E-commerce growth, products no longer being fully built at just one facility, and “building to order” replacing “building to stock” have resulted in a more complex supply chain.
The Coalition for America’s Gateways & Trade Corridors (CAGTC) released a white paper that said our national freight infrastructure must be improved to meet the demands of the growing economy.
The white paper, “America’s 21st Century Manufacturing Relies on 20th Century Infrastructure,” was written by Majestic Realty Co. Senior Vice President Fran Inman, and CAGTC Executive Director Elaine Nessle.
The CAGTC also issued its “Freight Can’t Wait” booklet, which it said “highlights 43 freight projects of regional and national significance in need of federal partnership, including enhancements at freight hubs, sea and land gateways, and the augmentation of roadway capacity to diminish system chokepoints.”
The CAGTC white paper said that while the private sector has been shifting to meet new demands, the United States’ national freight network, which was once the envy of the world, has stalled due to years of underinvestment, challenging the economic growth potential.
Since 2010, more than 800,000 domestic manufacturing jobs have been established, and the sector has grown nearly two times as fast as the overall economy, according to a report issued by the White House, Revitalizing American Manufacturing.
The Global Competitiveness Report 2015-2016, released by the World Economic Forum, showed how the U.S. ranks 13th for the quality of overall infrastructure and 14th for road quality.
Several trends are impacting the supply chain, including e-commerce growth, products no longer being fully built at just one facility, and “building to order” replacing “building to stock.”
The CAGTC white paper said e-commerce is creating new stress on infrastructure, with consumers demanding precise and immediate deliveries. “As manufacturing and distribution move closer to population centers to accommodate this growing trend, the average truckload length of haul is being shortened and instead, less-than-truckload carriers are experiencing a significant uptick,” it said.
Business-to-business e-commerce is also on the rise. The CAGTC white paper said that according to a recent Forrester Research report, U.S. manufacturers, wholesalers, and distributors sold $780 billion to companies online in 2015, over twice the $305 billion in retail sales the same year.
In addition, manufacturers are no longer building entire finished products in one facility, requiring the transportation of parts from one plant to another for assembly and completion.
Another trend impacting the supply chain is that “building to order” is replacing “building to stock,” and this demand for customized products is forcing companies to re-evaluate high-volume supply chains and the practice of mass producing goods, the white paper said.
CAGTC: Freight infrastructure must be improved to meet demand
