United States’ ‘Deteriorating Infrastructure’ Causes Drag on Economic Growth

(Business Wire)

The US Chamber of Commerce has released what it calls the first-ever nationwide and state-by-state Transportation Performance Index which shows a significant decline over the last five years in how America’s transportation infrastructure is serving the needs of domestic commerce, international trade, and the overall US economy. The annual index is the first of its kind designed to look over time at how US transportation infrastructure is serving the needs of the US economy and business community.

“The performance of the nation’s transportation system is not keeping pace with the rate of growth of the demands on that system,” said Thomas J. Donohue, president and CEO of the US Chamber of Commerce. “As our economy recovers, the nation’s transportation infrastructure must be prepared to meet the projected growth in freight and population. In fact, a 10-point improvement in the new national transportation index could generate 3% more growth in the nation’s Gross Domestic Product. However, our index shows that from now through 2015 there will be a rapid decline in the performance of the system if we continue business as usual. Right now we’re on an unsustainable path.” Read more here.

WEF Report Brands Brazil’s Transport Infrastructure ‘Appalling’

(Transport Intelligence – John Manners-Bell)

Canada ranks 10^th in survey

Ahead of its Annual Meeting of the New Champions 2010 in Tianjin, China, the World Economic Forum has published its Global Competitiveness Report 2010-2011.

Switzerland tops the overall rankings whilst the United States falls two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd), after already ceding the top place to Switzerland last year. [Canada ranks 10th, see here.]

The report takes into account a wide range of different factors in assessing the level of each country’s competitiveness. The most relevant from a logistics perspective is ‘infrastructure’, although of course more generalised factors such as, ‘goods market efficiency’, ‘macroeconomic environment’ and ‘technological readiness’ have an indirect impact on the sector. Read more here.

United States Infrastructure Report Q2 2010

(Business Monitor International)

News in the U.S. infrastructure sector over the past quarter has been dominated by public sector support for projects. In the transport sector the US$8bn high speed rail funding was allocated, and in the utilities sector, the Department of Energy handed out billions of dollars worth of loan guarantees. In contrast, the private sector has been fairly muted.

In BMI’s Q210 US Infrastructure Report we are forecasting growth to return to the construction sector following five years of decline. In 2010, we are forecasting the construction industry to grow by 2.4% year-on-year (y-o-y) in real terms, to reach a nominal value of US$519.6bn. This growth is notable; however, it must be taken into context of the 13.2% decline estimated for 2009. Growth will mainly be fuelled by the disbursement of funds from the US$787bn American Recovery and Reinvestment Act (ARRA).

Read more here. Download a free sample here.

RAND: Railroads May Not Be Able to Handle Increased Freight

(American Shipper)

The volume of U.S. freight is expected to double over the next 30 years, and a new study said while railroads have improved productivity in recent decades, continued incremental improvements may be insufficient to handle freight volume increases.

The study by nonprofit research organization RAND Corp. said, “Increased use of rail freight is seen as a way to accommodate increased volumes while minimizing congestion on the highway system. However, the U.S. railroad network consists of many fewer track miles than it did several decades ago, and there is concern that it has become congested and incapable of handling additional volume.”

“Concern about railroad capacity constraints appears to be justified. However, capacity is determined by many factors, including operating practices, signaling technology, and car availability, in addition to miles of track,” RAND said. “Given the complexity of the system, there isn’t enough information available today to determine whether rail performance is now stable, declining or improving.”

The report three areas for further research:

• Improved reporting and public dissemination of railroad system and performance statistics to support transportation policy.

• Continued examination of public and private cost tradeoffs between shipping freight by truck and by rail.

• Development of a national freight strategy that balances the private interests of the shippers and the railroads with the public interest associated with the relative social costs of different modes of freight transportation.

The study, The State of U.S. Railroads: A Review of Capacity and Performance Data, is available online at the RAND website.

‘The Longer We Put It Off,’ the Worse Things Will Get

(New Brunswick Business Journal – Matt McCann)

Key pieces of Canada’s infrastructure are crumbling, and a $200-billion investment is needed to maintain our standard of living, says a public policy researcher.

In a paper released today by the Institute for Research in Public Policy, James Brox, an economics professor at the University of Waterloo, said facilities such as roads, highways, bridges, ports, and water systems need the money – $72 billion for new facilities and $123 billion to repair and upgrade those already built – as soon as possible.

Add to that a sustained, 10% annual increase in infrastructure spending, and manufacturing unit production costs could be reduced by five per cent per year, he said, the equivalent of a five per cent increase in productivity.

The funding increase, Brox said, would help narrow the Canada-U.S. manufacturing productivity gap, and enhance the manufacturing sector’s competitive profile.

“New Brunswick’s a bit better off because the infrastructure is more recent, but in a few years it’ll be in the same position Ontario’s in,” Brox said. “The longer we put it off, the worse things are going to get,” he said, adding that the more systems wear down, the more they cost to repair.

Since the 1970s, responsibility for these infrastructure projects has gradually been shifted down to the municipal level.

But cities, Brox said, rely heavily on property taxes for money, an area that’s difficult to increase, and as such, infrastructure has gone neglected or is not even built in the first place.

“Right now, the municipalities don’t have a stable, long-term source of revenue that’s sufficient to fund the infrastructure that they’re really required to provide if we’re going to effect the productivity of the country,” he said.

In addition to lower costs and higher productivity, Brox said infrastructure investments could also translate into a 0.6% increase in jobs relative to baseline trends. David Plante, vice-president of Canadian Manufacturers and Exporters for New Brunswick and Prince Edward Island, said investments in infrastructure are essential to New Brunswick. It is the most export-dependent province, with 75% of its GDP relying on domestic and international exports.

“We’re in a situation where some of our existing infrastructure is deteriorating, but by the same token, we don’t have the same level of infrastructure in much of the rest of Canada and in the United States.” Plante said that every $1 spent on public infrastructure equals 17 cents in cost savings for manufacturers. Those savings translate into a 0.2% increase in GDP.

Citing figures from Statistics Canada, Plante said that all of the money spent on public infrastructure between 1961 and 2000 was responsible for 18% of all business productivity gains. “Infrastructure has to be a clear priority for the federal government,” he said.