For Our Grandchildren's Future, Global Competition, Not Revenue, Is The Real Challenge
AASHTO’s recommendations for the National Surface Transportation Policy and Revenue Study Commission, approved by the Board of Directors on October 30, 2006, includes this “Call for Action.”
“Our generation inherited the world’s best transportation system made possible by the commitment of the past two generations to invest in the country’s future. We have spent that inheritance.”
“The 21st Century is an increasingly competitive world where countries like China and India have set their sights on overtaking America as the preeminent economic power. Our prosperity and way of life are at stake. America must respond.”
Assessing the Competition Worldwide
Today the nation is facing increasing global competition. China, with a population of 1.3 billion, is building a 53,000-mile National Expressway System which, when complete in 2020, will rival the 47,000-mile U.S. Interstate System. India, with a population of one billion, is building a 10,000-mile national expressway system. Europe, with a population of 450 million, is spending hundreds of billions of euros on a network of highways, bridges, tunnels, ports, and rail lines.
The China Challenge
For the past decade China, with a population of 1.3 billion, has generated economic growth of between 8 and10 percent annually. To support its economic expansion, the government of China has devoted extraordinary resources to the development of its transportation system including its trunk highway system, regional and local highways, ports, freight railroads, intercity passenger rail, subways, and public transportation. As is shown in the chart below there has been modest growth in container cargo volumes from Europe, North America and elsewhere over the last 25 years. The most dramatic growth has come from Asia, with China accounting for the vast majority of the increase. (Figure 1.)
Figure 1. Asia Dominates Growth in Container Cargo Worldwide, 1980–2006
In 2005, a delegation of transportation leaders from the United States, including then Federal Highway Administrator Mary Peters and AASHTO Executive Director John Horsley visited China to assess the development of its Trunk Highway System. Under the leadership of the Ministry of Communications (MOC), which is responsible for highways, China completed 41,000 kilometers of their National Expressway System in 14 years, 7 years earlier than planned. Investment in highways has increased from $12.6 billion in 1996 to $53 billion in 2004.
MOC briefed the U.S. delegation on China’s master plan for a National Expressway Network that includes a total of 85,000 kilometers that will connect all large and medium-sized cities by 2020. The U.S. group was impressed by the scale and pace of the system under development. The quality of the expressways and bridges were world-class. When complete, the Chinese National Expressway System at 53,000 miles will be larger that the current 47,000-mile U.S. Interstate Highway System. At the end of one briefing the Chinese asked, “What are the United States’ plans for the future of your Interstate System?” This question must be addressed.
The pace of development in China poses two challenges for America’s transportation system. First, the rate of increase in the volume of containers being shipped from China through U.S. ports threatens to overwhelm the capacity of our system. Second, China’s appetite for materials such as steel and concrete to fuel its massive construction program, has put considerable upward pressure on the cost of construction here in the United States.
The impacts on our transportation system reflect the even larger impacts on the nation’s future economic standing in the world. Economic analysts suggest that China, armed with excellent transportation, a low-cost and enormous labor pool, and an aggressive policy for economic growth will supersede the United States as the dominant trading nation perhaps as early as 2020. Such a change will have serious impacts on the ability of the United States to sustain the current standard of living, afford good-paying jobs to its workforce, and maintain world markets for its goods.
As the U.S. economy becomes both more integrated and globalized, there is an ever-increasing economic premium placed on rapid, reliable transportation for goods and passengers. Our ability to compete will require a well-connected, nationwide, high-capacity system capable of high speeds and reliability. The competitiveness of U.S. industries like agriculture already depends on a low-cost, efficient transportation system to give it an edge. In the future, increasing our productivity and retaining manufacturers like Dell, which assembles its computers here in the United States, will depend on a reliable, efficiently running system as well.
India Makes Massive Investments
India is enjoying annual growth rates of 7 to 8 percent. With a population in excess of one billion and such dynamic growth rates some observers expect India’s economy to become the third largest in the world, after those of the United States and China. India now recognizes that its projected economic expansion cannot be sustained without massive investments in and operational reforms of its transportation system, in particular, in the highway sector.
India has embarked on a 12-year plan at the estimated cost of $15 billion, to develop a 10,000-mile national highway system connecting its four principal metropolitan areas of Delhi, Mumbai, Chennai, and Kolkata, and two cross-country expressways connecting the country North–South and East–West. India’s development plans will also put upward pressure on the costs of construction in the United States due to increased demand for materials.
Europe Connects a Common Economy
T.R. Reid in a book titled, The United States of Europe, writes “Twenty-five nations have joined together—with a dozen or so on the waiting list—to build a common economy, government, and culture…Europe has more people, more wealth, and more trade than the United States.” He goes on to report that the European Union, with a population of over 450 million, has invested hundreds of billions of euros in an ambitious network of highways, bridges, tunnels, ports, and rail lines.
Reid concludes that while this historic transformation of Europe has been taking place, “Americans have been asleep.” Some of the transportation improvements built recently in Europe are the following: the $50 billion Chunnel between the United Kingdom and France; a $4 billion bridge from Denmark to Sweden; new tunnels to carry truck and train traffic under the Alps and across the Pyrenees; 100 billion euros are being poured into the reconstruction of a route connecting Italy and Greece with the Baltic States; Rotterdam has become the world’s largest freighter port; and finally, Europe from the TGV in France to the Eurostar in Italy has an extensive network of high-speed rail lines which connect the entire continent.
Neighbors Prepare for Trade Goods
Over the past 25 years, a tsunami of container-borne cargo has hit U.S. ports. Container volume, most of it from Asia, increased from 8 million twenty-foot equivalent units (TEUs) to 40 million in that period, and if current trends continue, it will exceed 100 million TEUs by 2020, overwhelming current North American port capacity.
To respond to this huge increase in trade, the Canadians plan to tap a $233 million gateway fund to develop a major deep-water port at Prince Rupert, north of Vancouver and trans-ship containers south by rail to the Canadian National’s mainline and then east to Chicago. Hutchison Port Holdings, the world’s largest independent port operator, plans to pump $200 million into expanding containership capacity at Lazaro Cardenas, Mexico’s deepest port, which is just north of Acapulco, and transship cargo via the Kansas City Southern de Mexico rail line to Texas and destinations north. The voters of Panama have approved the plan to invest $5 billion to deepen and widen the Panama Canal so that the huge “PostPanamax” container cargo ships of the future can use the Canal to access American ports in the South and East.
Recently, John Vickerman of TransSystems, recognized as one of the pre-eminent port planners in the United States, asked, “What is it about this huge growth in trade that is about to hit the West Coast that the Canadians get, and the Mexicans get, that Americans don’t get?”
