American farmers are producing at record levels, and international customers are purchasing more than ever. But the question is: can our nation's transportation system move grain from farm to port with the speed and efficiency that today's international trade demands?
The answer is rapidly becoming a glaring "no," according to infrastructure experts who addressed the U.S. Grains Council International Marketing Conference & Annual Membership meeting in February.
For decades, U.S. farmers raised more grain than global customers were buying, so the nation could live with inefficiencies in moving it to port via truck, rail or barge. By 2002, however, world demand decreased the surplus, and U.S. infrastructure deficiencies started to become more apparent – and problematic.
The United States must place greater priority on the movement of freight because the aging U.S. transportation system is not keeping up with today's pace of international trade, according to the experts.
Kurt Nagle, chief executive officer of the American Association of Port Authorities, and Ken Eriksen, senior vice president at Informa Economics, say the country needs a wake up call on its infrastructure.
"A nation is judged by its infrastructure, and the United States is getting worse by the year, if not the day," Nagle says, whose organization represents 160 port authorities in the Western Hemisphere.
"We need an attitude adjustment about infrastructure," Eriksen adds. In a world where communication is instantaneous, and overnight delivery of packages is standard operating procedure, transportation of freight is not keeping up.
"Developing countries are seeing the opportunity that upgrading their infrastructure can bring, and many are putting higher priority on their infrastructure than we are."
Nagle showed statistics that Singapore, Brazil, Japan and the European Union all spend more per capita on infrastructure improvement than the United States.
Trade adds jobs
The speakers both emphasized that international trade creates and maintains American jobs and that it is shortsighted for the United States not to have an infrastructure that takes full advantage of the growing economic potential that world trade represents. Nagle states that seaports support 13 million jobs, and every billion dollars in exports means 15,000 jobs.
"Transportation inefficiency devalues grain and causes bottlenecks that back up all the way to the farm gate," Eriksen says.
Eriksen and Nagle both applauded the administration's commitment to doubling exports by 2014, but emphasized that it will take infrastructure improvements to realize that goal.
"Exports are key to global competitiveness, and seaports mean prosperity, but we must have efficient transportation infrastructure that gets goods to the ports," Nagle says. "It has to be a federal priority."
Eriksen adds that the nation's inland waterways are in need of at least $9 billion in federal improvements. "The railroads invest more than that every year. Waterways move our economy and they need attention," he says.
Nagle says the lower Mississippi River is a "poster child of the inadequate maintenance of federal navigation channels." He states unless the U.S. does a better job of maintaining its navigation channels through dredging and improvement of its locks and dams the country will not be able to take advantage of the expanded Panama Canal to be completed in 2014.
The Port of New Orleans services 5,000 ocean-going vessels annually. Its proximity to the Midwest via a 14,500-mile inland waterway system, six Class One railroads and the interstate highway system makes New Orleans the port of choice for the movement of cargoes such as steel, rubber, coffee, containers and manufactured goods.
If exports from one of the world's busiest ports are an indication, the U.S. economy is on the rebound. Through the first half of 2010, the port experienced a 60% increase in container shipments over the same period in 2009.
Pat Gallwey, chief operation officer of the Port of New Orleans, who addressed attendees at the USGC luncheon meeting, says the Port is working diligently to expand capacity and services to meet export demand.
The Port has completed more than $40 million of upgrades in the last five years, $100 million of new construction is now underway, with $50 million more in the design phase. This year, the port is taking delivery of two new 65-long-ton gantry cranes at an estimated cost of $26.5 million.
Despite the promising outlook, Gallwey is concerned about maintenance of the Mississippi River's shipping capacity. To accommodate shipping, the River must be maintained by the U.S. Army Corps of Engineers at a width of 750 feet and a depth of 45 feet. Gallwey says the Corps is facing a potential $22 million cut in its $85 million dredging budget. He explained that bar pilots and maritime professionals who help guide ships through navigationally-challenging waters, are recommending that barges on the Mississippi be loaded to only a 44-foot draft due to insufficient dredging.
"With a national goal of doubling U.S. exports, we can't start by reducing the draft in the Mississippi River. That sends a horrible message to the world about shipping from New Orleans and the United States," Gallwey says. "We need the agriculture industry's help to get the federal funding to keep the Mississippi dredged to 45 feet. The BP oil spill in the Gulf is minor compared to the economic impact of reducing the River's draft to 44 feet."