Stronger US freight infrastructure needed to compete with China

Stronger US freight infrastructure needed to compete with China

The Biden Administration last week introduced a $2.3 trillion American Jobs Plan to address, among other things, the decrepit state of our own national infrastructure. Photo credit:

In May 1884, P.T. Barnum led a procession of 24 elephants and 17 camels across the newly constructed Brooklyn Bridge. He did it to prove to a nervous public that John Roebling’s masterfully designed suspension bridge was safe to use. Today, a century and a half later, how many crumbling bridges in the United States would Barnum and his elephants be willing to cross to prove the same point?

Infrastructure has always been at the core of the US's mobility and competitive might. Our roads, bridges, ports, and railways have enabled our retail supply chains, facilitated our travel, and strengthened our national security. So how could something so critical to the American way of life be found in such disrepair? How did the United States, the largest economy in the world, find itself at the mercy of Third World mobility? How did we become so complacent over the years while China rose to become the gold standard for world-class infrastructure and engineering?

The rise of China over the last two and a half decades has been one of the great achievements in human history, with over 200 million people being lifted out of poverty as a result. Today, China boasts one of the most modern and dynamic infrastructure systems on Earth. It has constructed over 20,000 miles of high-speed passenger rail and more than 200,000 miles of roads and bridges. It operates 7 of the world’s top 10 seaports, and has the world’s largest 5G network. China isn't just developing world-class infrastructure, it is exporting it as well, to countries such as Pakistan, Bangladesh, and other countries deemed strategically important to its Belt and Road Initiative.

Part of China’s success has been due to its one-party socialist system, which allows it to accelerate grand construction projects without regard for cost or societal impact. That’s a road that open and free societies would never choose to take. The other part of China’s success has been due to its mindset regarding investment, time horizons, and global competition. We can learn from these are areas.

A willingness to invest

One of the reasons for China’s success with infrastructure has been its willingness to aggressively invest — spending over 6 percent of its GDP annually on infrastructure compared with just 2.4 percent in the United States. China plans to invest $1.4 trillion on digital infrastructure alone during the next five years, recognizing the role that artificial intelligence and the internet of things will play in managing traffic patterns and enabling predictive maintenance on roads and bridges. Meanwhile, here at home, the US is currently ranked 13th in the world for infrastructure quality and eighth in the world for broadband internet coverage. The American Society of Civil Engineers estimates that over the last 10 years, the US has underspent on infrastructure by as much as $2.59 trillion.

Taking the 'long view'

The second reason for China’s success is that it takes the long view on geopolitical issues, national infrastructure development, and economic growth strategy. During President Richard Nixon’s visit to China in 1972, he asked China’s Premier Zhou for his thoughts on the French Revolution and its impact on Western civilization. Zhou reportedly told Nixon that he thought it was still too early to say.

To successfully compete with China on infrastructure in the 21st century, we’ll need to think, plan, and execute beyond presidential elections and the daily news cycle. We’ll need to take a more visionary approach to infrastructure, understanding that development takes time, planning, and cooperation. We’ll need to embrace the fact that what we build today is for the wellbeing of future generations and not just our own. We’ll need to take the long view.

Competitive advantage in global marketplace

The third reason for China’s success is that it views its national infrastructure and its Belt and Road Initiative as a competitive advantage in the global marketplace. By taking this view, China possesses a nationalistic sense of urgency to invest, develop, and export world-class infrastructure as quickly as possible. China views its domestic infrastructure as part of an international competitive strategy. To compete with China in the years ahead, the US must adopt a similar view on competitiveness with a comparable sense of urgency.

The Biden Administration last week introduced a $2.3 trillion American Jobs Plan to address, among other things, the decrepit state of our own national infrastructure. The plan is aggressive to say the least, and seeks to address a number of unrelated problems that have been neglected for far too long. A small portion of the plan specifically addresses infrastructure and is a call to action to improve our roads, bridges, passenger rail, and ports to better the US’s domestic mobility and global competitiveness.

President John Kennedy once said, “the time to repair the roof is when the sun is shining.” The infrastructure portion of the American Jobs Plan is an urgently needed initiative whose time has come. Interest rates are low, the unemployed need work, and in the post-COVID-19 world, the country would benefit from the additional economic stimulus. The Congressional Budget Office estimates that every dollar spent on infrastructure brings an economic benefit of $2.20. The US Council of Economic Advisors calculates that every $1 billion of transportation infrastructure investment ends up supporting 13,000 jobs, according to consultancy McKinsey and Company.

Prioritizing the numerous components of the full American Jobs Plan will be a monumental task to navigate. The plan has four spending buckets, three of which have nothing to do with what we think of as transport infrastructure.

Building schools and senior care facilities represents the largest bucket with a proposed spend of $768 billion or 33% of the total plan. Transportation is second-largest bucket with a proposed $621 billion spend or 27% of the plan. Utilities, jobs, manufacturing, and innovation make up the third and fourth buckets with a combined spend of $904 billion or 40 percent of the plan. The sheer size and complexity of the American Jobs Plan in its entirety will make it extremely difficult to legislate.

Focused approach will yield progress

A more focused and simplified approach is needed with infrastructure in order to make progress where it is needed most. One idea is to break out the $621 billion transportation infrastructure piece from the plan, combine it with the $100 billion broadband piece of the plan, and pass a bipartisan transportation infrastructure package as a first priority. This idea makes sense.

Raising the federal gas tax has also been suggested. It’s been at 18.4 cents for more than two decades. The gas tax, though, has diminishing returns. Motor vehicles today are much more fuel efficient than when the tax was first introduced, and gas-powered vehicles will eventually be replaced by electric ones.

In the future, we shouldn’t need elephants and camels to prove that our infrastructure is safe and world class. Investment in the infrastructure portion of the American Jobs Plan is a generational opportunity to tap into our competitive nature, showcase our world-class engineering capabilities, and do great things.

To compete with China in the 21st century, we can’t afford to wait any longer.

Peter Levesque is the president of Ports America, the largest marine terminal operator in the United States. He is past chairman of the American Chamber of Commerce in Hong Kong where he lived and worked for over 25 years. He is currently a director at the US Chamber of Commerce’s Board in Washington, D.C.