Statement on "Intermodalism: Moving America's People and Goods" by Douglas L. Whitley

Statement on "Intermodalism: Moving America's People and Goods" before the House Subcommittee on Highways & Transit for the United States Chamber of Commerce and Illinois State Chamber of Commerce by Douglas L. Whitley

June 18, 2002

Mr. Chairman, Ranking Member Borski, members of the Subcommittee, thank you for allowing me to appear before you today to discuss the importance of intermodalism in the moving of people and goods. I am Douglas L. Whitley, President & CEO at the Illinois State Chamber of Commerce. I appear before the Subcommittee as a representative of the United States Chamber of Commerce, which is the world's largest business federation. My testimony will address the importance of a national, seamless transportation network that meets the mobility needs of moving people and cargo.

The Importance of Transportation Infrastructure Investment

For both the nation and the state of Illinois, the importance of investment in our nation's transportation system is critical to our future economic growth, international competitiveness, quality of life and national security. Our transportation system has supported the nation's strong economic performance, and the evolution of world commerce. Our "just-in-time" supply chain mindset demands that we move our people and freight faster than any country in the world. Unfortunately, our transportation infrastructure system is ill-prepared to handle the higher and higher volumes of freight and people. Only two major hub airports have been built in the United States in the past twenty-five years, and new runway projects, like the O'Hara airport expansion, can take as long as 15 years to build. Unless something happens soon, our aviation system will be virtually grounded by an expected tripling of air cargo volume by 2015, and a 50 percent increase in passenger traffic during that same period.

On our nation's highway system, a similar crisis is facing it. In just a twenty-five year span—1970 to 1995—highway passenger travel in the U.S. nearly doubled. But improvements to and expansion of our highway system are not keeping up. Since 1970, vehicle miles traveled have soared 123 percent while road capacity has increased just five percent. Vehicle miles traveled on Illinois' highways increased by 26 percent from 1989 to 1999.

The U.S. Marine Transportation System, which is 25,000 miles of navigable channels, 300 ports and nearly 4,000 marine terminals, annually moves more than a billion tons of domestic and international freight. At the current rate, every major U.S. container port will experience a doubling or tripling of container volume by 2020, but as of right now, many aren't even equipped to handle the new mega containerships.

Railways, another important intermodal connector, are also seeing a surge in growth. Since deregulation of the industry in 1980, rail freight volumes have increased by 50 percent, and they are expected to grow by another billion tons in the next 20 years.

On the mass transit system, there are almost 3,825 route miles of commuter rail service in operation in the U.S. An additional 134 miles are under construction and 300 miles in design, with over 2,300 miles in planning and 1,100 additional miles under consideration for commuter rail projects. Over the past six years, ridership on the nation's public transportation systems has grown faster than the population. 14 million Americans use public transportation every day and 25 million people use transit on a regular basis. Supplementing commuter rail, the passenger and intercity bus industry serves more than 4,000 communities directly with scheduled service.

There are many consequences of a sub par system— congestion, decreased productivity, more accidents and diminished global competitiveness. The cost of road congestion to the U.S. economy was nearly $78 billion in 1999—more than triple what it was 20 years ago! Billions and billions more are lost to companies when their products don't reach their destinations on time.

Funding Requirements Not Meeting Demand for Surface Transportation

U.S. Department of Transportation (DOT) data show that a minimum $50 billion per year federal investment in highway improvements is necessary to simply maintain the current physical conditions and system performance of the nation's highway and bridge network. To actually produce improvements, DOT reports that a $65 billion per year federal investment is needed. Currently, we spend $30 billion a year. On the transit side, DOT estimates that $17 billion in capital investment is needed annually just to maintain and improve current public transportation services. To meet these current challenges, we must invest our limited resources in a better, more efficient manner. We must look at innovative financing and public-private partnerships to supplement the federal user fee system. During reauthorization of TEA-21, we also will be advocating that all transportation fuel taxes should be placed to the Highway Trust Fund that was set up to pay for the maintenance and improvement of the system. The U.S. Chamber believes that ethanol should be taxed at the same rate as gasoline and that the 2.5 cents per gallon of the ethanol tax that is currently paid into the General Fund should be transferred to the Highway Trust Fund. That is why it is of critical importance to ensure the investment of all Highway Trust Fund revenues into much needed surface transportation programs.

Furthermore, we strongly urge Congress to repeal the 4.3 cents per gallon tax that railroads and barges currently pay into the General Fund. These resources should be spent on the maintenance and improvement of their systems, particularly with rail connection points and waterway locks.

Business Community Response To Meeting Transportation System Demand

It's clear our infrastructure system that is the backbone of our nation's mobility is in trouble. The business community is prepared to partner with government and other stakeholders in bringing about positive change. The hallmark of U.S. economic success is the ability to remove barriers to produce increased productivity and efficiency. We stand ready to do our part to achieve significant transportation system improvements.

Americans for Transportation Mobility

Last summer the U.S. Chamber helped launch a new coalition called Americans for Transportation Mobility, or ATM. ATM is a broad-based organization of transportation users and providers, state and local organizations, and state and local government officials. The coalition has more than 350 organizations whose objective is simple: to build public and political support for a safer and more efficient transportation system. We hope to achieve our objective through a two-pronged approach: 1) Ensuring that Congress fully dedicates federal transportation trust fund revenues for their intended purpose, and 2) accelerate the project review process by removing redundancies. All the money in the world will not help if we are not efficient in the planning and approval for much-needed improvement projects.

For the first time, the business and labor communities have joined together in educating lawmakers on the importance of improved mobility and safety to future economic growth. Without meeting the mobility needs for the movement of people and goods, our nation will not achieve economic success and quality of life it demands. The ATM coalition looks forward to working with this subcommittee and the full Transportation & Infrastructure Committee in ensuring adequate investments are made over the next several years in our transportation network.

Chamber's TEA-21 Reauthorization Policy Principles

The U.S. Chamber has formulated its TEA-21 reauthorization policy principles. Over the past year, the Chamber's Transportation Infrastructure & Logistics Committee has formulated the business community's views on reauthorization. A copy of our nine-point agenda is attached. In summary, the Chamber strongly advocates that TEA-21 reauthorization recognize the intermodal nature of the nation's transportation network and strive to improve mobility and competitiveness within the network. Our nation needs to spend all revenues collected into the Highway Trust Fund for surface transportation investment and look at public-private partnerships where feasible and equitable. Furthermore, we need to find ways to accelerate project delivery once the decision is made to maintain and improve our transportation infrastructure.

We have briefed members of the Subcommittee on our agenda for TEA-21 reauthorization and stand ready to work with you during the reauthorization debate to ensure continued growth in our surface transportation program.

Freight Stakeholders Coalition

The U.S. Chamber has also been a participant in the Freight Stakeholder's coalition. The goal of the coalition is to highlight the importance of investing in the nation's freight infrastructure. We strongly endorse the principles articulated by coalition: protecting the integrity of the Highway Trust Fund, dedicating funds for National Highway System connectors to intermodal freight facilities, and forming a national freight industry advisory group to provide industry input to DOT. The coalition also strongly advocates highlighting freight infrastructure projects of national significance and ensuring priority funding for these vital multi-modal projects that can relieve congestion at the freight "chokepoints."

Moving People

The U.S. Chamber of Commerce believes we need to look at a variety of options to move people. We need to not only build more highways but also develop our passenger rail system. Chicago has always been a hub for freight and passenger rail service. The state of Illinois is looking at a variety of transportation solutions beyond building more highways to help relieve congestion. For example, the state is investing resources in passenger rail, looking at possibly moving forward with a high speed rail corridor, and finding ways that both freight and passenger rail can work better.

Security & Intermodalism

Today, as we continue to respond to the events of September 11, we should strengthen, not diminish, America's freedom of movement, and transportation systems to effectively grow the economy. Consequently, service interruptions – like accidents, congestion, driver shortages, labor strikes, late arrival of ships and trains, terrorism, and unpredictable systemic inefficiency – can quickly unravel today's tightly strung systems. That's why many of us in the business community are challenging proposals that are advanced to make us feel more secure, but which won't work. The U.S. Chamber believes that defending the homeland should be achieved without losing our openness and mobility, or slowing the engines of commerce. We also caution government to distinguish ideas that will work from those that won't, and balance the need for greater security with the requirements of international commerce.

We also urge Congress to review the whole concept of intermodalism. It's a word we like to throw around, but are we really giving it anything more than just lip service? In truth, we really don't have intermodalism – we merely have transport modes that sometimes meet. The U.S. Chamber believes that for the sake of our global competitiveness it is time to stop pretending. To achieve real intermodalism, we must strengthen and modernize our national freight transportation infrastructure and synchronize its operation and management. In short, we must change our point of view… to think about transportation differently. We must do more than acknowledge that transportation is a set of interconnected systems. We must move our minds to a place that believes we have efficient transportation only if the individual components in the system work together.

And there's the rub. Many in Washington have been taught to think about transportation vertically – about each particular mode as an individual economic mechanism. Each, of course, has its strengths and its weaknesses, and its wants and needs … and those are legitimate characteristics of individual business. But in today's world, American economic efficiency requires that we rise above parochial thinking.

Conclusion

In closing, you should know that the U.S. Chamber will continue to play an active and aggressive part in advancing the idea of a transportation agenda that strengthens our intermodal system. We are living in a new world that requires new thinking and approaches to transportation that should be characterized by changed behaviors and measurable results. We will remind the public and Congress that infrastructure is not disposable – it is a strategic asset that must be renewed and protected.

Freight transportation can no long be taken for granted, and "seamless multi-modal trade corridors" are no longer the stuff of transportation fiction. Transportation – as an integrated system – is an essential component of America's global competitiveness, and, as such, it can no longer be relegated to the backbench of U.S. public policy. We need to continue to explore public-private collaboration such as the Alameda Corridor project in California that provides multi-modal solutions to the congestion of both moving people and freight.

The impact of doing nothing will be increased congestion, decreased safety on our roads, and setbacks in our ability to improve air quality. The U.S. Chamber and chambers throughout the nation look forward to working with Congress and the President to bring about continued, predictable investment in our nation's transportation system. Investment in our national transportation system will ensure we remain a leader in the global marketplace.

Thank you, and I am happy to answer your questions.