May 9, 2011

Economist: U.S. can't handle a major increase in exports

Without further investments in freight infrastructure, the country will choke on its economic growth, warns Moffatt & Nichol economist.

By Toby Gooley

The current state of U.S. infrastructure is not adequate to support President Obama's push to double export volumes over the next five years, according to a leading industry economist.

Speaking May 5 at the Virginia Maritime Association's annual International Trade Symposium, Walter Kemmsies, chief economist for Moffatt & Nichol, an engineering firm specializing in transport and infrastructure issues, said the country lacks the "infrastructure to support increased exports" and that without significant changes to the transport system, the United States "will choke on our economic growth."

One problem, according to Kemmsies, is that an infrastructure built around moving containerized import traffic from the West Coast to inland population centers may no longer fit shifting trade and transportation patterns. Inbound containers currently travel to urban areas with large consumer markets. However, most export traffic originates in rural areas where containers are not readily available, Kemmsies said. The often-prohibitive costs of repositioning empty containers or bringing exports to the existing infrastructure have forced some U.S. exporters to shift from containers to bulk shipping methods, said Kemmsies.

"We need more infrastructure to support containerized exports... including building more [bulk-to-container] transfer facilities at ports and more intermodal systems in agricultural areas," Kemmsies said.

Kemmsies told the group that ocean carriers' use of slow steaming to minimize fuel usage is a major reason for West Coast ports' recent gains in market share. It has become faster to drop containers on the West Coast and ship them by intermodal rail to the East Coast than to slow steam to the East Coast, he said. As transportation costs continue to rise, companies with time constraints are finding it more advantageous to ship through the West Coast again, he said.

More articles by Toby Gooley

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