The federal government's failure to deal with the infrastructure crisis has states—and even corporations—thinking about stepping in. That could prove a mixed blessing.
By now, it's pretty clear to everyone in the country that we have a serious transportation infrastructure problem. Many bridges and highways are in deplorable condition, and the amount of time we spend stalled in traffic increases with each passing year. In 2011, the average commuter lost 34 hours due to traffic delays, compared with 14 hours in 1982. The cost of this congestion exceeds $100 billion annually, according to the Texas A&M Transportation Institute. These delays, combined with the cost of fuel and restrictive driver hours-of-service regulations, also contribute to the ever-increasing cost of moving goods by truck.
Certainly, the federal government is aware of the issue. President Obama mentioned it in his most recent State of the Union address. Congress has passed several bills and conducted hearings on the subject. The first hearing of the new House Transportation Committee focused on the topic and reinforced the president's concern. So what's the problem? The problem is that no one has developed a plan for improvement or a mechanism for paying for the improvements. And they won't come cheap. The U.S. Chamber of Commerce has urged Congress to increase the federal fuel tax, which has not been raised since 1993. Obviously, that is a political football; but if nothing is done, the Highway Trust Fund (the primary source of funding for surface transportation projects) will be depleted within two years.
In fact, it appears the effects of the funding squeeze are already being felt. On Christmas Day, 2012, a headline on the front page of The Memphis Commercial Appeal read "Memphis – Kentucky I-69 Quietly Shelved." As the story explained, after 20 years of planning, design, and spending, the state of Tennessee has decided to discontinue work on the 156-mile segment of Interstate 69 stretching from southern Kentucky to northern Mississippi. This is particularly disappointing in that I-69 has been designated the NAFTA Highway, since it would provide a direct connection with Canada and Mexico. Why has Tennessee backed away from the project? The federal government has not provided the funding necessary to complete the work.
In the face of the federal government's failure to act, states are beginning to take matters into their own hands. Two months ago, the Virginia General Assembly passed a transportation bill that among other things, would eliminate the retail fuel tax and replace it with a wholesale gas tax. The general sales tax would be increased by 0.3 percent. The total bill is expected to generate about $850 million annually for transportation projects. The increased taxes will not be universally popular, but the commonwealth appears to be on track to alleviate congestion. Virginia is also encouraging investment by private entities and has been doing so for some time. Last month, Maryland passed legislation similar to Virginia's, and bills are also being considered in New Hampshire and Massachusetts.
It's not just the states that are attempting to tackle the infrastructure problem. The powerful business advocacy group The U.S. Chamber of Commerce has joined in the effort through its "Let's Rebuild America" initiative. One of the program's key goals is to encourage public/private partnerships, and the chamber points to several instances of how such partnerships have resolved significant infrastructure issues.
While I have always been an advocate of the federal government's doing its job by developing a plan and providing the funds, I am finally convinced that this simply is not going to happen. Still, the private/public partnership route could prove a mixed blessing. To me, the one big risk is that the states and corporations will do what is best for them, but not necessarily best for the country.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.