HOW BAD IS IT?

For several years, one of the major concerns of supply chain managers and much of the general public has been the deteriorating transportation infrastructure in the country. The major problem has been not so much the recognition of the road and bridge issue but the fact that Congress has consistently failed to provide a satisfactory funding mechanism. As I wrote here in August, once again this year Congress simply kicked the can down the road, providing some temporary funding through May, 2015, but leaving the hot potato for the newly elected Congress to handle.

When we read about this issue, it is most often generically described as the “deteriorating condition of our roads and bridges”, but how bad is it? In July of this year, the President’s Council of Economic Advisors prepared a report entitled, An Economic Analysis of Transportation Infrastructure Investment. The report was developed to support the President’s plan for funding which relied heavily on private investment. While you may or may not agree with the politics of his program, the report does demonstrate the seriousness of the situation in easily understood terms. In the United States today there are over 4 million miles of roads and 600,000 bridges. Sixty five percent of the country’s major roads are in unsatisfactory condition, 25% of the bridges require significant repairs, and 45% of Americans have no access to transit services. Time estimated that 252 vehicles move across structurally deficient bridges each day.

The social costs of inadequate infrastructure are high. We spend 5.5 billion hours in traffic every year, at a cost of $120 billion in extra fuel and lost time.

Roadway conditions were a significant factor in one third of the 33,000 traffic fatalities in 2013.

Nike estimates it spends an additional $4 million weekly to carry an extra 7 to 14 days of inventory to protect against shipping delays. An even more timely example in the report indicated that a week-long disruption to container movements through the ports of LA and Long Beach could cost the economy as much as $150 million per day.

In 1962, highway and transit spending amounted to 3.0% of GDP. In 2011, it was just over half that. Hopefully, the new Congress will bite the bullet on an expensive and controversial subject and enact legislation that will provide a long-term solution. The most obvious remedy would be to increase the fuel tax. It would be difficult however, to envision a more politically volatile step and Congress is not anxious to take it.

Over 50 years ago, Dwight Eisenhower, in announcing the new interstate highway system said, “A modern, efficient highway system is essential to meet the needs of our growing population, our expanding economy, and our national security.” This statement is even more true today than it was then. Hopefully, the new Republican majority will heed the words of one of their visionaries of years past.

Written By: Clifford F. Lynch