June 2004 | Commentary | Viewpoint: Logistics & Supply Chain Analysis

Nurture, Don't Neglect, Our Waterways Infrastructure

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For logistics professionals who already see the rising costs of the nation's traffic congestion reflected in their bottom line, it is troubling to know that the Federal Highway Administration estimates use of the nation's highways for freight transportation will increase by 40 percent over the next 10 years.

It is clear that the saturation point of our national highway system is approaching, with increased accidents, air pollution, cargo spills, and delays portending even more trouble to come.

One of the most logical transportation alternatives with the greatest benefit to commerce and consumers is the inland waterways system. The commercially active portion of our national inland waterways system spans approximately 12,000 miles and serves 38 states—moving 16 percent of the nation's intercity freight for just two percent of the nation's total freight costs.

That generates an annual transportation savings of more than $7 billion for shippers, with one typical 15-barge tow able to move the same amount of cargo as 870 trucks.

But despite their integral role, the country's inland ports and waterways are in a state of neglect. Of 195 locksites in the United States—which handle more than 630 million tons of freight annually—more than half are 50 years old, or older, and beyond their economic design lives.

This has very negative implications for our nation's competitiveness and for our quality of life. Without domestic water transportation, shippers would require 41 million more truck trips and 9.9 billion more gallons of fuel annually to move the same amount of cargo. This increased traffic would create 7.8 billion pounds of additional pollutants.

Just last summer, a main lock at Greenup Locks and Dams on the Ohio River was closed for more than two months for unscheduled emergency maintenance during the busy grain export season. The closure cost an estimated $14 million in losses.

If the upper gate at the lock had failed, however, it could have collapsed and taken the main lock chamber out of service for six months. In this scenario, delay costs would exceed an estimated $75 million and alternate transportation costs would exceed $60 million.

Modernizing Infrastructure

One key to maximizing the efficiency of the waterways transportation mode is modernizing the industry's port and waterway infrastructure (locks, dams, ports, loading/unloading facilities, terminals and docks).

Under landmark cost-sharing legislation enacted in 1986, barge companies pay a diesel fuel tax of 20 cents per gallon, which is deposited into the Inland Waterways Trust Fund to pay for half the cost of modernizing locks and dams.

But instead of being used promptly as originally intended, more than $400 million in Inland Waterways Trust Fund receipts have accumulated, remaining unspent as our nation's waterways infrastructure continues to erode.

Perhaps policymakers are hearing our plea to utilize the trust fund to benefit the waterways and the nation. President Bush's fiscal year 2005 budget request, released earlier this year, demonstrated the administration's growing understanding of the inland waterways system's myriad benefits and the need to upgrade this transportation system. The budget request proposed FY 2005 spending between $115 and $133 million from the dedicated Inland Waterways Trust Fund for the modernization of priority projects.

While still short of the Waterways Council's recommended $150-million-per-year allocation for 10 years, the President's budget request is the highest funding recommendation over the last decade. As required under current law, these trust fund expenditures will be matched by general revenue treasury funds.

While the President's increasing recognition is encouraging, we must continue to push hard for full and efficient funding for all our nation's priority lock and dam projects. The condition of our waterways infrastructure is critical to maintaining our global competitiveness.

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