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Clogged US Transportation Systems Affecting Trade - 2002-10-28

U.S. transportation officials say congested ports and highways, an aging infrastructure, and added security are slowing the flow of goods and raising the cost of doing business in the United States. Officials and experts met to discuss the problem in Long Beach, California.

The meeting of federal and state officials and academic experts took place just kilometers from the massive ports of Los Angeles and Long Beach. Both are struggling to process backed-up inventory after a recent 10-day shutdown.

September 29, West Coast port operators locked out cargo handlers in a labor dispute that cost the United States an estimated one billion dollars a day. The impact was felt worldwide, especially among U.S. trading partners in Asia. October 8, President Bush secured a court order to reopen the ports for 80 days, but the dispute that shut them down has not yet been resolved.

The stoppage showed the fragility of a transportation system that is crucial to getting goods into and out of the country. But the ports are not the only weak link in the system, say the officials who met in Long Beach. Growing highway congestion is slowing the flow of goods to the markets.

"The system is congested at our major ports of entry, the major metropolitan areas, and increasingly between the major metropolitan areas," said Harry Caldwell, chief of freight policy for the U.S. Federal Highway Administration. "We're seeing dramatic increases in both passenger and freight transportation. Railroad freight movement is increasing, but our freight system for rail is very limited in its geographic scope, so most the movement continues to occur on the highway system."

John Horsley is director of the American Association of State Highway and Transportation Officials. He sees congestion on the major shipping corridors, such as Highway 710, which runs eastward from Long Beach, and the roads that lead north from Texas to Chicago.

Mr. Horsley notes there are added slowdowns because of new security measures at the ports. In fact, he says, since the terrorist attacks of September 11, 2001, there is heightened security through the transportation system.

"The containers coming into our ports all over America could be a vector for explosives, so whether it's bridges for rail or tunnels for trucks or ports and the vulnerability of containers, we've got be more vigilant than ever before," he said.

Jeff Morales, director of the California Department of Transportation, says security has been tightened at California ports, on the state's major highways, and at other transit points.

"It's everything from surveillance to looking at what we can do in terms of access, and other things," he said. "Obviously, we don't want to shut down movement, so really it's a matter of how do we keep things moving but be appropriately vigilant and so we're using everything we have at our disposal to do that."

The extra security adds costs, and not only in delayed deliveries.

Joseph Magaddino, an economist from California State University, Long Beach, says studies show that homeland security will shave 0.5 percent from the U.S. growth rate.

"The estimates are somewhere between 0.4 and 0.6 of a percent over the long run in terms of our ability to grow," he said. "And that simply reflects the fact that we'll not be spending resources to add onto the stock of goods and services, but we're be spending resources to improve security."

The economist says money will be spent on new technology for scrutinizing cargo and hiring extra security staff, instead of buying new factory machines or hiring added industrial workers.

Although stepped-up security is slowing the flow of freight, port operators hope that new computer technology will improve their operations. However, the use of new technology is one of the key issues in the recent dock shutdown: dock workers are demanding guarantees that the new technology will not eliminate jobs.

John Horsley of the Association of State Highway and Transportation Officials says the roads are just as important as the ports to ensuring the flow of cargo, and he says many highways are overcrowded.

"One of reasons we're holding this national seminar here in Long Beach today is to warm up the federal government to the idea of giving us more resources next year," he said. "Our highway and transit bill is up for action in Congress next year, and there's no question whether the issue is security or capacity or access to international markets, that resources are a critical difference to help us do a better job."

Highway officials are asking Congress for a $32 billion appropriation this year, and for increases totaling 50 percent over the next six years.

Federal highway official Harry Caldwell says the transportation system is getting more and more congested at a time when international trade is becoming more important. Imports and exports now account for 25 percent of the U.S. gross domestic product, and will account for 35 percent in 20 years.