Covid-19 Response: Infrastructure Investments Coming Soon

In Washington, infrastructure spending is back on the table… thanks to Covid-19.

Last year both the Democrats and Republicans tried to pass legislation for infrastructure.

Democrats floated a 5-year plan worth $760 billion.  The Trump administration floated a 10-year plan with a $2 trillion investment.

Both packages identified the need to address present and future needs.  Present needs included repair and maintenance of roads, bridges, rails, etc.  Future needs included the building of infrastructure for charging of electric vehicles (EVs) .

Funding for repair, maintenance and upgrades are necessary to maintain competitive advantage.  However, the Mueller investigation sidelined any hope of infrastructure legislation.

Now, thanks to the Coronacrisis, infrastructure is in the forefront of discussions as part of a fourth stimulus package.

In addition, an infrastructure bill would serve as a well-timed boost for the economy.  It would employ many people quickly, serving as a jobs program.

Nonetheless, funding a bill both parties can agree to still faces some obstacles.  But those obstacles are likely to be overcome given the state of the nation’s infrastructure.

Before going any further, look at recent trends in infrastructure funding.

Infrastructure Investments Undercut Future US Competitive Advantage

A Brookings Institution study revealed five trends about infrastructure spending.  The findings help shed light on the challenges facing infrastructure funding.  They also provide a profile of U.S. federal, state and local spending.

Without further ado, here are the study’s findings of spending between 2007 and 2017. (Joseph W. Kane and Adie Tomer.)

Key Findings Show Shift to Repair and Maintenance

  1. Total public spending on infrastructure has declined $9.9 billion.
  2. Spending on operations, maintenance, and repair increased $23.2 billion.
  3. State and local spending declined, but it represents 75% of all U.S infrastructure spending.
  4. State spending on transportation infrastructure declined $4.2 billion since 2007 but has rebounded over the last five years.
  5. S. spending on water infrastructure declined $5.6 billion.

The study revealed a worrisome trend that requires immediate attention.  It calls for a new economic vision in the new infrastructure age.  It also calls for improved coordination and partnership between state and local leaders.  Finally, it points out a need for a “better articulated” federal role in investment.

Everyone recognizes the importance of repairing and upgrading the nation’s infrastructure.

Issues and Obstacles to Immediate and Prudent Funding for Infrastructure

The main issue to date for funding infrastructure projects revolved around how to pay for it.  No one wants to raise taxes.  That explains the lack of meaningful progress.

Besides that, both the Democrats and Republicans will have to address funding priorities.  Democrats want to spend money on infrastructure as well as other unrelated projects.  Some of those include funding for housing, school construction, and more Covid-19 testing.

Those are all good causes. But they’re not infrastructure-related.  So, now the Republicans question the need for a fourth stimulus bill.  Yet, everyone concurs there’s a pressing need to fund infrastructure projects.  It’s likely, after much sausage making, a bill will eventually pass.

Another issue revolves around priorities for infrastructure spending.  The Brooking Institution study above also cited the need for a coordinated plan.

Some organizations like the American Truckers Association (ATA) are calling for a focus on highways and road networks.  Others like the Northwest Seaport Alliance (NWSA) point to the need for addressing intermodal infrastructure issues.  And CREATE, Chicago Region Environmental and Transportation Efficiency, program calls for focusing on alleviating the country’s bottlenecks.

As you can see, there are many competing requirements for limited dollars.

This brings up the National Freight Strategic Plan (NFSP). The NFSP aims to address the following questions:

Opportunity to help inform national freight strategy:

  • What are the key challenges facing the U.S. freight transportation system?
  • How should U.S. DOT measure freight transportation system performance?
  • What industry freight-specific data is important to understanding how economic trends impact freight logistics and cargo movements?
  • What approach should the federal government use to invest in the multimodal freight system?  (U.S. Department of Transportation)

Conclusion

The question is not so much whether Congress will act to fund an infrastructure bill.  The question now seems to be when we can expect a funding bill approved and signed into law.

As Congress considers an infrastructure bill, you’ll want to ensure you have a supply chain designed for efficiency.  When infrastructure construction begins, you can expect bottlenecks.

Future competitive businesses will have integrated supply chains that support seamless cargo flows.  Efficiently designed supply chains will ensure seamless intermodal cargo flows.

Contact American Global Logistics  to ensure smooth cargo flows before, during, and after the coming infrastructure construction. We can help you save time and money with an integrated and optimized supply chain.