October 14, 2008

Hard road ahead for physical infrastructure

By DC Velocity Staff

The issue of the logistics infrastructure got plenty of attention during the conference, drawing discussion in at least two different panel discussions. The reason is simple enough. Demands on infrastructure—ports, roads, railroads, waterways, and airports—are growing faster than capacity. The result is bottlenecks, delays, safety and security concerns, and a host of other issues.

"U.S. capacity additions lag growth in trade," Paul Bingham told those attending a seminar on the effects of globalization on infrastructure. Bingham, managing director of Global Insight's Trade and Transportation Group, warned that failure to expand the U.S. infrastructure could harm the U.S. economy by creating higher delivered costs for imports, increasing congestion, reducing transit time reliability, and more. All of these factors would add up to a lower standard of living for the nation.

Bingham's remarks are timely as Congress will be addressing the highway funding legislation next year. Bingham expects Congress to consider alternatives to the fuel tax for funding maintenance and construction as well as reducing restrictions on truck size and weight, which could improve motor carrier productivity. An earlier panel of less-than-truckload company executives also expressed some confidence that Congress will lift the size and weight restrictions.

One of the major roadblocks to this in the past has been the railroad industry, which have opposed easing size and weight restrictions. But Christopher Norek, a senior partner with Supply Chain Connectors, who spoke on the same panel with Bingham, suggested that railroads might be willing to ease back on their objections, particularly if truckers support the railroads' efforts to win tax credits for their own infrastructure investments.

The country's infrastructure issues are much broader and deeper than roads and railroads asserted Janet Kavinoky, director of transportation and infrastructure for the U.S. Chamber of Commerce. Kavinoky is leading the chamber's Let's Rebuild America initiative to consolidate efforts urging Congress to address pressing infrastructure issues. "If we don't deal with these problems, fuel costs, emissions, and costs are going to go up," she said. "We have more needs than we can pay for." She pointed out that in addition to the highway funding bill, Congress must also address federal aviation funding and the Water Resources Development Act next year.

The nation faces major challenges to other segments of the overall infrastructure, including electricity, broadband, telecommunications, and water resources. "If we don't deal with it, we are going to have more congestion, more deaths, more time commuting, more time sitting on runways," she said. "The longer we wait, the cost of repair and replacement will go up at an astronomical rate."