World Trade 100

Consequences of Success

June 3, 2014

T­rue learning, it is said, means not repeating your mistakes. That doesn’t mean not making new ones.

Mistakes are supposed to be part of a learning process the U.S. Congress seems to be unwilling to engage in. It is encouraging to hear the Senate agree to a six-year highway bill without true dissention or a long process of adding and then modifying or deleting unrelated amendments. The more critical a bill and the closer the deadline, the more likely it is to carry the unwanted weight of such amendments. For that reason, the highway bill should have been bloated with excess amendments.

Does this signal some learning has taken place? Not necessarily. The Environment and Public Works Committee, which approved the bill, clearly understands the need to move forward. But pushing deadlines related to the expiration of a bill like this one actually puts the process well behind schedule.

The construction season is just starting in many states, and much-needed infrastructure projects required funding and approval well before this if they are to address the country’s transportation needs. Where states need federal funds to start or complete these projects, the uncertainty over the levels and timing of the funding may have delayed action to the point that many of the projects will not be completed.

If the Senate seems to have learned how to streamline passage of a critical bill by keeping it trimmed of excess, it still has the issue of funding to address. Holding funding at current levels with allowance for inflation means there will be little, if any, increases, just as the Highway Trust Fund has seen the gap between revenues and needed expenditures widening.

Although the bipartisan support for the bill is encouraging, this is a mid-term election year, and a bitter fight could cost either party (or both) some seats in the House or the Senate. So, too, would a tax increase. The motor carrier industry has openly supported a fuel tax increase, provided the funds it would add to the Highway Trust Fund are used for the intended infrastructure maintenance and development.

An old complaint of the industry is the perception that freight doesn’t vote. Clearly, freight doesn’t have enough votes. A fuel tax increase would affect nearly every U.S. household directly by increasing fuel costs. It would affect them indirectly by increasing transportation costs for the goods they consume. That cost would add to inflation.

One of the most important facts about the U.S. infrastructure that seems to elude the Congress and the average consumer is that it is part of a much larger network that supports world trade. The necessity of domestic transportation infrastructure to goods movement when most manufacturing and consumption was domestic certainly doesn’t change with today’s extended supply chains sourcing and selling in more places. In fact, that core resource must perform even better than in the past. And now we must add the connectors that have increased in importance — ports, intermodal hubs, inland waterways and airports.

Supply chain professionals have all seen the effects of poor infrastructure on the prospects of an emerging economy. Smart companies send a logistics team to evaluate infrastructure and services before committing to a location.

 Perhaps we can all do a better job of teaching the legislators not only the value of our successes but also the consequences of our mistakes.