American Public Transportation Association Legislative Conference - remarks by Thomas J. Donohue

Legislative Conference

Remarks by Tom Donohue
President & CEO, U.S. Chamber of Commerce

Washington, D.C.
March 7, 2005

Thank you, Sharon Green. I find myself in an interesting position at the moment - the former head of the American Trucking Associations and a current board member of a major freight railroad company addressing a group of public transportation leaders.

I think this makes a couple of statements. The first is that once you get into transportation, you never really get out. And second, if you're serious about improving transportation, like the Chamber and I are, you really need to understand the challenges of each and every mode. The whole pie needs to be baked - not just a single slice.

I'd like to take this opportunity to discuss the broader challenges facing the entire transportation system and offer a few ideas on how we might meet them.

In Washington these days, we hear about the Social Security crisis, the health care crisis, and the budget deficit crisis, among others.

Yes, these are important issues, and the Chamber is involved in all of them. But not enough people are talking about the transportation crisis, and the Chamber, working with APTA and others, is determined to change that.

Our transportation system is not keeping pace with the rise of globalization and increased competition and demand from the developing world.

International trade and investment accounts for almost a third of the U.S. economy as more and more businesses-including small and medium-sized ones-are tapping overseas markets.

95% of the world's customers live somewhere other than the United States. And those customers are raising their incomes and improving their standards of living, which means increased demand for more goods.

We're also seeing tremendous economic growth in India, China, East Asia and other parts of the developing world.

As these economies grow, they will continue to consume tremendous volumes of resources and commodities.

In some Chinese ports, they can't offload the cargo ships carrying concrete, copper and other commodities and raw materials fast enough.

Many cargo ships have to wait their turn offshore, and this has created delays and shortages that are being felt here and elsewhere around the world.

Goods aren't the only thing crisscrossing the globe in record volumes. People, too, are on the move. In our own country, air passenger travel is reaching pre 9-11 levels, due in large part to increased affordability. Around the world as well, rising incomes and a growing middle class are making travel more attainable for millions.

Every mode of transportation is feeling the strain caused by the rapidly growing and changing global economy.

Air cargo volume is expected to triple by 2015. In a way, we're a victim of our own success. We've developed logistics systems that enable a package shipped from New York to arrive in Los Angeles the next day. The stakes and shipper expectations are increasingly rising.

Highway passenger travel in the U.S. nearly doubled in a recent twenty-five year span. More people with cars and busier schedules are turning our roads into parking lots.

Every major U.S. container port can expect to experience a doubling or tripling of container volume in the next 15 years. This is one reality that is highlighted in a 2003 Chamber study on the tremendous challenges facing our port and associated intermodal systems. We need to increase port capacity to keep our edge.

Since deregulation of the rail freight industry twenty-five years ago, rail freight volumes are up 50%, and excess capacity has been almost completely absorbed.

How will we handle future growth in rail freight? As a member of the board of Union Pacific, this is an issue I have to think about.

Commercial aviation-an industry that supports 10 million U.S. jobs and about 8% of our gross domestic produce-has its own set of severe challenges.

As passenger travel reaches pre-9/11 levels, our air transportation system is facing congestion, inefficiencies, unpredictable service, and long delays.

Airlines are the most regulated and heavily taxed industry in our economy, causing even the new lower-cost carriers to struggle.

The domestic aviation industry bears such a disproportionate high tax burden that its customers pay as much as 44% of their ticket in federal taxes and fees.

Combined with competitive pressures and rising fuel costs, over-taxation and regulation are making the business of commercial aviation nearly unviable.

Business also recognizes the challenges facing our public transportation system.

From our perspective, mass transit is a vital component of the transportation system because it gets employees to their places of work, reduces road congestion, is friendly to the environment, and is absolutely essential to modern city living.

Business is committed to ensuring that public transportation systems are modernized and made safer and more efficient through adequate funding levels.

So now that I've covered the key challenges facing the transportation industry, let me offer a few solutions.

First, we need to make greater progress toward intermodalism. The individual transportation modes need to let go of old rivalries and territorial mindsets and make a commitment to cooperation in building a seamless, synchronized transportation system.

Business leaders and local government officials are doing this in some places. Long Beach, California, for example, has made tremendous investments in its port and associated highway and rail systems. What good is a world-class port if the roads and rails leading to and from it are breaking down?

Second, we have to find ways, using technology, to balance mobility and security. In a society where security has become the highest public priority, the economic importance of moving people and goods quickly and efficiently tends to get overlooked.

Mobility is the hallmark of a free society, and if we compromise that, then we've handed Osama bin Laden the victory he seeks.

The Chamber is working very closely with the Department of Homeland Security, our friends in Canada, and others to make sure that our borders remain secure, yet open to commerce.

Third, we must take action to revitalize the commercial aviation industry. To that end, the Chamber has launched an initiative that seeks to:

Reduce the burden of unjustified taxes, fees, and regulations; design and build an airport and air traffic management system with the capacity to safely and efficiently handle much greater volumes of traffic; and ensure that the United States retains global leadership in aviation.

Finally, we need to increase investment in transportation infrastructure and also think about alternative funding mechanisms.

Working with APTA through the Americans for Transportation Mobility coalition, the Chamber is calling for multi-year reauthorization of TEA-21 at the highest funding levels possible. The Administration has come up $28 billion from its original figure, so we're moving in the right direction.

Some have said that we have a pretty good thing going with these temporary extensions. But the uncertainty of long-term funding is having a negative impact on project development.

We're also working to ensure that the planning and approval process is streamlined and that dedicated trust fund dollars are spent for their intended purpose of infrastructure improvements.

We also need to be thinking about long-term challenges to surface transportation funding.

With rising fuel efficiency, American drivers don't have to fill up their cars and trucks as often as they used to, which means fewer dollars going into the trust fund.

Supplemental revenue streams will be necessary to sustain and improve the surface transportation system.

In the private sector, companies change business models all the time to stay competitive. When it comes to transportation, we have to consider a new business model, one in which the highway trust fund is the major-but not the only-revenue producer.

It won't be as simple as raising gas taxes, which, as we all know, is a political hot potato.

We have to consider expanding states' rights to toll. Pilot projects in some states have been successful in reducing congestion. But many questions, such as whether states should be allowed to toll new roads but not existing ones, have to be worked out.

We should also encourage greater private financing of transportation infrastructure. Several public-private partnerships have taken hold around the country. We should anticipate more of these as public funds struggle to keep up with needed projects.

The Chamber's think tank, the National Chamber Foundation, is conducting a study on transportation financing, and we look forward to sharing the results with you when it's completed this fall.

Beyond alternative financing methods, we should encourage new technologies and new ways of building infrastructure.

For instance, perhaps zoning and land domain laws can be tweaked to enable developers to use new technology and materials for building better and longer-living infrastructure-and at less cost. Innovation in construction could be a great cost saver.

Let me close by saying that the U.S. Chamber will continue to play an active and aggressive role in promoting a transportation system that meets our economy's needs.
" We will remind the public and Congress time and again that infrastructure is not disposable - it is a strategic asset that must continually be renewed and protected.

One asset in particular-public transportation-is critical to relieving congestion bottlenecks and improving air quality.

Taken as a unit, our transportation network is an essential component of America's global competitiveness and can no longer be relegated to the backbench of U.S. public policy.

Working with partners like APTA, I'm confident we can make this happen.

Thank you very much.