• ITVI.USA
    15,285.540
    -94.080
    -0.6%
  • OTLT.USA
    2.776
    -0.010
    -0.4%
  • OTRI.USA
    21.450
    -0.050
    -0.2%
  • OTVI.USA
    15,256.620
    -93.130
    -0.6%
  • TSTOPVRPM.ATLPHL
    3.300
    -0.240
    -6.8%
  • TSTOPVRPM.CHIATL
    2.950
    -0.020
    -0.7%
  • TSTOPVRPM.DALLAX
    1.440
    0.000
    0%
  • TSTOPVRPM.LAXDAL
    3.310
    0.060
    1.8%
  • TSTOPVRPM.PHLCHI
    2.150
    0.020
    0.9%
  • TSTOPVRPM.LAXSEA
    3.950
    -0.100
    -2.5%
  • WAIT.USA
    126.000
    1.000
    0.8%
  • ITVI.USA
    15,285.540
    -94.080
    -0.6%
  • OTLT.USA
    2.776
    -0.010
    -0.4%
  • OTRI.USA
    21.450
    -0.050
    -0.2%
  • OTVI.USA
    15,256.620
    -93.130
    -0.6%
  • TSTOPVRPM.ATLPHL
    3.300
    -0.240
    -6.8%
  • TSTOPVRPM.CHIATL
    2.950
    -0.020
    -0.7%
  • TSTOPVRPM.DALLAX
    1.440
    0.000
    0%
  • TSTOPVRPM.LAXDAL
    3.310
    0.060
    1.8%
  • TSTOPVRPM.PHLCHI
    2.150
    0.020
    0.9%
  • TSTOPVRPM.LAXSEA
    3.950
    -0.100
    -2.5%
  • WAIT.USA
    126.000
    1.000
    0.8%
American Shipper

If not sexy, utterly important

Wouldn’t wholesale infrastructure spending be a perfect way to celebrate the DOT’s 50th anniversary?

   Infrastructure is sexy. Ok, maybe not, but we can all agree it is critical to the U.S. economy on many levels, from supporting jobs in construction and maintenance to providing the conduit for shipping goods.
   The scale and scope of our shipping infrastructure is enormous: 4 million miles of roads, 614,387 bridges, 140,000 miles of rail track, 25,000 miles of inland waterways, and 926 ports. Given the attention it has received over the past few weeks, infrastructure, if not sexy, certainly has become a focal point.
   April 1 marked the 50th anniversary of the U.S. Department of Transportation. During her remarks at an open house celebrating the anniversary, Secretary of Transportation Elaine L. Chao said, “the infrastructure we all grew up with is aging,” adding that refurbishing and modernizing infrastructure was noted as one of President Trump’s priorities. The urgency of the need to act is reflected in the March release of the American Society of Civil Engineers’ (ASCE) quadrennial Infrastructure Report Card.
   The 2017 report card, covering 16 categories, gives the national infrastructure a D+. Although the core transportation and shipping categories—bridges (C+), inland waterways (D), ports (C+), rail (B), and roads (D)—get a C average, the mediocre grade still reflects an area that needs attention. As an interesting point of reference, the World Economic Forum Global Competitiveness Report 2016–2017 ranked the United States seventh for overall transport infrastructure, 13th for roads and for rail, and 10th for ports.
   While not, as President Trump claimed during his campaign, at levels of a third world country, the United States consistently ranked behind countries such as the United Arab Emirates, Singapore, the Netherlands, Japan, and France. The ASCE report also notes a cumulative infrastructure need of $4.6 trillion and a funding gap of $2.1 trillion through 2025. Focusing on surface transportation, rail, inland waterways, and marine ports, the funding gap stands at $1.1 trillion.
   During her anniversary comments, Secretary Chao said Trump’s “infrastructure initiative, which will be announced later this year, will include a strategic targeted program of investment valued at $1 trillion over 10 years.”

Despite all the energy we can expect to be spent in political debate during the coming months, we appear headed for an insufficient outcome.

   Sounds like a well-aligned solution—except she also said it would “cover more than just transportation infrastructure” and “will include energy, water, and potentially broadband and veterans’ hospitals.” What will actually be directed toward our shipping infrastructure remains to be seen.
   In the wake of the House’s failure to pass a healthcare bill, an infrastructure bill would seem to be an opportunity to generate bipartisan support. Although the bill is still being developed (Secretary Chao more recently said the administration plans to present the bill as early as May), speculation is that it will include direct federal funding of less than half the $1 trillion objective, with the remainder consisting of tax credits as incentive for private investment.
   While aligned on a $1 trillion objective, not unexpectedly, Democrats, led by Senators Chuck Schumer (D-NY) and Bernie Sanders (I-VT), in January proposed a competing plan that relies on direct federal spending. From a shipping infrastructure perspective, however, this plan (also a 10-year proposal) comes up short of the $1.1 trillion funding gap with $210 billion for roads and bridges, $180 billion for rail and bus, and $70 billion for ports and airports.
   Despite all the energy we can expect to be spent in political debate during the coming months, we appear headed for an insufficient outcome. Hopefully, as a shipping community, we can encourage our elected officials at all levels to recognize several important issues:
   • The need for $1 trillion in shipping infrastructure for roads, bridges, rail, waterways, and ports
   • The reality that the funding mechanism is not an either-or situation but will require both significant direct funding and incentives at state and federal levels, possibly including an infrastructure bank (an approach favored by Canadian Prime Minister Justin Trudeau to address Canada’s infrastructure challenges)
   • The important role that streamlining state and federal permitting will play in lowering development costs and accelerating spending while also maintaining appropriate safeguards for environmental protection
   Making real progress on this crucial topic would be a great anniversary gift for the DOT. And if you still don’t think infrastructure is sexy, take a look at John Oliver’s Infrastructure report on HBO’s “Last Week Tonight.”

  Sean Monahan is a 30-year supply chain practitioner and partner with A.T. Kearney, a global management consulting firm.

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