On April 11, 2008 I attended the APICS and CSCPM sponsored Passport to Supply Chain Effectiveness Forum. The key note was presented by Mr. John Lanigan, Executive Vice President and Chief Marketing Officer of Burlington Northern Santa Fe (BNSF). The subject of his talk was “U.S. Transportation Infrastructure Is the Crisis Here Now?” Mr. Lanigan identified numerous challenges within our transportation system and the serious consequences it has and will have on the U.S. economy if these issues remain unaddressed. Mr. Lanigan provided some interesting statistics and during my research for this posting, I identified a few more.

• According to Mr. Lanigan, from 1980 to 2005 rail miles have decreased by 39% and volume has increase by 65% 
• According to SEDA-COG, in the last 20 years vehicle travel has increased by 75% and road miles have increased by only 1%
• According to the Texas Transportation Institute (TTI), in 2003, congestion in the top 85 U.S. urban areas caused 3.7 billion hours of travel delay and 2.3 billions gallons of wasted fuel, for a total cost of $63 billion.
• The TTI study also noted that the economic cost of highway congestion was $39 billion in 2003 and 67 billion in 2007. It is expected to be $240 billion in 2020 if the status quo remains.
• According to www.fightgridlocknow.gov in the 10 most congested areas, each rush hour traveler “pays” an annual virtual “congestion tax” of between $850 and $1,600 in lost time and fuel and spends the equivalent of almost 8 work days each year stuck in traffic. The site also provided these additional anecdotes:
  • A national retailer that keeps $2.5 billion worth of merchandise on-hand recently added 10 days of “buffer stock” to its inventory due to increased delays. This buffer stock cost the retailer $2.7 million annually.
  • A computer chip manufacturer advanced its last shipment departure time two hours ahead for outbound shipments through Portland International Airport due to increased afternoon peak congestion on area roads.
  • An Atlanta area distributor of pet food with an 11-truck fleet finds it difficult for one truck to make more than 12 daily deliveries; in 1984, one truck made as many as 20 deliveries each day.
  • In 2005, congestion at the Otay Mesa and Tecate crossings along the California-Mexico border was estimated by the San Diego Association of Governments to cost the U.S. economy $3.7 billion in output and almost 40,000 jobs. 
  • In 2000, Global Insight, an economic forecasting firm, estimated congestion at the Ambassador Bridge between Detroit, Michigan and Windsor, Canada cost motor carriers between $150 million and $200 million.
• According to Mr. Lanigan, even though the railway system currently has capacity, by 2035 if investment in infrastructure remains at the current rate the entire transportation system will become grid-lock. In order to keep up with the infrastructure improvements, it is estimated that $135 million a year needs to be spent annually up from a current investment of $35 million a year.

Despite these current and impending realities, other than some talk and some grand initiatives put forth, the finances to address these problems have been slow to come. As in most issues, those that deal with the future tend to be displaced by the immediate needs of the present. Unless there is ground swell of public support or top down governmental dictate, I am afraid that the problem is going to get far worse before it gets better.

In a very telling example that highlights our collective lack of urgency, Mr. Lanigan discussed how the Chinese government after identifying the need for a new port in Shanghai, constructed and put into operation the new port in just 5 years. 5 years ago a similar need was identified in California. The port is to be constructed on an abandoned rail yard located in a brown field in Long Beach. The design is to be greenest ever built with 0 carbon emissions. In the 5 years it took for the Chinese government to build their port, the California port is still awaiting permits.

Now I understand that the Chinese government did not move forward with their plans with any sense of social responsibility. They in fact displaced an entire fishing village quite swiftly. However, this example does exhibit quite clearly what we are competing against. According to Mr. Lanigan, it is expected that within 10 years China will equal our transportation system which is recognized as the best in the world despite its current shortcomings.

Civic, government, and corporate interests must forge an alliance in order to address this very serious issues in a balanced manner. Regardless if we import our goods from so-called “low cost countries” or produce goods domestically, a transportation system operating within the status quo will drive the cost of transport to undesirable levels. Already, the time it takes to transport goods from California to Chicago, the hub of the nation’s railway system, has increased by 35%. If nothing is done to address these issues our transportation arteries will become clogged which could lead to a catastrophic economic heart attack. This type of downturn will prove to be more costly and difficult to overcome than today’s current economic downturn.

If you would like to learn more on this subject and some of the plans currently in consideration, visit www.transportationfortomorrow.org