Reinforce supply chains

The Baltimore Sun

A major component of the economic stimulus bill passed by the House last week focuses on infrastructure investment as a prime way to lift the U.S. out of a deepening decline. President Barack Obama warns of a "generation" of lost earnings if legislation isn't enacted to breathe life into an economy floundering in recession.

Pumping money into infrastructure is desperately needed - but it is not enough. Building bridges and roads without a clear 21st-century national strategy to guide the investment will squander it. The result? The United States will lose much more than a generation of earnings; we will sacrifice our competitive edge in the global economy.

Efforts to improve the aging U.S. infrastructure must be focused on connecting our commercial/trade corridors to the world marketplace more effectively using technological innovations in transportation, e-commerce and logistics. We need to build the best system with the best technology to move our products and services to the world. To do so, we need a "national supply chain strategy" to counteract competitor nations' aggressive policies to develop themselves as global hubs serving as magnets for commerce, investment, jobs - and ultimately prosperity.

We are falling behind in this area. China's current plan includes a number of interlaced projects that will extend its stake in the global trade of automobiles, steel and other products. For example, the government is dredging 30 square kilometers of ocean to create a "Logistics City" in Tianjin. In Singapore, the government is positioning the country as the preferred global "Logistics Nerve Center" and targeting large investments designed to increase port and airport turnaround times and create online platforms for industry transactions.

These kinds of multi-jurisdictional strategic initiatives and investments deliver huge payoffs. Annual growth in investments in rail, roads, seaports and airports positively correlates with real growth in gross domestic product, according to our research.

So how can we better leverage more than $800 billion to maintain and increase our international competitive advantage? Investments must be made in efficient, state-of-the-art transport, logistics, communications and utility networks. Government policies and regulations need to support and facilitate U.S. trade, transport and logistics.

Private companies that have a stake in this arena, such as logistics and transportation providers, must also get involved. And industry and government must coordinate and collaborate at all levels.

Such a national-level, strategic approach is sadly absent in the United States to date, but precedents do exist. Take the 15-year, $6.4 billion Heartland Corridor Project, a public/private partnership that will cut 200 miles off the route between the Port of Virginia at Norfolk and Chicago. Maersk Line, the largest container ship line in the world, invested $500 million in a state-of-the-art port terminal and 28 tunnels between Norfolk and Chicago that will be modified to provide enough clearance for trains to double-stack containers and reduce transit times.

Another example: The Office of Freight Management and Operations at the Federal Highway Administration has developed a National Freight Policy Framework and a geographic information system showcasing all major freight pathways in the United States.

A new single, overarching strategy and unified organization would provide the vision not simply to guide infrastructure stimulus spending in the short and medium terms, but to marshal our federal, regional, state and local forces toward ensuring that the United States remains in the global game as a competitive economy. This is an urgent task if we want to build on our investment. Mr. Obama should get the ball rolling by issuing an executive order authorizing the creation of a National Infrastructure Action Group composed of high-level representatives from the White House Office of Domestic Policy, federal and state departments of Transportation and Commerce, and industry stakeholder groups. This group's main task would be to ensure that the stimulus' infrastructure spending has the greatest benefit for our national competitive position.

Sandor Boyson is co-director of the Supply Chain Management Center and research professor at the University of Maryland's Robert H. Smith School of Business. His e-mail is sboyson@rhsmith.umd.edu. Thomas Corsi is co-director of the Supply Chain Management Center and the Michele Smith professor of logistics at the Smith School. His e-mail is tcorsi@rhsmith.umd.edu.

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