DC Velocity - February 2011

BY CLIFFORD F. LYNCH

fastlane

Chasing the car

IN HIS 2010 STATE OF THE UNION ADDRESS, PRESIDENT OBAMA announced a plan to boost U.S. exports, calling it an avenue to job growth. That plan, the National Export Initiative (NEI), has aggressive goals and an aggressive timeline—doubling exports from $1.57 trillion in 2009 to $3.14 trillion by 2015. It would also have a big payoff—the White House says the program would create 2 million new jobs. But unless we act quickly to address our infrastructure woes, it could create something else as well: gridlock of epic proportions.

Since the announcement, the government has moved ahead quickly with the program. In March, the White House laid out the NEI’s eight objectives, or “priorities,” and tasked a multi-agency executive panel with developing a plan to achieve them. The priorities are as follows:

Priority 1: Exports by small and medium-sized enterprises (SMEs). Encourage participation among SMEs by providing export assistance to first-time exporters and helping current exporters identify new markets.

Priority 2: Federal export assistance. Raise awareness of federal resources available to U.S. companies seeking assistance with exporting.

Priority 3: Trade missions. Ensure that U.S. gov-ernment-led trade missions are effectively promoting exports by U.S. companies.

Priority 4: Commercial advocacy. Raise awareness of government programs to help U.S. companies compete on a more equal footing with foreign companies that benefit from home government support.

Priority 5: Increasing export credit. Make more export financing available to SMEs.

Priority 6: Macroeconomic rebalancing. Work to promote balanced and strong growth in the global economy to spur demand for U.S. imports.

Priority 7: Reducing barriers to trade. Improve access to overseas markets by dismantling trade barriers and robustly enforcing trade agreements.

Priority 8: Export promotion of services. Develop a framework for promoting services trade. Services are the largest component of the U.S. economy, accounting for nearly 70 percent of U.S. GDP, yet they’re often overlooked by traditional trade promotion programs.

Of course, setting goals is one thing; achieving them is another. We face a number of obstacles to reaching these objectives. For example, we need to resolve our ongoing dispute with our second largest

export trading partner, Mexico. In 2009, Mexico slapped tariffs on $2.4 billion worth of U.S. imports when tensions flared over cross-border trucking. It’s apparent that Mexico won’t lift those tariffs until an agreement is reached.

Then there’s the question of whether our already overburdened transportation system can handle the additional volume. The deficiencies of the nation’s infrastructure—especially its roads and bridges—are well documented. And even if we could build out our road network in time, there’s still the matter of truck capacity. Trucks are already in short supply in some domestic lanes, and if the predicted driver shortage materializes, carriers say they would be hard pressed to add capacity anytime soon.

Roads aren’t the only concern. Although several ports are undergoing expansion, we could see a return to pre-2008

congestion levels at some of the busier ones when volumes pick up. The opening of the expanded Panama Canal will help equalize port traffic, but the expected completion date of 2014 is pretty far into the president’s five year cycle.

I could continue, but my intent is not to criticize the NEI. Rather, it’s to suggest that it cannot be considered in a vacuum. While job creation is a goal we can all support, it’s critical that government and business leaders give some thought to the chaos that could be unleashed on the nation’s transportation/logistics system.

If we aren’t careful, we’ll be like the dog that was chasing the car and caught it. ;

Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing – A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can be reached at cliff@cflynch.com.