Supply Chain Frontiers issue #14. Read all articles in this issue.
America’s aging transportation infrastructure can’t keep up with relentless world trade growth. If it isn’t overhauled, consumers and the U.S. economy will pay a steep price.
That was the warning issued by John Bowe, President of The Americas for global transportation leader APL and its sister company APL Logistics, at the 2006 Innovations in Transportation symposium held this month. Organized by the MIT Center for Transportation & Logistics, the third annual Innovations symposium focused on solutions to the ongoing infrastructure capacity crisis.
“The U.S. economy has been transformed by unprecedented growth in containerized imports,” Bowe told an audience of academic, business and transportation industry leaders. “Growth in the transportation infrastructure hasn’t kept pace. If we don’t fix this, supply chains will bog down, consumer prices will go up and the economy will suffer.”
To address the problem, Bowe called for public-private collaboration leading to:
* a national freight policy;
* significant new investment in the U.S. rail network;
* and increased productivity at U.S. ports.
He cautioned, however, that government can’t be counted on to pick up the massive cost of infrastructure improvement. “The private sector will have to play a larger role,” said Bowe. “But we’ll look to government to provide incentives that stimulate investment.”
Bowe’s presentation was the latest in a year-long series of alerts delivered by APL – one of the world’s largest container shipping lines – on the state of the nation’s outmoded freight transport system. Last January the company’s CEO, Ron Widdows, Transpacific Trade Senior Vice President Bob Sappio and Bowe took their campaign to Washington, D.C., for briefings with President Bush’s Domestic Policy Council.
The message: Containerized U.S. imports from Asia will grow by about 30% in the next three years, but ports aren’t improving productivity fast enough to keep pace and railroads aren’t adding enough track, equipment or terminal capacity to handle the load.
APL isn’t alone in calling for collaborative action to fix the transportation system. Executives from the nation’s largest and best-known retailers have joined the container carrier in the effort. Many were in the audience Monday to hear Bowe warn of longer transit times and higher inventory costs if infrastructure inadequacies aren’t addressed.
“We’ve worked with shippers on temporary solutions,” Bowe pointed out. “We’ve made better use of alternative U.S. gateway ports, we’ve improved planning and forecasting, and we continue to work closely with our rail partners to manage through rail congestion.
“But there’ll come a time in the not too distant future when even these measures won’t be enough,” he added. “We’re pushing too much cargo through a pipeline that is not growing fast enough. Eventually it will be overwhelmed. We need to act now to prevent gridlock.”
For more information on the symposium and the proceedings contact Chris Caplice, Executive Director, Master of Engineering in Logistics program.