Infrastructure issue bridges gap between forwarders, integrators

A decade-old major highway bridge collapse in Minneapolis still serves as a deadly reminder of the price our nation pays for lack of transportation infrastructure investment. The incident, which happened without warning over the Mississippi River on Aug. 1, 2007, took the lives of 13 people and injured 145 more during the evening rush-hour commute. It also demonstrated how poor road conditions can cost the United States billions of dollars in lost opportunity, increased fuel consumption and vehicle maintenance expenses.

So, when two fierce competitors, UPS and FedEx, recently combined forces to call for more infrastructure investment, tax simplification, and free and fair trade, forwarders realized that market rivals could stand shoulder to shoulder on the need to make government policies simpler, more equitable and more growth-oriented.

FedEx CEO Fred Smith and UPS CEO David Abney argued that our country needs to set more ambitious targets for its growth after noting that the real 2 percent annual growth in recent years is insufficient. Bigger thinking will encourage company planners to innovate and unleash productivity, but the right policies need to be in place so that everyone can prosper.

The express leaders called for the implementation of simple, fair and progressive taxation as the cornerstone of growth, where lower tax rates, the elimination of loopholes and tax code simplification can create opportunity in the business sector. The resulting rise in GDP would keep tax revenue constant, so the government could still fund necessary programs while allowing individuals and firms to invest more for growth.

Other countries, including China and India, are investing significant amounts into infrastructure as the United States falls behind. This global competition is why the U.S. must expand and modernize its roads, bridges, airports, seaports and other transport modes. A long-term approach with multiple funding mechanisms, including user fees and innovative partnerships with the private sector, is essential, but these funds must be dedicated specifically to transportation infrastructure.

Both CEOs agree that their companies are significant users of the transportation system and are prepared to pay their share for the use of new roads, bridges and aviation systems. Forwarders using those systems should be ready to pay their proportional share, as well.

Freight forwarders and their integrated carrier competitors must realize that all Americans benefit from a globally interconnected world because 95 percent of the world’s consumers exist outside the United States. The dependence on other countries for goods and services is why the negotiation of high-standard free-trade agreements is essential. These agreements go beyond tariff barriers and allow U.S. exports and e-commerce-related growth. Freight forwarders should agree that establishing the right framework for commercial ties with all countries is an essential part of American competitiveness not to be feared, if accompanied by a fair-trade policy. In other words, if everyone plays by the same rules, competition will thrive and so will economic growth.

In August, to address the infrastructure issue, President Trump signed an executive order aimed at curtailing the time it takes for an infrastructure project to be approved and delivered. The requirement allows the administration to develop a scorecard that tracks progress on a quarterly basis. Projects that fail to achieve critical milestones will automatically generate senior agency leadership attention. Presently, the average environmental review takes about five years and can be subject to more than 65 requirements or permits.

Hopefully, the executive order will go a long way toward addressing our crumbling infrastructure concerns. The initiative will require significant investment, since recent estimates peg the cost of repairing deteriorating roads and bridges in the United States at about US$740 billion. Still, the measure applies only to federally managed projects and not those controlled by the states.

Smith and Abney realize that business and government must work in a collaborative partnership for building in the future. If the government lays the groundwork through tax simplification, fair trade and infrastructure investment – and resists the urge to micromanage – businesses will carry the proverbial baton to the finish line. These improvements will benefit not only transportation providers, including express carriers and forwarders, but also a multitude of industries capable of sharing resources for the common interest.

As the e-commerce world continues its meteoric rise in retail, industrial and commercial opportunities, transportation providers will be the ultimate beneficiaries because the purchased item will almost always require delivery using various modes, including integrated express carriers and forwarders. While service capabilities and product offerings may vary, all competitors must stand in unity and demand the bold reforms in providing essential policy priorities that Smith and Abney are calling for, if our nation wants to be globally competitive.