funding measures of six-months or less in duration, Regan said it is far from what the country needs to adequately address its crumbling infrastructure needs.
That bill, by the way, expires Sept. 30, 2014, and the groundwork already is being laid for a comprehensive, multi-year (five, ideally) that truly addresses spending needs with adequate, and innovative revenue sources.
“The issue is putting that support into a tangible action plan that can be sold to the voters,” Regan told LM. “For all the pontification by Congress on this issue, my answer is ‘So what? What’s going to happen? How are we going to pay for it?’”
What’s needed, Regan and others are telling Congress behind the scenes, is a long-term highway bill (ideally 4-6 years), with adequate funding levels, that will allow road builders and local planners to sufficiently plan for the future.
Regan and others are offering up a three-pronged solution that would go a long way to alleviating congestion, reducing the costs of delays and modernizing our infrastructure.
“First of all, we need a long-term solution,” Regan said. “These continuing resolutions and short-term funding methodologies don’t help us find a long-term solution. We don’t decide today to build a road tomorrow. It’s a three-, five-, sometimes 10-year process. We need a long-term fix.”
The second thing that Washington needs to understand, Regan said, is that building roads and bridges is not a budget-busting expense. “We’re looking for an investment,” he said. “One of things I’d like to ask them to understand the money is being spent in form of congestion, higher fuel costs and hundred billions of dollars wasted because of our antiquated road structure. A Competitive, viable supply chain relies on first class infrastructure. We are investing in infrastructure for benefit of country in terms of jobs, and productivity.”
The third and most important issue facing renewal of the current $256 billion highway bill is how to pay for it. Relying on the current system of federal fuel taxes (18.4 cents a gallon on gasoline, 23.4 cents on diesel, unchanged since 1993) is inadequate. Vehicles are getting better mileage, using less fuel. Because the tax has never been indexed for inflation, it has lost more than 60 percent of its purchasing power since President Bill Clinton raised it in 1993.
“Relying on fuel taxes to pay for the Highway Trust Fund is absolutely imbecilic,” Regan said. “We have to look at several alternatives—vehicle use taxes, variable tolling, a lot of things. We are spending that money now but in different ways. We are spending it in the cost of delays and other bottlenecks.”
David Abney, chief operating officer at UPS, knows first-hand of those costs. He recently testified at the hearing on the importance of logistics to the success of U.S. commerce and the American economy. Each day, the world’s largest transportation company delivers 16.3 million packages to 8.8 million consumers to every address in America.
“Logistics can give us the most efficient path between two points, but logistics cannot improve the underlying transportation infrastructure,” Abney told the freight committee hearing. “Upgrading our highways, airways, railways and ports is something that only Congress and the administration can do. Until our infrastructure is modernized, logistics gains will stall.”
Then Abney proceeded to nail the cause of such delays which are hampering the U.S. economic recovery and hurting our international competitiveness with emerging economies such as India and China.
“Our country’s freight transportation system was built in silos and stitched together as a patchwork,” Abney added. “If we want America to reach the next level of efficiency and productivity, we must shift our approach and transform our infrastructure from a pathwork to a network.”
Confirmation of former Charlotte mayor Anthony Foxx as the nation’s 17th Transportation Secretary, succeeding Ray LaHood, is seen by some in logistics as a positive. As mayor, Foxx spearheaded a multi-billion-dollar expansion of the Charlotte airport to help fuel that city’s international competitiveness.
“You’ve got to be optimistic because of his decision to invest a ton of money in that airport,” Regan said.
But the biggest issue is finding the right mechanism to pay for it all. “Everybody wants roads,” Regan summed up. “Nobody wants to pay for them.”
Reauthorization of the federal surface transportation programs begins with replacing the Moving Ahead for Progress in the 21st Century Act (MAP-21). That expires Sept. 30, 2014—about six weeks before the mid-term elections. Few in Washington expect any sort of comprehensive spending program at that time. Bottom line? Look for at least one, and perhaps, several stopgap continuing resolutions until Congress gets past those elections.
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