U.S. Transportation Concerns — A Potential CPO Problem

This afternoon, I'd like to welcome back a regular guest columnist to Spend Matters. Brian Sommer is a Senior Fellow at Azul Partners, founder of Tech Ventive, and is author of the blog Services Safari.

I appreciate it when CEOs speak candidly. I recently read what United Parcel Services CEO Mike Eskew had to say re: the transportation infrastructure of the United States. These comments are part of a larger document you can find at UPS' site. "What's shocking, quite frankly, is the inability of our transportation infrastructure to keep up with the normal day-to-day stresses imposed upon it," said UPS CEO Mike Eskew. "Our highways, waterways, railroads and aviation networks are simply not keeping up with ordinary demands. Eskew noted the problem is receiving some recognition outside the transportation industry, citing a report card issued last year by the American Society of Civil Engineers. "In 2005, here's what our infrastructure report card looked like: our aviation system got a D+; navigable waterways a D-; roads a D, and rails a C-."

"What does the overall report card on our national transportation infrastructure look like? Well, let's put it this way: if your kids brought home report cards like this, someone would be grounded."

The implication of his remarks on supply chains and CPOs should be apparent. Shipments will likely face more delays as time goes on. The risks he is referring to will manifest themselves in such areas as port delays, rail car shortages, rail yard bottlenecks, container shortages, and over the road delays due to road congestion or construction.

No matter how you spin it, the facts spell trouble for those firms dependent on global supply chains, and shipping into and throughout North America. And without question, delays and transportation infrastructure issues will continue to make a CPOs job more difficult.

Here are some more data points. The Journal of Commerce reports that seven more ports handled more than a million containers in 2005. That brings the total to 84 ports moving 1 million of more containers. These ports account for approximately 77% of world shipments. FYI -- The Shanghai port moved 3.5 million units.

My question is this: where will all this new volume go particularly if the infrastructure remains sub-standard?

Brian Sommer authors the blog: Services Safari.

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