WWD.com/retail-news/retail-features/traffic-plan-could-speed-up-supply-chain-530180/
government-trade
government-trade

Traffic Plan Could Speed Up Supply Chain

Prompted by retailers, the U.S. Transportation Department has made combating congestion throughout the supply chain a key goal.

WASHINGTON — For a nation of travelers, congestion on the roads and in the skies means more than late arrivals, hours of boredom and headaches — it costs money.

Freight bottlenecks and delayed deliveries because of overloaded airports, docks and highways siphon an estimated $200 billion out of the economy each year and eat away at the profit margins of retailers.

“If power blackouts drained billions of dollars from the economy each year, it would be considered a crisis of unacceptable proportion,” then-Transportation Secretary Norman Mineta said this spring. “Yet many accept the fact that Americans squander 3.7 billion hours and 2.3 billion gallons of fuel each year sitting in traffic jams, and waste $9.4 billion as a result of airline delays.”

Partly in response to retailers, the federal Department of Transportation has made combating congestion throughout the supply chain one of its top priorities.

Congestion on the highways, however, is a multifaceted problem, caused by everything from too many cars on the roads to construction projects and accidents. The issue requires a broad approach.

Still, small and relatively inexpensive changes to the way traffic is managed can have a big impact on gridlock in the country’s metropolitan areas, said Deputy Assistant Transportation Secretary Tyler Duvall.

“We’re actually pretty close on a lot of urban highways to significant reductions in congestion if you just really manage the system a little bit during peak periods,” Duvall said in an interview, noting there is a “congestion curve.”

That means traffic on a busy highway will move along until there are just a few too many cars, leading to gridlock, white knuckles and late shipments to stores. Getting some of those cars off of the road during rush hour could make all the difference; only a small reduction in overall traffic could keep cars and trucks moving.

To get those few extra cars off the road, Duvall wants to test converting carpool lanes to “variable-priced hot lanes” that would charge a toll during rush hours.

This is similar to initiatives in London and Stockholm, but so far no U.S. city has agreed to be the first to take the plunge, especially since adding tolls makes it a hard political sell.

This story first appeared in the July 11, 2006 issue of WWD.  Subscribe Today.

“The moment is getting increasingly ripe for a major demonstration,” Duvall said.

A test area would install not only tolls, but improve its bus system to make better use of the highways. Duvall said the federal government would help the region quickly finish construction to ease congestion. Such a test will have to wait at least a little while, though.

“Any run-up to the election, you get a pause in policy decisions,” Duvall said. “We think there’s a big opportunity after the elections this fall…to really make some progress in this area.”

Even after the November midterm elections, any move to charge for access to roads is bound to cause debate, as it did when London launched its program in 2003.

Richard Dodd, head of media and campaigns for the British Retail Consortium, said the jury is still out on the London program, which charges cars and trucks eight pounds, or about $10.20, to drive into the center of the city on weekdays.

“What businesses have said, including retailers, is that they support the principle of road charging — providing that it does lead to a reduction in congestion,” Dodd said.

He added that it was not yet clear what kind of lasting impact the program would have, since congestion dropped decisively at first, but less as time passed.

“There’s certainly a feeling that people have got used to it and now just accept it as an extra tax or extra charge, and it’s stopped having the deterrent effect,” Dodd said.

In the U.S., the National Retail Federation doesn’t have a position on charging tolls, said Erik Autor, the lobbying group’s vice president and international trade counsel.

“Not surprisingly, we’re somewhat wary of user fees, but a toll system to regulate traffic more efficiently…appears to be the way things are moving and it’s certainly sitting out there as an option,” he said.

Autor is pleased to see government interest in the area and expects it to continue even though Mineta recently stepped down as transportation secretary. A permanent replacement has yet to be named.

“It’s very encouraging that the folks at DOT really seem to get it,” Autor said. “It’s a looming, huge problem for retailers. This is a situation that’s only going to get worse over time. It’s already starting to have an impact on supply chain management.”

Autor said the industry has had a few wake-up calls that have sharpened the focus on transportation infrastructure, including the 2002 strike at the port in Los Angeles.

“We’ve got to plot out a series of steps along the way that will help move things in the right direction,” he said. “We don’t want a situation where nothing happens; where we essentially have status quo until there’s a crisis.”

The Transportation Department is working with states to fight congestion in other ways, such as encouraging laws that get fender-benders off the road quickly and using technology to get better traffic information to drivers. The agency is working to keep goods moving through the ports and airways more efficiently.