Picking Our Pockets

Michael Eskew, CEO of UPS, offered his criticism of the U.S. transport infrastructure in an address at the Houston Forum earlier this month. Echoing comments made last year by David Lim of NOL (Neptune Orient Lines), Mr. Eskew stressed the urgent need for investment and expansion of U.S. waterways, highways, rail, and aviation networks.

Business leaders, he said, must help Americans understand that their jobs and standard of living depend on a U.S. economy that depends on global trade. He urged Americans to realize that global trade is a key driver of the U.S. economy, and that they must support investment in transport infrastructure in order to avoid putting the economic health of the nation in jeopardy. People may not like to build new roads or add runways to airports, but the U.S. economy risks stagnation without continued investment and infrastructure expansion, Mr. Eskew added.

A year ago Mr. Lim of NOL stated that efforts must be focused on increasing throughput in the cargo supply chain, not just growing capacity. “There is a pressing need for carriers, terminal operators and land transport companies to work more closely together … Likewise there is a need for close coordination between industry, governments and other interested parties to ensure that much needed infrastructure construction is not unduly delayed … Globalization has increased world trade, and will continue to drive it relentlessly …”, were Mr. Lim’s exact words.

Mr. Eskew said that the solution for U.S. businesses will require “lots of money”, but that money should be targeted strategically taking into account how all transportation systems work together and increasing the integration of those different modes.

That “lots of money”, of course, is expected to come from U.S. end users/citizens/taxpayers.

But here’s where the transportation authorities are off base. Those very end users/citizens/taxpayers who are being conned into footing the bill for the dredging, for the demolition and replacement of bridges and highways, for expanded ports and railway infrastructure, and, yes, even for the cost of the ocean-going behemoths, are the same ones who’ve seen their jobs farmed out to overseas firms. Simple math reveals that the water level in the well is already down to a critical stage. Every time a measure is taken to remove obstacles in the supply chain, or assure speedier transport of goods, or tightened security, or infrastructure upgrading, there’s always a fee tacked on to every TEU. With all the “per TEU” add-ons we keep reading about, what will happen to the lower priced goods that were destined for retailer’s shelves? The “cost-conscious buyer” will soon be a thing of the past, and with present levels of unemployment and the guarantee that many more of our citizens will soon be in that category, buyers of any description will be few and far between.

Here’s something to ponder. Because the transportation companies are the ones pocketing the profits from global trade, and since infrastructure upgrading will increase their profit margins, why should U.S. consumers/taxpayers be handed the tab for greasing the skids along the supply chain? Wouldn’t it be logical, and even-handed, to insist that the industry giants pay their own way?