Home is Where the Heart (of Economic Development) Is

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As state and local authorities survey investments in transportation and distribution infrastructure, one glaring omission interrupts their planning—a lack of oversight and assistance from the federal government. What are they doing about it?

The last time the United States had a federal transportation policy was under President Eisenhower, who was following in Harry Truman's footsteps. Both leaders knew transportation infrastructure drives economic development.

Today, however, leadership at the highest levels seems to be lacking, leaving state and local economic development administrators and planners, chambers of commerce, and other community leaders to fill the breech.

Many state and local offices have been forced to go it alone and draw up their own blueprints for building economic sustainability. But their limited regional purview and dependence on political constituencies that don't always understand the importance of transportation infrastructure present a major chink in their strategic vision.

Some areas have remedied this lack of federal policy with strong local leadership to create public/private partnerships that help endow both short- and long-term transportation projects. Other areas, without an objective administrative voice, have failed to capitalize on economic development opportunities and still struggle with communicating local business needs to state development authorities.

Inbound Logistics solicited comment from various economic development agencies to gauge the importance of transportation and logistics activities at the state and local levels; the impact of globalization and high transportation costs; and their best practices for pairing local business interests with investments in future logistics activities.

Here's what they had to say:

Q: In the absence of a federal transportation policy, what can state and local leaders do to meet businesses' transportation demands?

Tim Cantwell, director, MidAmerica Airport, Illinois: Lack of federal oversight and executive branch direction clearly hurts state and local authorities. Without specified priorities, those who make the most effort are the ones who get federal tax dollars.

Illinois, however, functions differently. The state centralizes transportation oversight and places all modes of transportation—air, land, and ocean—under one umbrella. This helps direct federal funding to state-prioritized projects.

Stan Moses, assistant community development director, City of Bangor, Maine: Part of the problem is that we do not have rational energy and environmental policies. Because cargo shipments rely on energy use, it is nearly impossible to have a transportation policy without an energy policy.

While national leaders are starting to integrate their view of transportation, energy, and the environment, the complexity of these areas makes it difficult to develop a politically viable initiative that properly addresses each area.

Because of the scope of this integration, it is easier to implement these policies on a local or state level. In turn, acceptance of the economic and environmental benefits can bubble up and help reduce political inertia at the national level.

Barb Fleisner, executive director, Marshfield Area Chamber of Commerce & Industry, Wisconsin: The recently passed six-year Federal Transportation Bill sets a lot of transport policy. While not the optimal way to dictate policy, it does provide a guideline as to what areas receive money.

I serve on the Transportation Development Association in Wisconsin and we are advocates for strong infrastructure for all modes of transportation. While we do not set policy, we provide direction to our state legislators. Locally, our chamber works with surrounding municipalities to set our five-year capital improvement plan.

Bert Brantley, communications manager, Georgia Department of Economic Development: In Georgia, we have taken initiative to fill in the gap between what the federal government provides and what is needed to move the state forward.

Gov. Perdue created a six-year, $15.5-billion transportation program called 'Fast Forward' that commits investment to improve the state's transportation system. The plan is split between congestion-relief projects in Metro Atlanta, and new infrastructure in the rest of Georgia to spur economic development.

Peter Beitzel, Metropolitan Milwaukee Association of Commerce: The general public doesn't believe transportation infrastructure is as important as health, education, and security. They assume our infrastructure will always be there. State and local leaders are held hostage by government officials who use environmental policy to stop projects, while the larger public good is ignored.

Ron Tillery, president, The Development Council, Kearney, Neb.: Legislators have expressed concern about these issues for the past several years. Local and state leaders, however, are sometimes more concerned about the road to the next town than the road to the next state.

In Nebraska, we have a number of organizations—The I-80 Nebraska Corridor group, The Nebraska Logistics Council, and FutureForce—that understand Nebraska's geographic significance and the importance of our road, rail, and port infrastructure. Collectively, these organizations recognize that we must develop infrastructure to prepare for the future.

Scott Connell, vice president, economic development, Greater Waco, Texas, Chamber of Commerce: It is incumbent on each level of government to do its part to maintain and improve transportation infrastructure. Trucks drive on city streets, county roads, and state and federal highways. The key is thinking ahead and making sure road networks are connected.

Jim Edmonds, chairman, Port of Houston Authority (PHA): Many years ago, the federal government prudently chose to delegate oversight of transportation infrastructure issues to state and local governments. As such, there is no breech today; rather there is delegated responsibility.

Q: What impact do globalization and rising transportation costs have on logistics and transportation in your area?

Globalization

Cantwell: Globalization is boosting the importance of air freight. Time-specific and value-added logistics demands require air shipments that circumvent chokepoints and get to the country's core distribution networks.

Moses: Businesses are showing more interest in local and long-distance links between land, sea, and air transport.

Fleisner: Because of globalization, companies incorporate shipment destinations as an important factor when deciding where to locate a facility. Rising gas prices have caused our state legislators to remove an annual inflationary adjustment, which has further squeezed already limited transportation spend.

Beitzel: Globalization makes the need for good infrastructure all the more important because we need product delivered faster, cheaper, and more efficiently.

Connell: Site selection project managers now frequently request information about global connections, such as port access and international airfreight transportation.

Edmonds: Globalization has had a positive impact on bi-directional trade. PHA, for example, has posted year-on-year increases in tonnage, containers, and revenue as a result of U.S. trade policy and globalization.

Rising Transportation Costs

Cantwell: It's important to categorize rising transport costs by mode. With higher fuel prices, the optimal, cost-efficient distance of truck transport has decreased. For an incremental increase in cost, shipping via air to a multi-consumer reach point may be a viable option.

If a truck is used to collect and distribute product within a 1,500-mile radius, for example, it might be better to have two distribution points at each end and reduce the truck distance to 750 miles. This halves the truck cost, and increases flight spend, which could average out to be considerably less than the 50 percent truck savings.

Brantley: States that invest in efficient and seamless transportation infrastructure benefit when transport costs rise.

Tillery: Rising transportation costs underscore the value of prudent transportation infrastructure investment. Improvements to ease congestion on I-80, for example, are helping to enhance its value as a transcontinental route.

Connell: When looking at site selection projects, many companies now map out logistics requirements to calculate potential transport costs before they identify a location for receiving and distributing product to customers.

Edmonds: We have seen no impact. Cargo handling of all commodities is increasing at a steady rate at the Port of Houston.

Q: Do businesses in your area take transportation and logistics as seriously as they should? If not, how are you changing their perception?

Cantwell: The St. Louis region has passed up barge and rail opportunities for everything but through traffic, but is quickly recognizing the importance of air freight as it aspires to become a global crossroads. MidAmerica St. Louis Airport is on track to become an active cargo portal to the United States, as evidenced by the recent opening of a 50,000-square-foot cargo handling facility.

Fleisner: Our businesses and local officials take transportation and logistics seriously, and have dedicated resources to complete infrastructure projects. However, with limited resources, these decisions do not come without a lot of public debate.

Brantley: Most Georgia businesses use the state's transportation network to help access markets quickly and efficiently. We have an active logistics task force that brings together representatives from the state's transportation authorities to discuss how to market the state as a logistics hub. This has similarly helped educate smaller businesses about ways to extend their reach beyond their local communities.

Beitzel: Most of our politicians do not take transportation as seriously as they should. They perceive property tax and environmental impacts as more important than transportation investments. We should place a greater value on improving our infrastructure because countries such as China have reaped considerable benefits by taking a proactive approach.

Connell: Companies in our region do take transportation seriously, and we have several road improvement projects underway and in development. Also, in Texas Central Industrial Park, we are working with Union Pacific Railroad and local industry to design a team track on 200 acres to accommodate rail needs for various businesses.

Edmonds: We are diligently working with federal, state, county, and city officials on transportation programs such as freight rail corridors and road improvement projects.

Q: How do you expect those initiatives to play out over the next decade?

Cantwell: We expect that MidAmerica St. Louis Airport's potential to interface U.S. industry with the world and attract air cargo business will be its revenue backbone for the future.

Fleisner: I expect officials to float more bonds to pay for transportation projects, increasing debt service. As a result, projects may be delayed.

Brantley: Georgia is positioned to evolve its logistics assets over the next 10 years and state authorities will continue to pitch the state as a place for investment.

Beitzel: Our recent initiatives serve to maintain existing infrastructure and are not an investment in the future. Our chamber of commerce fought hard to ensure the main central freeway interchange in Milwaukee was rebuilt to handle more traffic—a project the former mayor opposed.

We are also attempting to create an airport authority, but a local constituency is fighting hard to keep the airport under the control of residential interests. This has yet to be determined.

Connell: Waco-area businesses will need alternatives for moving product inbound and outbound. These improvements will give companies the ability to shift transportation when external factors such as energy prices, weather, or homeland security compromise supply chain efficiency and costs.

Edmonds: We expect these improvements will positively impact the ability to facilitate cargo movements to and from the Port of Houston.

Transportation Ticker

State and local economic development authorities are continually seeking out opportunities to invest in and enhance port, airport, road, and rail infrastructure to increase cargo handling capacity and throughput.

Here are some examples.

The Trans-Texas Corridor, which parallels Interstate 35 and provides a corridor for highway, rail, and utility infrastructure, is a long-term public/private program designed to help develop increased transport access throughout the state.

A $1.25-billion investment in a fifth runway at Atlanta's Hartsfield-Jackson International, the world's busiest airport, will help the region accommodate double-digit growth in international air cargo shipments while enhancing the city's position as a global logistics gateway.

The last regulatory hurdle has been cleared as Kansas City Southern (KCS) and Norfolk Southern push forward with their joint plan to increase capacity and improve service on KCS' Meridian Speedway. The 320-mile rail connection between Meridian, Miss., and Shreveport, La., is a crucial transportation corridor linking the Southeast and Southwest United States.

In concert with the Port of Brunswick's harbor-deepening project, the Georgia Ports Authority has approved funding for a major expansion at Anguilla Junction that will increase rail capacity at the port 100 percent.

The Army Corps of Engineers has approved The Virginia Port Authority's plans to begin development of its Craney Island project. The facility, which will be the state's fourth deep-water cargo terminal when completed, will improve cargo movement between the port and Midwest markets.

The North Carolina State Ports Authority has purchased a 600-acre parcel of land, nine miles from the Atlantic Ocean, that will be developed into a major cargo terminal. Tentative plans are to build a facility that can accommodate 1.5 million TEUs, 4,000 linear feet of berthing, and an industrial park for distribution centers.

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