UPS offers infrastructure action plan
Kurt Kuehn, senior vice president of worldwide sales and marketing for UPS, on Monday urged U.S. retailers and manufacturers to speak up more about the looming decline of freight transportation infrastructure in order to get elected officials to take the problem seriously and develop a national transportation strategy.
Several high profile consumer goods, pharmaceutical and electronics companies have lobbied the Department of Transportation and the White House during the past couple of years, and the National Industrial Transportation League continues to raise the issue of freight bottlenecks.
But shippers, for the most part, have not consistently publicized the fact that highway, rail, port and airport congestion is raising their costs and the speed at which they can deliver products to customers.
Speaking at the NIT League’s Transcomp conference held in UPS’s home city of Atlanta, Kuehn said business leaders can't leave it to trucking companies and other freight carriers to make the case for upgrades to transportation infrastructure. It’s a theme that his boss, UPS Chairman and Chief Executive Michael Eskew, and others have voiced in the past.
Kuehn said he was concerned that the majority of 500 shippers recently surveyed by the MIT Center for Transportation and Logistics responded that they never meet or talk with government officials about transportation issues.
“I think the reason for this is that many big shippers are too busy running their companies to think about macro issues,” he said. “Corporate shippers don’t really think of themselves as being in the transportation business. But the truth is, you are in the transportation business.”
Carriers like UPS, ocean liner APL, road builders and others want shippers to push for more road capacity, rail and port connectors, and other improvements because demand is growing faster than additional transportation system capacity and politicians tend to dismiss their pleas because they have a direct, vested interest in increasing spending on transportation projects.
UPS is heavily impacted by congestion because its package delivery trucks have to navigate urban and suburban areas, it operates fleets of heavy-duty trucks and airlines, and is the largest commercial railroad customer. The inability to efficiently move goods is highlighted by the fact that the average speed of daytime automobile travel in New York City is 6 mph compared to 11.5 mph by horse-drawn vehicles in 1907, Kuehn noted.
A national strategy for transportation would take into account projects that impact the entire economy and coordinate cross-region and cross-mode investment in ways that deliver national, not just local, benefit, Kuehn said.
He reiterated UPS’s support for user fees and raising the federal gas tax if the money collected is strictly dedicated to infrastructure improvements and not siphoned off for other budgetary reasons. The aviation system is also constrained by overcrowding and poor air traffic control technology. UPS favors a proposal before Congress that replaces the fuel tax for commercial aviation with a $25 modernization surcharge on all flights in controlled airspace, and increases the jet fuel tax on general aviation. Large airlines claim the current system for funding the Federal Aviation Administration subsidizes corporate jets and other small aircraft users of airports.
UPS’s infrastructure action plan also places responsibility on companies to become more efficient in managing their cargo movements. One way companies should do that is “to disaggregate inventory and move products only once ' avoiding the into-warehouses, out-of-warehouse, multiple-handoff approach,” Kuehn said. That solution, not surprisingly, plays into UPS supply chain business, in which the company acts as an ocean freight consolidator and then injects shipments directly into its package or less-than-truckload networks after clearing the U.S. port for direct delivery.
Greater use of technology for highways, railroads, ports and the aviation system can help track traffic and increase capacity through better use of the existing infrastructure, he added. Other ways to increase capacity include adding more truck-only highway lanes, increasing the size and weight of trucks, and rail industry tax credits.
The movement of goods is enabled by the efficient flow of shipment information between commercial parties and government agencies, especially when involving international trade. Kuehn called for harmonizing tariffs across North America as a step to simplify customs paper and compliance, and raising the minimum value at which imported goods must receive clearance. ' Eric Kulisch