Transportation Security and Congestion: Impacts on the rail and trucking industries

Transportation Security and Congestion:

Impacts on the rail and trucking industries

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The new global economy has increased both the prevalence and the scope of international trade - Transportation Security and Congestion: Impacts on the rail and trucking industries introduction. There will be occasional downturns, but the overall trend is very likely to continue. Meanwhile, the varied parts of the logistical chain are struggling to adapt to the new economy. Congestion has become a major issue at many United States ports. An increased emphasis on security and new regulatory schemes contribute to the problem. All of these issues ultimately affect the ground transportation industry, which also has its own unique concerns.

If the United States is to emerge strongly from the current economic downturn these issues must be addressed sooner rather than later. Inefficient and sluggish freight transportation lines could severely hinder the recovery. The rail and trucking industries were once the backbone of the American economy. Now, they could be the backbone of the world economy. A chain is only as strong as its weakest link however. American ports, for now, are that weak link.

Congestion

The elements which cause congestion in the ports are varied and require solutions that are both local and international in scope. Some ports cannot accommodate the largest of today’s freight vessels. Either there are not enough unloading points or the channels are simply not deep or wide enough. There are also delays at other points in the system which affects the ports and vice-versa.

The United States has five Class 1 railroads, all of which are operating at peak capacity. In recent decades rail networks have developed as the result of mergers rather than national economic interests. Existing rail lines were constructed to serve the 19th and 20th century economies. Congestion on the rails hampers productivity. Chicago, for example, is an area where rail congestion is particularly high. Chokepoints such as that in Chicago affect the entire transportation industry.

In Chicago a fast-freight system has been proposed. This would allow through freight to bypass Chicago entirely while reducing stress on the chokepoint. It is estimated that delivery time could be reduced by “two to three days” (Bucklew, 2007). The positive ripple effect could be enjoyed by the trucking industry. Improved transit times could allow for more flexibility in route planning. Such an investment would require massive public buy-in. Logistic, financial, environmental, safety and security issues would need to be fully researched and presented in a cohesive campaign.

A “perfect storm” of events has led to chronic port congestion which, in turn, has affected the profitability and efficiency of the rail and truck industries. In the 1990s, the world economy became truly global. International trade skyrocketed, larger and faster transport vehicles came on line and old infrastructure became increasingly outmoded. Then, the terrorist attacks of 2001 ushered in a still-evolving state of regulation and hyper-vigilance.

Security

American ports have come under criticism for a perceived lack of security since the terrorist attacks of 2001. Public tolerance for containers moving through ports without being thoroughly checked is at an all-time low. The rail and truck systems that deliver goods to and from the ports are, by extension, also under increased scrutiny. Security planners have long since given up the notion that all potential incidents can be prevented. They are focusing on reducing known risks and mitigating the impact of events once they occur. The Department of Homeland Security, which itself is still taking shape, is ultimately in charge of port security and its associated infrastructure. That agency works through the Department of Transportation, the U.S. Coast Guard, the Transportation Security Administration and other agencies to provide a regulatory and security framework.

The efficiency of the security apparatus is decreased by the lack of coordination between its components. Each element of the supply chain has private security organizations. State and local police also have jurisdiction. Federal and State regulatory and security agencies also are involved. Too often these organizations do not work in a seamless or cohesive way. This contributes to congestion, not only at the point in issue but down the down the logistical chain as well.

A factor contributing to the difficulty of protecting ports is the lack of coordination among public and private security organizations that are responsible for port security (Pinto and Talley, 2006). According to former head of the U.S. Maritime Administration John Jaiman the perspective of the federal government on port security is evolving. After 9/11/2001 there was a rush to tighten security. The needs of consumers and commercial interests came in a distant second. The government is now focusing more on creating a balance.

Jaiman states that “Now, we realize that cargo efficiency and cargo security go hand in hand” (Bucklew, 2007). This change in perspective comes none too soon for the port, rail and truck freight operators. Changing security frameworks are not the only contributor to congestion throughout the system. A brief look at some American ports shows a multitude of issues.

Los Angeles/Long Beach

The Port of Los Angeles/Long Beach is a massive multi-use facility. Inadequate rail infrastructure, along with new security initiatives and increased port usage has slowed the movement of freight to a crawl. In terms of freight volume, the port is one of the busiest in the world.

Even with the economy in a downturn the port often has delays. In this case the problem is less about traffic congestion and more about inland congestion and the lack of adequate rail lines. The existing rail and truck line infrastructure is strained to the point where efficiency is compromised. Port volume has actually decreased in recent years, but this is not expected to continue.

The Port of Houston

The Houston Ship Channel hosts more than 50 ships and 300 barge movements

each day. Statistics from Vessel Traffic Service indicate a 10% increase in traffic from 2004 to 2005 (Houston/Galveston Navigation Safety Advisory Committee, 2006). Houston’s Port Authority has begun dredging of new channels for these massive ships. That process is ongoing.

Houston also experiences rail congestion as the port grows in regional and international importance. A freight/rail district has been created in Houston and several surrounding counties. The goal is to reduce rail congestion and the impact of freight rail in the surrounding communities. For the time being congestion remains the number one problem with port security and governmental regulations as contributors.

The Port of Norfolk/Hampton Roads

This Virginia port is adjacent to one of the largest naval facilities in the world. Like other ports it has experienced a slight downturn in traffic due to the sluggish economy. The port has used the opportunity to construct a detailed survey of the port’s employees, contractors and customers. Some of the conclusions drawn were not surprising.

In the Port of Norfolk/Hampton Roads, “The most important constraint to improving port productivity is traffic congestion” (Angle Technology, LLC, 2009). More than twice as many survey respondents cited congestion as did the second most cited constraint of obtaining a skilled workforce. The third largest constraint was “regulatory compliance”.

The Port of Hampton Roads can only accommodate seven rail cars at a time. Infrastructure improvements are clearly needed for the rail and truck industries to serve the port effectively. Other issues also lie beneath the surface.

Simple lack of cooperation with port workers appears to be one issue worsening congestion. One Hampton Roads survey respondent said that: “Our drivers are starving to death largely in part of the way the port allows its port workers to play with the driver’s time and place. So many hoops to jump through”. Another respondent stated that the problems with the port have much to do with “Brokers, truckers and shippers looking beyond what needs to be done today to get their work done…[they] need to look one to two weeks out and plan their operations, deliveries and workforce to match a changing industry” (Angle Technology, LLC., 2009).

Analysis and Conclusion

Constructing a national intermodal freight transportation system would be the most obvious solution to inefficiencies within the current system. Some Asian nations, for example, have seen increased productivity by seamlessly integrating the modes of transportation. For several reasons, including political considerations, this would be more difficult to do in the United States.

If the American ports and the rail and truck lines that serve them are to be competitive in the 21st century a more systemic focus must be undertaken. Infrastructure improvements are necessary but must be comprehensive in scope. A port may dredge new channels to accommodate enough shipping but if there is not enough rail or truck lines to serve them it may only serve to create more congestion. Comprehensive intermodal planning such as that done in Toledo can help create a more seamless transportation industry. At the very least it keeps each mode aware of the needs and goals of the other.

To date, most centralized logistical planning has centered on the needs of the ports and their unionized workers. Many security measures and anti-congestion initiatives have failed to fully take into account the effect on the ground transportation industry. Incentives to invest and improve ground transport have been inadequate to keep up with the changes in the world economy. The rail freight industry has served America well and still has the capability to do so.

A major investment to improve infrastructure is necessary however. The trucking industry suffers from a lack of qualified drivers and other issues. Congestion and a governmental focus on ports is hurting the profitabilility of the rail and truck industries, hence the lack of innovative investment and development of a well-trained workforce.

Profits for the trucking industry are relatively thin. Out of every dollar a U.S. trucking company makes 95.2 cents are used on expenses leaving only a margin of 4.8 cents (TruckInfo.net, 2010). The margin is even smaller when the highly successful United Parcel Service (UPS) is taken out of the statistics. In 2007, the amount of freight moved by rail dropped after reaching record highs in 2006. American railroads are still profitable, mainly because of coal. The industry recognizes the need for more infrastructure spending and the development of seamless relationships with government and other forms of transport.

One proposed solution to the lack of cohesiveness within the transportation system is the establishment of Transportation Opportunity Districts. These districts can attract public and private investment, raise public awareness and manage logistics and supply from a holistic viewpoint. Efficiency, reliability and productivity can be enhanced while costs could be better controlled. The District would also be in a unique position to work with policy makers. Transportation Opportunity Districts would be designed to serve local and regional interests first, within the context of the global economy.

Competition between the Trucking and Rail industries has a long history. In the 1950s when the dominant rail industry showed inefficiency in moving smaller goods the Trucking industry took action. “Truckers went after the market with a vengeance and nearly three quarters of the railroads’ less-than-carload business shifted to the highways within a decade” (Levinson, 2006). Cooperation is an unnatural state of affairs for these industries. In many ways this is healthy. The logistic requirements of the global economy demand some level of integration though. Going forward the issues of congestion thought the system, and coping with evolving regulatory schemes will be of primary importance.

 

 

 

 

 

 

 

Bibliography

Angle Technology, LLC. (2009). “The Hampton Roads Logistics Industry: A survey”. Norfolk, VA: Opportunity, Inc.

Association of American Railroads. (2008). “Overview of America’s Freight Railroads”. Accessed 7/5/2010 from:

http://www.aar.org/PubCommon/Documents/AboutTheIndustry/Overview.pdf

Bernstein, Mark. (2006). “The More Trade Grows, the Worse U.S. Port Congestion Becomes”. BNP Media. Accessed 7/3/2010 from:

http://www.worldtrademag.com/copyright/16360682175dc010VgnVCM100000f932a8c0____?view=print

Bucklew, Keith. (2007). “The heartland fast-freight rail system: notes and comments”. American

Society of Transportation and Logistics. Accessed 7/4/2010 from: http://www.entrepreneuer.com/tradejournals/article/print/171140041.html

Homeland Security News Wire. (2010). “Infrastructure: U.S. To Expand Freight Congestion

Tracking Initiative”. News Wire Publications. Accessed 7/2/2010 from: http://homelandsecuritynewswire.com/us-expand-freight-congestion-tracking-initiative

Houston/Galveston Navigation Safety Advisory Committee. (2006). “Navigating the Houston

Ship Channel: A reference for Commercial Users”. Houston, TX: HGNSAC.

IHS Global Insight. (2009). “NCFRP: Report 1″. Washington, D.C.: Transportation Research Board.

Intermodal Transportation Institute. (2008). “Joint Intermodal Task Force for Transportation and Logistics”. Toledo, OH: The University of Toledo.

Pinto, C. Ariel and Wayne K. Talley. (2006). “The Security Incident Cycle of Ports”. Norfolk, VA: Old Dominion University.

Levinson, Marc. (2006). The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton, NJ: Princeton University Press.

The Port of Houston Authority. (2007). “The Port Report (September)”. Accessed 7/4/201 from:

http://www.portofhouston.com/pdf/pubaffairs/PortReport-Sep07.pdf

TruckInfo.net. (2010). “Trucking Statistics”. Accessed 7/5/2010 from:

http://www.truckinfo.net/trucking/stats.htm

 

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