Striking a cord of urgency, BNSF Railway Chairman and CEO Matthew Rose called for a coordinated and massive investment in U.S. transportation infrastructure to preserve the country’s advantage in facilitating trade.
“Our supply chain is a weapon of mass competition,” Rose told the 100th annual convention of the American Association of Port Authorities Thursday in Seattle. His comments come as President Obama seeks $50 billion for infrastructure and Congress debates a long-term transportation plan.
The nation’s freight transportation infrastructure is still world class, with supply chain costs taking up 8 percent of gross domestic product. Supply chain costs in China, also a major trading nation, are 16 to 20 percent of the Asian country’s GDP, Rose said.
Continued neglect of the U.S. infrastructure could push the country's supply chain costs as a percentage of GDP into double-digits.
“How did we get to the point where the world’s greatest infrastructure is creaking? There has been no major investment in infrastructure in 30 years, and arguably in the last 50 years,” Rose said.
The country invested significantly in ports and airports in the 1970s, and in building the national highway system in the 1950s.
The U.S. container trade in 2007 peaked at 25 million 20-foot equivalent container units. Container volumes dropped to 19 million TEUs in the 2009 recession, rebounded to 22 million TEUs last year and should get back to the 25 million peak by the end of 2012, Rose said.
He reminded port executives that when trade volumes last peaked, there was a nationwide shortage of truck, intermodal rail and port capacity. The transportation industry was then lulled into complacency.
“The greatest recession since the Great Depression made us feel like we had capacity,” Rose said.
In order to prevent a return to capacity constraints, freight delays and increased supply chain costs, the U.S. must rebuild and expand its transportation infrastructure. Washington needs to give greter support for the costly improvements, Rose said.
“I believe this president is an infrastructure president,” he said. However, federal money alone will not be enough. “We must leverage the federal money” through public-private partnerships,” Rose said.
Rose urged the Department of Transportation to identify bottlenecks in the system, as well as those corridors that bear the brunt of freight traffic, as priorities for investment. Noting that the regulatory process for infrastructure projects takes years, Rose said the approval and construction processes must be streamlined.