Truck drivers rest on a highway ramp on the outskirts of Chicago, Ill. (SCOTT OLSON/AFP/Getty Images)
September 11, 2015
- The gradual deterioration of the U.S. transportation system may create inefficiencies that threaten the economy.
- Failing roads and waterways will increase congestion in canals, ports and highways over the course of the next 10 years.
- The United States will have to adopt technological innovations such as delivery drones to alleviate the economic impact of a weakening transportation network.
To participate in the global economy and reap the benefits of international trade, countries need to maintain efficient, reliable infrastructure. This can be difficult; national transportation networks are inherently piecemeal and costly to maintain. Even centralized powers with enormous potential to move products often inherit outdated infrastructure, which may suit the physical contours of the land but fail to meet modern needs — having been built to accommodate conditions that no longer exist. Technological advances, shifting demographics and changing patterns of consumer demand require infrastructure to adapt, but transportation networks are often so firmly entrenched that geography and history make it impossible for planners to begin with a truly clean slate.
The United States is no exception. Though it is a young country, its relative wealth allowed it to develop rapidly and, by extension, without much coordination. While today the United States boasts one of the most advanced transportation networks in the world, its system is in gradual decline. Numerous constraints, chiefly congestion, plague U.S. highways and waterways, making the transportation of goods less efficient. And the lack of attention paid to national infrastructure recently belies its importance: A smooth and effective transportation system is a chief element of Washington’s geopolitical power, and congestion in the largest consumer market in the world is bound to affect the entire global economy.
Calls for repairs should not be confused with apocalyptic predictions of crumbling infrastructure. However, the United States does need to invest heavily in its transportation networks to stay competitive. Already the U.S. transportation system faces some immediate threats to its competitiveness in a global system. Specifically, the inland waterway system is on the verge of crumbling, and the U.S. port system is hobbled by massive inefficiencies and entrenched interests, such as port unions, that make change difficult. Ultimately, federal policy could overcome these challenges. But there is a distinct lack of political pressure to invest in infrastructure in the near future, largely because the system’s breakdown is occurring so gradually.
To compete in a rapidly changing global market, the United States will have to adapt. The expansion of the Panama Canal, with its new lane expected to open sometime next year, has made it even more imperative that that U.S. East and Gulf Coast ports complete expansions of their own. Many U.S. ports are ill-equipped to accommodate the larger ships that will soon be making their way through the wider, deeper canal. Recent contract negotiations, work slowdowns and congestion on the U.S. West Coast have already contributed to increased traffic and congestion at East and Gulf Coast ports.
As ships get larger, not only will the United States have to renovate its ports and waterways, but the trucking industry will have to adjust as well. In the United States, trucks move 60 percent of freight by volume and 70 percent by value, carrying containers between port and temporary storage and from suppliers to customers in populous urban centers. Larger ships are becoming more popular because they use economies of scale to maximize profit. But larger ships require more trucks to pick up and deliver material at a given time, burdening the trucking industry with the prospect of growing congestion.
At the same time, with U.S. demand volumes expected to rise, the United States faces a growing truck shortage. The American Trucking Association has predicted that freight volumes will grow more than 29 percent during the next 11 years. According to industry experts, last year the sector was consistently 15-20 percent short of drivers to handle shorter distance deliveries, such as transport from port to storage. The industry as a whole estimates that the current number of commercial truck drivers (1.6 million) is 35,000 short of demand. According to the American Trucking Association, that shortage will grow to about 200,000 by 2020 if nothing changes. Several factors are contributing to the problem. According to transportation consulting firm FTR, the need to adhere to safety standards enforced by the federal government is helping to drive up demand for drivers. At the same time, the average age of truck drivers is rising; as older drivers retire, the need for replacements will further strain the trucking sector.
While international trade puts a growing burden on U.S. ports, the country’s internal transportation networks are also in need of an overhaul. The nation’s waterways play a key role in the inland transportation of bulk goods. The Mississippi River system in 2013 moved approximately 7 percent of exported food and food products (including nearly 50 percent of grains exported), 16 percent of exported coal and 19 percent of exported petroleum liquids and products. Yet many of the locks that make the Upper Mississippi and other rivers easily navigable are well over 50 years old. The estimated cost to maintain the status quo is $1.5 billion annually, and it would cost well over $100 billion to update the system fully.
Railways are not immune to difficulties, either. Intermodal use of rail has grown because rail transport, when available, is cheaper on average than road transport, at 3.76 cents per ton-mile rather than 16.54 cents per ton-mile. But rail is already experiencing congestion; Seattle-to-Chicago transit times nearly doubled in 2014, and traffic along significant sections of many of the country’s major rail corridors is projected to increase by more than 100 percent by 2035. Many major connecting points in Chicago, a vital intermodal node, are in already congested urban areas. In 2013, nearly half of all intermodal shipments originated or terminated in Chicago, where terminal space is limited and rail transfers often require cross-town drayage. And overcrowded rail corridors are unlikely to see any relief in the near future. A number of bulk goods, such as oil, lack alternative means of transportation, and freight volumes are expected to increase even more. Container shipping will have to compete with bulk goods for limited space on U.S. rail lines.
With overcrowding at origin points and along transport routes, it is no surprise that congestion is also growing at destination points: urban demand centers. There are 42 urbanized areas in the United States that contain roughly half the national population but account for nearly 90 percent of all transit trips and almost 80 percent of revenue. At the “last mile,” or the point of delivery to the customer in urban areas, infrastructure has often not caught up to demand.
This creates a difficult environment for companies trying to move goods to meet demand. The relatively new field of supply chain management must consider a staggering number of risks, challenges and inherent constraints regardless of monetary concerns. Some companies are seeking to bypass the failings of the current system altogether. Amazon is pushing to allow drone deliveries, which would essentially bypass the current transportation infrastructure, dramatically reducing the strain on roadways in urban centers.
But the most advanced companies have instead focused their resources on introducing visibility into their supply chains by adopting methods for tracking the individual items within their system. While such technology does not directly reduce traffic on roadways and waterways, it does allow logistics professionals to pinpoint areas of inefficiency. This technology is still relatively new and cost intensive, and it frequently involves a level of reorganization that many companies simply are not capable of undergoing. However, it could help make increasingly strained supply chains more efficient.
Increased visibility has already led to some logistical solutions. For example, service companies looking to develop “the Uber of trucking” are trying to reduce the distance between the point where a truck drops material off and where it picks up its next shipment. A truck delivering its cargo to a small town in Iowa may then need to be repositioned to Chicago to pick up more cargo, because lack of information-sharing between companies bars logistics firms from planning out a more efficient route. Some companies are working on a program that would enable truck drivers to identify nearby freight for pick-up, dramatically reducing mileage — particularly in the first mile. Such systems face significant barriers to development, including entrenched interests and practices, but the search for solutions illustrates a growing need to work around the inefficiencies inherent in the system.
The United States’ transportation networks are not on track for catastrophic failure anytime soon. After suffering years of neglect, however, aging highways and ports are deteriorating while demands on them are rising. It is not clear when the system will reach a breaking point, and that point may come undramatically, in the form of rising transportation costs that hobble economic growth. Lines of transportation will likely fail gradually, their decline evident to the general public only through longer commute times and small increases in the cost of living.
But the economic prosperity that now blunts the effects of failing U.S. infrastructure was enabled by the very infrastructure now falling into disrepair. Efficient waterways and roadways allowed the United States to build up an established advantage; without adaptation and adjustments, that advantage is not guaranteed to last forever.