From SCDigest's On-Target E-Magazine
- Jan. 17, 2013
Logistics News: Poor US Infrastructure has Huge Economic Costs, Engineering Group Says, While Massachusetts is Planning Major Increases in Transportation Taxes
But How Much Benefit is Worth How Much Cost? ASCE Says Cost is In Trillions - Is it?
SCDigest Editorial Staff
There seems to be general agreement that US infrastructure - notably for the nation's highway systems, are in need of improvement. Just how much - and how it will be paid for - remain the essential questions.
The issues were brought into relief this week by a new report on the subject from the American Society of Civil Engineers (ASCE), which looks at the economic impact of the nation's infrastructure shortcomings.
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| Compared with baseline forecasts for the years 2012-2020, the cumulative impact of deficient infrastructure due to continued underinvestment in the transportation, water, energy, and port sectors is predicted to result in an aggregated loss of $3.1 trillion in GDP from the U.S. economy. |
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What Do You Say?
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Every four years, the ASCE issues a report grading US infrastructure, and in 2009 assigned a mark of D as an average across all categories. A new report will be issued later in 2013, and it is unlikely this poor grade will much change.
However, we will note that the bi-annual Logistics Performance Index rankings from the World Bank in 2012 found the US ranked fourth among all countries in terms of logistics infrastructure.
Preceding that new ACSE report is a new publication titled Failure to Act: The Impact of US Current Infrastructure Investment on America's Future, which as the name connotes an attempt to quantify the impact of poor infrastructure on America's economy and families.
In summary, the report says that "deteriorating infrastructure, long known to be a public safety issue, has a cascading impact on the nation's economy, negatively affecting business productivity, gross domestic product (GDP), employment, personal income, and international competitiveness," to the tune of more than $3 trillion in GDP through 2020.
The ASCE said that for this report, it looked more closely at the interactions and dependencies between various categories of infrastructure, noting that, for example, "regardless of how quickly goods can be offloaded at the nation's ports, if highway and rail infrastructure needed to transport these goods to market is congested, traffic will slow and costs to business will rise, creating a drag on the U.S. economy that is ultimately reflected in a lower GDP."
On the other hand, the impact of degradation in one area in some cases may be offset by changes or capacity in others.
That said, the ASCE says that if what is had earlier projected as a $1.1 trillion gap by 2020 between what additional money is needed to be spent on infrastructure and what appears to be the current trajectory will be a reduction of $1 trillion in business sales, resulting in a loss of 3.5 million jobs. Additionally, if current trends are not reversed, the cumulative cost to the U.S. economy from 2012-2020 will be more than $3.1 trillion in GDP and $1.1 trillion in total trade, the ASCE says.
Noteworthy is that the above figures are not related to jobs associated with the infrastructure build out itself, but rather with the "friction" (our term) poor infrastructure introduces to the economy - especially, of course, in logistics and the supply chain.
(Transportation Management Article Continued Below)
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