"Transportation from the Customer's Perspective: Mega-Trends in Delivering the Goods" - Remarks by Thomas J. Donohue
January 10, 2005
Thank you very much. It's a pleasure to be with old friends and colleagues from an industry that I was honored to represent for 13 years.
In the seven years since leaving the American Trucking Associations to head up the Chamber, I've been able to see transportation from the perspectives of many different industries from both the carrier side and the shipping side.
That experience has confirmed what I've known for a long time—that the nation's transportation infrastructure and our ability to move people and goods efficiently and safely is absolutely essential to economic growth and global competitiveness.
Over the last couple of weeks, as policymakers in Washington have outlined their legislative priorities, we've heard a lot of talk about the urgency to act on several important issues.
There's the impending Social Security crisis.
There's the health care crisis – 45 million uninsured and double-digit premium increases for five consecutive years.
There's the need for legal reform to restore some balance and fairness in a civil justice system gone haywire.
Then there's the budget deficit. Does the size of the deficit threaten our economic future, and what must be done to bring it under control?
These are all very important debates, and the Chamber is heavily involved in each of them.
But there is an equally important issue that we don't hear a lot of policymakers talking about. We don't read about it in the daily newspapers.
It's the decaying state of our transportation infrastructure and the inability of decisionmakers to fully appreciate the investment that is required to build and maintain a 21st century transportation system.
This is a looming crisis that few outside this industry are willing to confront.
I'd like to take this opportunity to talk about the increased demands we're putting on our transportation system, some immediate steps we must take to meet that demand, and some possible innovative long-term solutions to the financing crunch we can expect to experience.
Our transportation system has served us well for a very long time. It has fueled the growth of our cities, provided the sturdy underpinnings of our economy, served as the nation's lifeline to the global economy, and dramatically uplifted the quality of life in America. It's the envy of the world.
Our transportation and logistics companies have been global leaders in innovation and technology.
It wasn't that long ago that the idea of shipping a package from New York late one afternoon and having it arrive at its destination in California the next morning was unthinkable. Today, it's expected.
We've seen remarkable advances in supply chain logistics, as many of the world's largest shippers have voluntarily come together to advance the science, standards, and practice of collaborative planning, forecasting, and replenishing across multiple modes.
However, the system we all depend on so much is under great strain and is, in its current state, incapable of handling growing volumes of freight and people.
Why is this happening? It's a combination of strong economic growth, increased travel in the United States, and more and more goods coming in and out of our country.
The value of international trade and investment almost equals 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 overseas customers are raising their incomes and improving their standards of living, expanding the market for American goods and services.
We're certainly not the only country whose infrastructure is feeling the pressure from intensified globalization.
Chinese ports are having difficulty handling the massive amounts of coal, concrete, copper and other commodities coming in on bulk freight ships, resulting in bottlenecks felt as far away as Brazil, India and Australia, a scarcity of bulk freighters, and rising bulk freight costs.
But as the world's largest economy and world's biggest importer and exporter, the United States faces the stiffest challenge, and our global competitors are watching anxiously to see if we can meet it.
Every mode is feeling the strain. Air cargo volume is expected to triple between 2000 and 2015. Highway passenger travel nearly doubled in a recent twenty-five year span. Truck vehicle-miles-of-travel doubled over a 20-year period and is forecasted to double again in the next 20 years.
Every major U.S. container port can expect to experience a doubling or tripling of container volume in the next 15 years.
That was one of several realities highlighted in a 2003 Chamber study on the state of our ports and associated intermodal systems.
And speaking of intermodalism, have we really achieved it? I would argue that instead of intermodalism, we have individual transport modes that sometimes meet. But that's a different speech for a different day. I'll certainly entertain your questions and comments on that issue during the discussion.
How about the rail freight industry? Since deregulation twenty-five years ago, the remaining handful of Class 1 railroads have reported a 50% increase in freight volumes while reducing personnel, locomotives, trackage and rail cars.
Domestic rail freight volumes are expected to grow by about a billion tons over a 20-year period. How will they be able to accommodate that kind of volume having already absorbed all excess capacity.
In a nutshell, our transportation network is bursting at the seams—and all the forecasts indicate that conditions will only get worse.
We must take immediate action while also beginning a serious dialogue about innovative long-term solutions.
In the short term, the Chamber is strongly lobbying Congress to fully fund the surface transportation reauthorization bill, TEA-21.
Congress has delayed full six-year reauthorization for more than a year now because it can't agree on a figure. The Chamber is aggressively pushing for the highest possible level of funding that addresses the nation's highway and transit needs.
Congress should also ensure that those dedicated transportation trust fund dollars are spent for their intended purpose of infrastructure maintenance and improvements and not whittled away for deficit reduction or unrelated programs.
Finally, government must streamline the planning and approval process so that the length of time between appropriation and project completion does not stretch for years or decades, as is now the case.
This has been a challenge in highway and airport infrastructure for decades, and now it's becoming an issue with water infrastructure projects.
The Chamber is leading a coalition dedicated to achieving these goals. The Americans for Transportation Mobility is made up of more than 300 local policymakers, chambers of commerce, labor unions, and transportation users and providers. We are committed to raise the importance of transportation investment to the public and to lawmakers.
That brings me to long-term funding challenges, particularly for surface transportation.
The highway trust fund, which has been in place since the Eisenhower Administration, is not sufficient in its current form to finance the highway and transit investments that are needed in the coming decades.
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.
The current federal gas tax is expected to provide enough revenue to maintain the existing interstate highway system for at least the next six years, but beyond that is not a pretty picture.
We have to get serious thinking about supplemental revenue streams, particularly for larger freight projects such as the Chicago CREATE project.
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, would have to be worked out.
We believe that tolling would be the most effective mechanism to pay for new infrastructure, but is not needed to maintain current infrastructure.
We should also encourage greater private financing of transportation infrastructure. Public-private partnerships have proven effective in creating additional capacity to meet rising demands.
The Chamber's think tank, the National Chamber Foundation, is conducting a study on transportation financing, and we look forward to sharing with you our short-term recommendations later this year.
Beyond financing, 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 for a lower cost. Innovation in construction could be a great cost saver.
Ladies and gentlemen, we are living in a new world requiring new thinking and approaches to transportation that leads to changed behaviors and measurable results.
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 that infrastructure is not disposable – it is a strategic asset that must continually be renewed and protected.
We are uniquely positioned to do so because we speak for all the modes. Representatives from each mode sit on our boards and on our committees.
Transportation is an essential component of America's global competitiveness and can no longer be relegated to the backbench of U.S. public policy.
I look forward to your comments and questions during the discussion period. Thank you very much.