Creating regulatory flexibility and providing a framework for the freight transportation industry to cope with massive logistics datasets are ways that federal and state legislators can enable innovation, according to panelists speaking on government’s role in promoting technological advances in transportation.
“I worry about our regulatory regime and our permitting processes in terms of whether they have the agility and nimbleness to allow our society to embrace the technological change that’s coming,” said James Ray, former senior advisor for infrastructure at the U.S. Department of Transportation (USDOT).
To go about this, panelists speaking at a May 7 event on Capitol Hill organized by the Association of American Railroads suggested several options.
Lawmakers need to reset their “muscle memory” so that the government resists maintaining the status quo of long lead times to draft regulations, Ray said, pointing to the years-long environmental permitting process for projects.
To keep up with the pace of technological advances, “we need to have that agitation between ‘sister and brother’ agencies” such as between the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency “so that we can develop a new muscle memory for developing projects under a tight timeline,” he said.
Lawmakers must also look at how to help industries best utilize the massive amounts of supply chain data that is and will become available, especially since varying modes and constituents within the transportation network – trucks, rail, shippers, states – tend to look at datasets through their own lenses and as a result, the normalization of that data becomes strained and expensive, Ray said.
“What are the core datasets that the C-suite is going to need to look at…We should have a core set of data that really spans the entire country,” Ray said. “I think there’s a role in the federal government in thinking of those issues as well. Big data will be the new oil. To the extent that we can harmonize those datasets across the country, the better off we’ll be.”
While Congress hasn’t taken action on autonomous vehicles, the USDOT and certain states have been creating “sub-regulation,” such as working groups, best practices documents, guidance documents or “sandboxing,” to provide some governance while still allowing regulatory flexibility, said Jennifer Huddleston, research fellow at the Mercatus Center, a think tank.
Some states have also started to look at their regulatory codes to see whether they are inhibiting innovation, she said.
“We’re seeing states and policymakers desiring more innovation, not less,” Huddleston said.
Will another tax replace the gas tax?
With global positioning systems embedded in more passenger and freight vehicles, the possibility of replacing the federal fuel tax with another tax will likely see political debate. As electric vehicle uses potentially increases, that could decrease the funding going into the gas tax.
Implementing a road-user charge in place of a gas tax would enable tax rates based on time of day and traffic levels, which could in turn influence driver behavior. For instance, if a truck drives on a road that was not built to withstand continued wear from heavy trucks, that truck could be taxed accordingly to pay for the damage to that road.
“The technology is incredibly simple…the real question is if there’s political will,” said Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a think tank.
The states could take action on establishing road-user charges if the federal government doesn’t act first, since state departments of transportation are the ones who maintain the roads, Ray said.
Facing international pressure
The transportation industry and U.S. lawmakers must grapple with how to facilitate innovation within the country because so much of innovation is already occurring outside the U.S.
An estimated $12 billion is being invested in logistics startups globally, with half of those startups in China and two-thirds in Asia, according to Patrick Lortie, a partner and global rail leader at Oliver Wyman, a consulting firm. Those companies are not staying within their own region, but they’re challenging incumbents on their home turf, which is forcing our companies to adapt while also bringing in a lot of innovation into the country, he said.
“There’s going to continue to be a lot of innovation coming to our side. It’s going to come from outside the U.S. and outside the industry, in many cases,” Lortie said.
U.S. industries can take that innovation coming in from abroad and apply it to their own networks or regulations. For the rail industry, practices adopted by European freight rail that focus on efficiency and are meant to deal with tighter customer demands need to be brought into the U.S., Lortie said.
Change is coming
The confluence of several factors – the availability of big data across the supply chain, consumers’ changing transportation patterns brought on in part by ridesharing options with Lyft and Uber, the rise of e-commerce and its affect on shipping patterns – are resulting in major upheavals affecting all transportation modes.
“The way we move, the way our goods move, is about to change in a dramatic fashion,” Ray said.
The focus is also becoming more about the customer or shipper, and less about the transportation carrier.
“People are no longer necessarily thinking of one mode to get people or items from Point A to Point B,” Huddleston said.
Meanwhile, the rail industry is at a tipping point because of several factors, Lortie said. Those are an economy that’s moving away from large rail-centric commodities of heavy industrial goods such as coal and a trucking industry that could grow dramatically in size within the next 20 to 25 years, in part because of autonomous trucking.
“From a shipper standpoint, this is all great. The shipping, the logistics of the future will be more efficient, more sustainable,” Lortie said. “There’s going to be better integration in the supply chain, so that the customer will have a really good ending in that. But it’s going to be very tough for the incumbents going forward.”
But the railroads can compete by developing technology that builds upon existing tools such as positive train control (PTC), a federally mandated safety technology that measures the distances between trains. The railroads can use PTC as a foundation towards predictive maintenance and shipment visibility, Lortie said.
