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American ShipperIntermodal

UPS boss slams U.S. transport infrastructure, warns of economic impact

UPS boss slams U.S. transport infrastructure, warns of economic impact

   UPS’ chief executive officer Mike Eskew Thursday warned that the United States’ economy risks stagnation if its transport network continues being neglected.

   “What’s shocking, quite frankly, is the inability of our transportation infrastructure to keep up with the normal day-to-day stresses imposed upon it,” Eskew said. “Our highways, waterways, railroads and aviation networks are simply not keeping up with ordinary demands.”

   Eskew was speaking at the Houston Forum in front of assembled business leaders and executives.

   Citing a report issued last year by the American Society of Civil Engineers, Eskew said: “In 2005, here’s what our infrastructure report card looked like: our aviation system got a D+; navigable waterways a D-; roads a D, and rails a C-. If your kids brought home report cards like this, someone would be grounded.”

   “I don’t think we’ve reached gridlock yet, but if we don’t do something about it, it’s only a matter of time. Why do I say this? Well, it’s just a simple matter of supply and demand. On the supply side, we have four million miles of public roads and bridges. More than 5,200 airports, 163,000 miles of railroad, 9,000 commercial docks, wharves and piers.

   “It’s an infrastructure valued at $2.2 trillion dollars, representing 7 percent of all fixed assets in the U.S. But even all these assets aren’t enough. Because of the growth in global trade, demand is rapidly outpacing supply.

   “It’s only going to get worse, as ocean cargo volume is expected to double by 2020. And yet, few U.S. ports have channels deep enough to accommodate the largest ocean-going container ships. Our inland waterways that help move goods within the country are also aging and stressed. Nearly half of all the locks on these inland waterways are functionally obsolete, according to the Army Corps of Engineers.

   “Back on terra firma, things aren’t any better. We depend on trucking to transport 90 percent of the products made or shipped in the U.S. But trucks are increasingly stuck in traffic, going nowhere fast and burning fuel. Between 1970 and 2003, vehicle travel on highways shot up by 161 percent. Yet new road mileage increased by only 6 percent.

   “In America’s 85 largest metro areas in 2003, 54 percent of travel involved heavy to extreme congestion, up from 20 percent in 1982. Road congestion costs the U.S. economy more than $63 billion every year, and the price tag is going to go up. Road use is expected to increase by nearly two-thirds in the just the next 20 years.

   “The story is similar on the railways, where rail freight tonnage is expected to increase by at least 50 percent by 2020. The U.S. rail system is experiencing unprecedented volume of international freight. In fact, half of all rail intermodal traffic today is international. That’s four-and-a-half million trailers and containers. To put that into perspective: In 1980, domestic and international traffic combined equaled three million trailers and containers.

   “We can’t wait on this. We need to move forward now,” Eskew said. He noted that the federal government spent about $91 billion on transportation construction in 2004, but said that a new approach was needed. “We don’t just need to spend more money on our infrastructure. We need to target that money strategically, using a holistic strategy.

   “By holistic, I mean taking into account how all the air, ground and water-based systems work together, and increasing the integration of all these different modes of transport. For example, all the port capacity in the world won’t prevent bottlenecks if there isn’t enough rail freight capacity on which to unload the ocean shipments.

   “If we’re going to take our rightful place as a nation in the world of trade, we must have the best infrastructure,” Eskew concluded. “We need to ask ourselves, whether we’re in the public or private sectors: Are we willing to stand by and watch as we slide into gridlock? Or are we willing to take the necessary steps today to ensure a vibrant economy tomorrow? Do we really have a choice?”