FedEx Freight Chief Says Transportation System Is Headed for Gridlock

Robert Bowman, Contributor

The nation’s network of highways, roads and bridges isn’t equipped to handle the huge growth in traffic that’s expected in coming years, said Bill Logue, president and chief executive officer of FedEx Freight.

Speaking in Houston at the annual conference of the National Industrial Transportation League, Logue said the U.S. transportation infrastructure isn’t even sufficient to handle today’s needs, let alone those of the future. “We must begin to address aging infrastructure across every mode of transportation,” he said.

Logue cited a prediction by the U.S. Federal Highway Administration that traffic volume on roads and highways will more than double between 2010 and 2040. Most of the growth will take place in urban areas,which are already under stress. Improvements in the system are “vital to economic growth, the creation of jobs and access to goods and services,” he said.

Repairs, upgrades and new construction are needed across the board, Logue said. On the aviation side, the Air Traffic Control System is built on design elements “that have not changed since the 1950s.”

FedEx supports the Federal Aviation Administration’s Next Generation Air Transportation System, or NextGen, which will rely on satellite-based technology and is being implemented in stages through 2025. It will allow pilots to choose their own flight paths, leading to an estimated fuel savings of $23 billion by 2018, according to FAA.

Changes are also needed among airfreight service providers. The top 20 airports in the U.S. will all experience severe congestion over the next decade, and most are in need of new runways to handle the additional demand, Logue said.

Paperwork continues to be a major headache. An international air shipment can generate more than 30 documents. An electronic-freight initiativespearheaded by the International Air Transport Association could save shippers and carriers $12 billion, while preventing up to 80 percent of paperwork-caused delays. “We cannot solve tomorrow’s challenges with yesterday’s approaches,” Logue said.

Seaports are in dire need of berth expansion and dredging, to accommodate the new generation of larger containerships. Even without the arrival of those mega-vessels, “many of the nation’s ports are already experiencing congestion and delay,” Logue said. Like surface-transportation interests, they don’t have the money to do the job. The U.S. Senate recently passed the Water Resources Development Act of 2013, which promotes harbor-development projects, but doesn’t specify how they would be funded.

Elsewhere in the world, transportation systems are in a similarly poor state, according to Logue. China’s total investment in infrastructure over the years equals 76 percent of its gross domestic product, he said, but spending has not been distributed equally among all modes. In India, meanwhile, most highways are of two lanes or less. And Brazil, one of the world’s most promising developing economies, ranks near the bottom in the quality of its roads, railroads and ports.

The coming transportation crisis is more than a question of inadequate physical assets. Logue also blamed government regulation for hampering carriers. The new Hours of Service restrictions for truckers are expected to cut driver productivity by 2% to 10%, he said. According to a new survey by theAmerican Transportation Research Institute,  more than 80 percent of motor carriers say they’ve been negatively affected by the rules.

Logue also criticized the Compliance, Safety, Accountability (CSA) program of the Federal Motor Carrier Safety Administration. While the agency’s goal of promoting safety is commendable, the regulatory burden imposed by CSA is expected to worsen the driver shortage, raise costs and reduce service choices for shippers, he said. “Fedex is committed to safety most of all,” he said. “But we need to educate [the public] about the real-world impact of these changes.”

European regulators are erecting many barriers to trade, he said. A report by the European Commission identified 700 protectionist measures since 2008, including 150 in the last year alone. They include complex license requirements, border fees, duty increases and bans on certain imports and exports. A rise in customs inspections has increased the cost of goods and services.

“We must address these barriers to trade,” said Logue. He called for expedited customs procedures and more liberal standards for duty-free treatment of imports.