Infrastructure Blues

Infrastructure Blues

Copyright 2004, Traffic World, Inc.

The confrontation over the highway bill is causing consternation among trucking executives who say the nation''s fundamental infrastructure problems are too important to be used as a political football.

"It''s time for the government to wake up to this highway infrastructure issue. It''s a huge problem," says FedEx Freight President and CEO Douglas G. Duncan. "It certainly isn''t getting enough attention in Congress right now."

Duncan called the conflict over a new six-year highway spending bill to replace the Transportation Equity Act for the 21st Century "an atrocious situation" that only will harm shippers'' productivity. Others agreed.

"I think eventually it will hurt the country," said James Welch, president of Yellow Transportation, the nation''s largest LTL carrier. "That''s capacity that''s going to be needed. It''s going to be critical to keep the infrastructure in place to keep the country going. We do worry about the roads we run and how hard it is on our equipment and the efficiency of what we can offer."

"There is a screaming need for more productivity," says Jim Staley, president of Roadway Express. "Certainly the railroads are adamantly opposed to longer combination vehicles. But it''s a disservice to the American consumer not to make progress on this issue."

While the Senate version of the $318 billion highway bill differs from the House $275 billion version, both houses are facing a firm April 30 deadline of the end of the current seven-month extension. President Bush has vowed to veto any bill that spends more than the $256 billion approved by the White House.

"They''re a long way from getting this thing done," said Tim Lynch, president and CEO of the Motor Freight Carriers Association. "Something has to give."

Lynch called a short- term extension of TEA-21 still a "real possibility" because legislators, he said, "have glossed over" a lot of the tough issues such as how to perfect a system in which some high-donor states receive less in funding from Washington than they give.

"When you don''t have a lot of money to fix the problem like they did in the last bill, that does not bode well," Lynch said.

The highway bill came under fire by fiscal hawks when the federal deficit threatened to surpass $500 billion. Transportation executives say the highway bill is the wrong place for Washington to suddenly find fiscal religion.

"We are not investing in new roads to meet tomorrow''s commerce needs," Duncan said. "Frankly, I don''t think we''re investing enough in current infrastructure to keep going at current levels. There are bridges all over this country going unfixed and unrepaired. From an infrastructure standpoint, we''re not getting what we need."

Duncan said he would rather Washington pass another short-term extension of TEA-21 than pass an insufficiently funded six-year highway bill.

"The current numbers they''re talking about are not going to fix anything," Duncan said. "We would have a better chance of getting something substantial after the elections. There''s a awful lot of projects on hold waiting for those funds."

Roger Nober, chairman of the Surface Transportation Board, said freight often takes a back seat to popular projects in the current highway bill. "Capacity and transit projects get focused on and freight projects don''t," Nober said. "It''s very difficult to convince the states that building a project in one area benefits another area."

He said policymakers have to focus more on freight projects, especially intermodal areas that can result in freight flow efficiency nationwide.

"What''s happened is when freight comes off the ships, it''s more efficient to dray it someplace and break it down rather than put it on an intermodal line," he said. "It''s a very dynamic market place."

And then there''s pork - this highway bill, critics say, is crammed with legislative handouts for projects that have nothing to do with highways. Duncan, who sits on the executive boards of the American Trucking Associations as well as the Transportation Research Board, knows the highway bill is notorious for pork-filled projects. Still, politicians ought to be able to see the pothole-filled landscape beyond their own districts, he said.

"Obviously, it''s a big issue and a lot of dollars," said Duncan. "My concern is three or four years from now we''ve constrained our economy because we were shortsighted years ago. I think we''d be better off with an extension of some sort to get past the election and then do something substantive."

Rep. Don Young, R-Alaska, tried to pay for the additional dollars in his bill by indexing the fuel tax - now 18.4 cents a gallon for gasoline, 24.4 cents for diesel, unchanged since 1993. But that was shot down by the White House and Republican leadership in Congress.

But even truckers, who consume some 30 billion gallons of fuel a year, say the fuel tax should be on the table - if they get something in return.

"The fuel tax is a point of compromise," Duncan said. "It would help to first spend down the Highway Trust Fund. First, spend it. Then if you need revenue, you could find some compromise. Maybe you could lift the freeze on LCV''s and perhaps raise the fuel tax."

Fuel taxes "should probably be part of the debate," Yellow''s Welch said. "It''s a matter of balancing the cost side and our ability to make a profit in this business."

While nobody wants higher taxes, some highly visible taxes such as those on fuel can easily be documented when it comes to negotiations with shippers, the truckers said.

"We certainly don''t want higher taxes," Duncan emphasized. "Basically when you tax the trucking industry it''s a tax on the American public because it raises the tax on everything people buy."

Although truckers currently have fuel surcharge programs in place, those surcharges still hits shippers hard.

"I don''t take fuel surcharges for granted," Duncan said. "We''ve been very fortunate people have been accepting that. But it''s still a cost to the customer. It''s still an impact on the customer. Those are real costs."

What are high oil prices going to do to overall economy? "The $40 a barrel wouldn''t constrain truckers but I would be concerned about its effect on the overall economy," Duncan said.