Archives for October 2018

How Infrastructure Deficits Affect Supply Chains

By Contributing Author | 10/08/2018 | 7:34 PM

By Avery Phillips



Your supply chain is only as good as each moving piece. If one link in the chain is broken, your company could lose thousands of dollars in revenue quickly before the bleeding stops. Budget constraints are often the cause and also the solution to supply chain deficits.

Most supply chains across the U.S. rely on government-run and maintained assets such as freeways, shipping ports, and railways. The problem is that you have no control over the upkeep of these assets, and if dangerous bridges or unsafe highways prevent drivers from reaching their destinations, you lose money. Reports all over the internet complain of truck drivers who refuse to drive through Chicago and New York because of deteriorating highways unsafe for big rigs.

All across America, city budgets are misused and underfunded, with supply chain assets being a low priority on the totem pole. Unlike the Port of Los Angeles that has been modernized and updated to meet consumer needs, most ports around the country have decaying bridges and equipment that need to be updated or replaced to accommodate larger cargo freight vessels. All of this adds to the complexity of your supply chain.

The Budget Solution to Supply Chain Deficits

With government offices changing hands like a game of musical chairs, supply chain infrastructure often gets lost in the mix. Focuses on technology, new road construction, and social impact initiatives take center stage and our highways, ports, and air freight transports all suffer. As they deteriorate further, the repair costs skyrocket —  so when budget talks resume, the issue is again delayed.

It will cost about $189 billion to fix the infrastructure deficits across the country. The U.S. Department of Transportation admits that a long-term solution has yet to be proposed and approved. Even more alarming is The American Society of Civil Engineers (ASCE) gave America’s infrastructure a D+ in their most recent evaluation.

The U.S. government wastes billions on unnecessary technology, social security tracking for deceased Americans, credit card abuse, unused airline tickets, and Medicare costs. Approximately $25 billion would be available to fix America's infrastructure and improve highways and ports if the budget were adjusted to use these wasted funds. Not to mention the secondary benefits of saving costs associated with accidents and liability claims when these deficits cause injury or death.

What Can Be Done to Fix the Problem

Current funding for infrastructure comes from taxes and fossil fuels, and this worked well up to a point. However, with emerging technologies and increased use, a better solution is needed. One proposed solution is to fund infrastructure maintenance with user fees, per vehicle, per mile and pass on the cost to the beneficiaries of those improved road conditions. Another helpful option would be to force large trucks to use managed lanes combined with intelligent transportation systems (ITS) to reduce congestion and improve tracking efficiency of supply chain vehicles.

CED.org offered up this interesting solution: the government should allow privately-funded vendors to repair and maintain highways and ports. State agencies could then focus on new construction for roads and bridges and reduce their labor force to save money. The money saved could be funneled into management positions to oversee the private contractors.

A lot of infrastructure problems fall under state-level budgets, so a more consolidated approach to the issue as a nationwide transportation system is needed. First, a collaboration between government, third-party vendors, state highway planners, and federal agencies is a must. A combined approach would start the process moving forward to fix these issues that are not going away but only getting worse as time passes.

Avery-Phillips-bioAvery T. Phillips is a freelance human being with too much to say. She loves nature and examining human interactions with the world. Comment or tweet her @a_taylorian with any questions or suggestions.

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About One-Off Sound-Off

Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.


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