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Logistics Infrastructure Measurement and Prioritization Protocol: Ensuring Trade Drives Economic Growth

Description:

The United States is experimenting anew with trade protectionism, despite the clear cautionary tales from our own history. The rapid emergence of China as a manufacturing powerhouse combined with China’s neo-mercantilist policy approach has significantly impacted American workers in certain sectors and regions.

One reason this is true is that transportation infrastructure has not kept up with the development of supply chains and the pressures of the market. Chinese goods, which are comprise of only 4% U.S. content, arrive by ship at highly efficient ports and are rapidly processed and sent on their way – a few hours from shipboard to flatcar.

Meanwhile, inputs to the U.S. manufacturing sector arrive by truck at land ports of entry from Canada or Mexico, carrying 25% and 40% U.S. content, respectively, and face chaotic and unpredictable processing delays, particularly on the U.S.-Mexico border, of up to ten or more hours before they are allowed to enter the United States despite the existence of dedicated Free and Secure Trade (FAST) lanes. The costs of these frictions reduce the price-competitiveness of U.S. goods, inhibit job creation and productivity growth, and feed anger at trade-related disruptions. Fundamental to this challenge is that the supporting and developing logistics infrastructure is not effective or efficient.

Objective:

The process by which port of entry infrastructure is planned, designed, financed and executed at land borders is complicated by the presence of numerous federal, state/provincial and local jurisdictions, a significant mismatch in how funds are mobilized between the U.S. and its neighbors, and the overarching counter-narcotics and national security objectives pursued. In addition, the U.S. subjects proposed border infrastructure projects to a highly politicized Presidential Permit analysis, which further impedes the market from ensuring that border infrastructure dollars produce their optimal return on investment.

A method of objectively measuring the efficiency of border infrastructure is required, thereby facilitating stakeholders in the prioritization of investments in new ports of entry, improvements to existing ports of entry, assessing the efficiency and effectiveness of logistics infrastructure, and, enabling approach to prioritizing investments.

Benefits:

Some estimates put the cost of border friction as high as $30 billion per year along the U.S.-Canada border alone. Similar studies estimate that the economic cost of delays at the U.S.-Mexico border are nearly $8 billion per year. Most estimates place the price tag for needed border infrastructure in the $6-10 billion range, such that those investments are likely to generate a significant net return on investment for the economy as a whole.

By taking a holistic approach to the North American transportation network, the measurement and prioritization protocols could enable governments, bond markets, developers, ports of entry and bridge operators to ensure that both public and private dollars generate the maximum return in terms of efficiency, lowering the cost of manufacturing in the U.S. and our neighbors and strengthening our ability to compete with China and others.

Related Research:

The existing knowledge base on this topic is characterized by regional fragmentation: the governments delegate the long-term planning process to public-private consultative groups that focus on discrete segments of the border. These in turn are focused on border communities, with the result that there is little analysis of the broader costs and benefits in areas that are geographically removed from the border but nonetheless “use” it. Measurement and prioritization protocols would take a broader view from the outset, ensuring that analysis of border infrastructure investment is clearly understood as a contribution to the global competitiveness of North American manufacturing.

Tasks:

The measurement and prioritization protocol would create an objective tool for measuring the efficiency of border infrastructure that would through the following tasks:

  1. Determine feasibility, concepts of operation, requirements, and identify potential and additional needs of a logistic infrastructure measurement and prioritization protocol.

  2. Establish an initial baseline compatibility with strategic and operational objectives for logistics infrastructure.

  3. Define the measurement and prioritization protocol, supporting databases, and library in enough detail to establish an initial baseline capable of meeting objectives. Develop structure of end product (and enabling product) requirements and generate a preliminary design.

  4. Complete the detailed design of the measurement and prioritization protocol, database and supporting library and its associated subsystems, including its operations systems.

  5. Assemble and integrate the products to create the measurement and prioritization protocol, database, and library. Perform system end product implementation, integration and test, and transition to use.

Relevance:

The topic has ongoing relevance, especially given the focus on international trade with Canada and Mexico via the new USMCA agreement.

Sponsoring Committee:AT020, International Trade and Transportation
RNS Developer:Daniel Hackett
Source Info:This would make an excellent research paper for the Standing Committee on International Trade and Transportation
Date Posted:01/10/2019
Date Modified:01/24/2019
Index Terms:International trade, Logistics, Competition, Freight transportation, Economic growth,
Cosponsoring Committees: 
Subjects    
Marine Transportation
Freight Transportation
Planning and Forecasting
Economics
Policy

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