“The sky is falling!! The sky is falling!!”
Just this past week, the first week in February, red flag after red flag was waved at us. Here are some excerpts:
1. “Brookings report says freight transport at breaking point.” (Brookings Institute)
“The system that moves freight into and around the United States is reaching a breaking point that is likely to cost consumers money and could sap American competitiveness, according to a report released Tuesday by the Brookings Institution.
“The strains are being exacerbated by the dramatic increase in imports during the past decade or so (more than 150 percent increase between 1990 and 2003). The report found that there is little coordination for the development and transportation systems that are integrated in ways that maximize effectiveness and cost-efficiency.
“It also found serious disconnects among the various agencies that have a role in freight movement regulation, with federal policies and funding that are sometimes counter-productive to producing solutions.”
2. “U.S. trade, transportation on collision course”. (The Journal of Commerce)
“LONG BEACH, Calif. — U.S. dependency on just-in-time transportation is on a collision course with its aging port, road and rail infrastructure, according to a national organization that represents state transportation agencies.
“John Horsely, executive director of the American Association of State Highway Transportation Officials, said the nation’s goods movement infrastructure is struggling to handle the growth of international trade, which now stands at more than 26 percent of gross domestic product compared to 13 percent in 1990 …
“The growing dependency on imports, and the narrow window for receiving high-cost consumer items or components used in the production of finished goods, is creating a potential disaster if deliveries experience long delays because of road and rail congestion, Horsely said. For example, if U.S. seaports do not expand, cargo volumes by 2010 will exceed the ability of ports in every region of the country to handle growing trade … the goods movement industry can not wait another three or four years to begin to solve its infrastructure problems, Horsely said.”
3. “Analyst says TEU growth will be more than double world GDP”. (American Shipper)
“Containerized trade is projected to grow 7.7 percent in 2006, more than double the projections for worldwide GDP growth of 3.4 percent, said Paul Bingham, an economist with economic consulting firm Global Insight. It’s not a new trend, but it’s one that is stressing infrastructure in the United States, Bingham told the Metrans National Urban Freight Conference in Long Beach Wednesday.
… Looking ahead to the coming 2006 peak season, we see continued challenges to system performance due to continued growth in trade that will start again within the next two months.”
4. “Imports up: ports at or near capacity”. (UPI News Track Business)
“LOS ANGELES, Feb 4 (UPI) — Ports across the United States are handling record amounts of cargo as shipments from Asia expand, breaking record numbers and stressing the dock system. The growth, although good for business, sets up an uncertain future as low-cost labor goods from China and India make their way to this country in growing numbers, putting the docks at capacity …
“A report by Pennsylvania State University warns ports have or will soon reach their peak, causing problems for the economy. Michael Maloni, the lead author of the report, said a problem at any major dock could be catastrophic …
‘The point is that there isn’t enough excess capacity systemwide now — across all ports — to handle any breakdown at any large port’, he said.”
5. “The capacity conundrum: One problem, two strategies”. (The Journal of Commerce)
Peter Tirschwell writes, “If I were to visit two random U.S. ports, chances are … I would hear little about expansion, and much about plans to expand through greater efficiency, by utilizing better information and terminal management to improve the per-TEU, per-acre, per-year count.
“This is fine as far as it goes … But the bottom line is that there are limits to how many containers that ports can handle before congestion sets in.
“I don’t believe it is possible for ports to double their utilization — that is, double in size without adding a single acreage of terminal space — and not cause huge disruption in the process …
“Eventually, we will run out of options, and this is what shippers have become increasingly cognizant and vocal about. It was the potent voice of shippers that finally galvanized the Department of Transportation last month to unveil its Framework for a National Freight Policy, a long-overdue document and government mindset. As the DOT acknowledged, ‘Dramatically increasing freight flows have created congestion in the transportation system, imposing costs on shippers, consumers and the environment.’
“It’s good that the government has acknowledged what the private sector has realized for years. We should not diminish that, but at the same time, we must bear in mind that it’s one thing to issue a report; it’s something else to do something about it. At every turn you find phrases such as ‘public-private collaboration.’ That’s another way of saying the private sector will be asked to chip in. That’s stumbling block No. 1 …
“Until policy-makers realize that the private sector will resist being a serious participant in infrastructure upgrades until it is guaranteed a meaningful say in how the money will be spent and a guarantee that money collected will go entirely for its intended purpose, more time will be lost, and gridlock detrimental to the economy will draw ever closer.”
[Wish we could say “It looks like Peter’s been reading our mail”, but we can’t because he hasn’t. We can say, however, that Peter seems to be the only one who can see past his nose.]