The American transportation infrastructure—including ports, roads, rail and airports—is in poor shape. In fact, according to a bipartisan panel of experts and two former secretaries of transportation, Norman Mineta and Samuel Skinner, an additional $134 billion to $262 billion must be spent per year through 2035 to rebuild roads, rail systems and air transportation. And that estimate doesn’t include the costs to maintain and upgrade the nation’s ports.

The costs to the country are enormous. Stated by the Texas Transportation Institute’s 2009 Urban Mobility Report, in 2007 wasted fuel and lost productivity costs for U.S. drivers stuck in traffic reached $87.2 billion or $750 for every U.S. driver. This topped 2.8 billion gallons—three weeks worth of average gasoline consumption for every driver. Plus, the cumulative amount of time wasted in idling traffic for all drivers totaled 4.2 billion hours—nearly one full work week for each driver.

Impact on Global Competitiveness

“Transportation systems are the backbone of America: They keep our nation strong and moving. But we have not been taking good care of this resource. Lacking a coherent vision for our transportation future and chronically short of resources, we defer new investments, fail to plan and allow existing systems to fall into disrepair,” according to the Miller Center of Public Affairs at the University of Virginia.

Very importantly, the Miller Center notes, “Our chief trading partners are making significant investments in their transportation infrastructure; America must do the same to remain competitive.” To compete with emerging economic powerhouses like China, the United States needs to become more efficient. And this includes making new investments in transportation infrastructure. Currently, as a percentage of its Gross Domestic Product, China spends approximately twice as much on capital investment as does the United States.

Stated by President Lyndon B. Johnson in 1966, “Modern transportation can be the rapid conduit of economic growth—or a bottleneck.” In recent years, it appears to have become a bottleneck.

Two American Ports in Top Twenty

The level of transportation efficiency has a direct impact on the cost of U.S. goods and services—whether sold in the United States or abroad. According to a U.S. Department of Transportation report released January 2011, one container in every 11 engaged in global trade is either bound for or originates in the United States. This accounted for 9 percent of worldwide container traffic.

However, in 2009 only two U.S. ports—Los Angeles and Long Beach—ranked among the world’s top 20 container ports as measured in TEUs (twenty-foot equivalent units), placing 16th and 18th respectively. The Port of New York/New Jersey ranked 22nd, falling from 20th in 2008, the report says.

In The Spotlight

Despite this, the United States continues to be the world’s largest trading nation. Total U.S. container traffic more than doubled in volume between 1995 and 2007, from 22 million TEUs to an estimated 45 million, before falling to approximately 43 million in 2008 and to 37 million in 2009. Between 1995 and 2009, world container traffic more than tripled in volume, from 137 million TEUs to 432 million TEUs.

Shifts in Container Trade Patterns

With the expansion of the Panama Canal, which is scheduled to be completed in October 2014, larger post-panamax ships will be able to pass through with a maximum cargo of 12,500 TEUs. This represents three times more capacity than today. As a result, some U.S. east coast ports are expecting an increase in container traffic as ships departing from China and other Asian trading partners no longer will have to unload in California.

However, others believe that much of the shift from the west coast to eastern and southern ports that already has occurred for a variety of reasons is coming to an end, and is unlikely to be significantly impacted by the Panama Canal expansion. One reason: only a few ports, including Baltimore, Norfolk, and New York-New Jersey have the 50 ft. depths required to accommodate post-panamax ships. Unless more dredging is funded (the Port of Miami currently is seeking $75 million for what it calls the Deep Dredge), post-panamax ship calls on the east cost may be limited.

The Growth of Inland Ports

The efficient movement of containerized cargo involves much more than our nation’s ports. Rail and highway capacity have an enormous impact, as well as our inland warehouses and distribution centers that provide logistical support for the entire multimodal freight supply chain.

According to the Miller Center of Public Affairs, approximately 60 percent of rail intermodal traffic consists of merchandise imports and exports that interchange between ship and rail at U.S. container ports. The remaining 40 percent of rail intermodal traffic is domestic.

As global trade increases, logistics providers are developing large integrated freight logistic distribution centers at inland locations, including Kansas City, Memphis, Columbus and Chicago, the Miller Center of Public Affairs says. And a large Buffalo bi-national logistic complex is in the planning stage.

Each day, thousands of imported containers are transported up to 2,000 miles to these hubs, mostly by rail on behalf of large-scale retailers and independent logistics providers. In addition, the Nation’s Class I railroads are developing mega hubs and renovating some of their rail tracks and tunnels for double-stack trains.

Efficient Transportation Is Essential

No sector is more important to the American economy than transportation, said George H. W. Bush in 1990. As world trade grows even larger and we continue our leadership in an increasingly global society, he said, we will become even more dependent on transportation. President Bush was correct. With the acceleration of globalization, transportation has become even more essential to the American economy. Unfortunately, the U.S. trade and transportation infrastructure has not received the attention or the funding it requires.

Unless significantly more funds are invested in this nations highway, rail and port infrastructure, efficiency gained by the development of sophisticated American supply chains will be lost to our global competitors.

This article appeared in Impact Analysis, March-April 2011.
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella is a world-recognized author and speaker on global business, competitive strategies and the latest economic trends. He also is CEO of World Trade Center BN, chair of the Upstate New York District Export Council, and founder of The Manzella Report and Manzella Trade Communications Inc. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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Talkback (1)

  • Guest (ีUdyRegan)

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    It's a very simple solution to improve the transportation network. Just how high on the priority list it is to do so! And of course to consider the budget of transforming and improving the transportation network is going to be… I think there are a lot of underlying cultural issues that people are too caught up in at the moment to be worried about things like transport right now! http://supercheapselfstorage.com.au/blog/

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