Potholes on US roads may hamper transportation longer than some members of the logistics industry expected. Hopes for a decisive move to fix the country’s ailing transportation infrastructure are turning into dismay as the new administration unveils elements of its plans for investment in this sector.
Pledges to tackle the worsening problems from crumbling highways, roads and bridges and insufficient infrastructure to accommodate rising traffic volume were a major plank in President Donald J. Trump’s election campaign, culminating in the promise to spend US$1 trillion on transportation infrastructure. However, the White House’s preliminary budget proposal for 2018 looks to reduce funding for the Department of Transportation. The budget allots US$16.2 billion to the department for discretionary spending, a drop of 13% from last year.
“We are not happy about it,” said Brandon Fried, executive director of the US Airforwarders Association. “Any reduction in transportation infrastructure spending is detrimental to transportation.”
Moreover, the new administration wants to eliminate the Transportation Investment Generating Economic Recovery (TIGER) grant scheme that the Obama administration had introduced in 2009 to support infrastructure developments at US ports. TIGER funding amounts to about US$499 million in a year.
The American Association of Port Authorities (AAPA) and the Coalition for America’s Gateways and Trade Corridors have criticized the planned cuts and called for a continuation of the TIGER scheme. Additionally, the Department of Homeland Security’s Port Security Grants Program, which Congress last funded at US$100 million and which provided 35 port security-related grants in fiscal 2017, is expected to experience a significant cut, the AAPA warned.
“We’re apprehensive about the fiscal 2018 budget,” said AAPA president and CEO Kurt Nagle. “Adequate federal investments into US port-related infrastructure, both on the landside and waterside, are crucial for the efficient movement of goods so the nation can remain globally competitive. It’s vital the federal government uphold its end of the partnership with ports so the country can have a 21st-century goods movement system in place,” he said.
More apprehension about infrastructure funding ensued at the end of March, when US Secretary of Transportation Elaine Chao indicated that only a fraction of the signature US$1 trillion infrastructure plan for the next decade would go to transportation. The promised US$1 trillion would include funding for energy, water and potentially broadband internet and military veterans’ hospitals, she revealed.
According to a study published last November by TRIP, a Washington-based transportation research group, just fixing the network of deteriorating roads and bridges in the US would require an investment of US$740 billion.
“Road conditions could deteriorate even further in the future as the rate of vehicle travel continues to increase,” the authors warned.
The American Trucking Association (ATA) estimates that congestion on the roads costs the trucking industry nearly US$50 billion in a year.
Chao did not disclose any details of the government’s US$1 trillion plan, saying that these would be released later in the year, but her remarks, coming after the unexpected cuts in the proposed budget, left the industry wondering what will come next.
“There are so many unanswered questions right now,” Fried said.
One massive question mark that is looming over the industry is the concept of a border adjustment tax to be levied on imports as part of a broad overhaul of the tax system that would incentivize companies to produce in the US by reducing taxes for exporters while increasing the cost of imports. The concept has been floated but not made any progress towards legislative moves.
“If you want to bring import trade to a halt, that will probably do it,” Fried said, adding that the government’s rhetoric on trade has been “really scary.”
For industry bodies like the Airforwarders Association, the way forward is to approach the White House to get a better understanding of the objectives of the new administration, while simultaneously lobbying in Congress to ensure funds for transportation are not diluted, Fried said.
He acknowledged that at this point it will be difficult to find many open ears for a dialogue on transportation issues. “It’s tough to find people in Washington to focus on this right now,” he admitted. The new administration did not have a large established base in Washington when it came into office, and a number of significant positions have not been filled yet.
Senior executives of FedEx Freight and Werner Enterprises were in Washington in early April to impress on the Senate the need for adequate funding for transportation infrastructure projects. “The need for significant investment in our infrastructure has never been more critical,” stressed FedEx Freight president and CEO Mike Ducker in his testimony.
By Ian Putzger
Correspondent | Toronto
