Logistics and Infrastructure: Challenges and Opportunities

Harry Caldwell
Federal Highway Administration
Office of Freight Management and Operations

• logistics and transportation infrastructure

• infrastructure and economic development

• challenges facing future infrastructure development and use

• approaches to problem solving

• Product Supply Chain Concept
• Government Regulation
• Equipment Carrying Capacity
• Mode Optimization
• Global Logistics & Technology
• Inventory Reduction

• Markets/Logistics (demand)
  • From national markets to global markets
  • From a manufacturing to a service economy
  • From push to pull logistics systems
• Carriers/Transportation Systems (supply)
  • From modal fragmentation to cross-modal coordination
  • From system construction to system optimization
  • From DoD stovepipes to "Focused Logistics"
• Public Policy
  • From economic deregulation to safety regulation
  • From modal to multi-modal surface transportation policy
  • From low visibility to environmental accountability

• Continuing evolution of the U.S. into a service and information economy
• Increasing domestic, NAFTA, and global trade
• Outsourcing for comparative economic advantage in production
• Customer-driven shift to customized, mass-market products and services
• Manufacture-to-order and time-definite-delivery
• Emergence of e-commerce and e-business

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An Asset to contain costs and make products more competitive

Are we using it wisely?

NHS Connectors

• Poor physical condition
• Port access issues
• "orphan status"
• inadequate coordination of investment strategies
• need for intermodal impact statements

82% see congestion as serious or critical Costs of slower speed Scheduling problems Driver morale Accidents & insurance Higher fuel & maintenance 85% see congestion worsening over next five years

• Highway congestion, especially landside access to ports and terminals
• Insufficient rail and intermodal terminal capacity
• fragmented operational strategies; immature national and international ITS and automated identification standards
• Shortages of labor and skills
• Limitation of public and private finance for system maintenance and new capacity
• Public-public and public-private integration of ITS and IT systems

• Trends
  • Evolving public sector awareness of the need for multi-modal policy, planning, and investment (ISTEA and TEA-21)
  • Increasing state and local control of transportation investment
  • Increasing use of highway trust funds for system preservation
  • Growing demand to re-link transportation investment and economic development
• Implications for freight
  • More complex planning and investment environment
  • Mismatch between scale of transport operations (increasingly regional and global) and public sector jurisdictions (local and state)
  • Issues
  • Role of multistate freight and trade corridor programs
• Identifying and financing freight projects of national significance
  • Use of highway trust funds for non-highway freight projects
  • Slow, inflexible public planning and project delivery compared to private sector
  • Disjointed modal planning
  • Difficult to engage private sector freight interests in state and MPO planning processes; limited freight representation
  • Inadequate freight planning data and analysis tools

Freight Transportation Perspectives
State and MPO focus is regional and local; private sector focus is increasingly national and global

• Low priority in State/MPO plans
• Lack of local match or sponsorship
• Lack of private sector participation
• Neighborhood/Community opposition
• Environmental concerns
• Physical/Other Constraints

North American readiness...

The Challenge

• Over the past 20 years, highway travel demand has increased an average of over 3.0 percent per year
• During that same time, highway capacity has increased at a rate of 0.3 percent per year.
• Over the next 20 years, freight movements are expected to double, with more intense growth in major traffic lanes, hubs, and POE
• Customer expectations will increase; environmental issues will intensify

Intermodalism Innovative Finance	Funding Increase State/local freight focus	Information Technology Infrastructure Funding (multimodal?) Institutional Development

• Institutional Development - break the paradigms
  • Encouraging multistate, regional, and binational intermodal freight coalitions
  • Establishing statewide and metropolitan freight advisory groups
  • Developing tools to evaluate freight improvement options 

• Information Technology - leverage technology to optimize system performance
  • ITS - need full deployment; links throughout supply chain
  • Border crossings and ports of entry - national security, trade processing, credentialing
  • Data needs - develop real-time operations information system - technology as enabler
• Infrastructure - early planning & public/private partnerships
  • Improve financing options -- eligibility issues...multijurisdictional infrastructure banks
  • Develop financing guidelines
  • Raise freight concerns during the planning process

• Comprehensive ops strategy...intermodal ITS
• support for private sector efficiency gains
• data and analytical development
• corridor and border support
• creation of RCOEs to support inst. dev.
• Initiate FDP...planning, prog, finance
• initiate pilot projects illustrating each element
  • independent T&E
• NAFTA component...variations of the above