Shippers beware: Gridlock ahead
Highway congestion "perfect storm" could cause supply chain snags
By David Hannon -- Purchasing, 10/15/2009 2:00:00 AM
If it seemed like the traffic on your local highways has been light the past few months, that's because it was. That's one of the few benefits of a recession—reduced traffic congestion on U.S. highways. But new data shows that as the economy recovers and more stimulus-funded highway projects get underway, traffic on U.S. highways will return to its frustrating norms and shippers will need to build more time into their deliveries.
How much lighter was traffic on U.S. highways in the past year? According to the U.S. Department of Transportation's Federal Highway Administration, travel on U.S. highways declined steadily for all of 2008. That trend continues for most of the first half of 2009, which saw traffic down by 0.6%, until a June uptick of 2.0% indicating the declines have likely hit bottom.
According to a new report from Inrix, a provider of traffic data which released its mid-year National Traffic Scorecard report, the 2008 congestion dip was caused by a rare combination of trends—higher fuel prices and high unemployment. Usually, when the economy shrinks, fuel prices drop, stimulating more traffic. But the Inrix report points that "2008 had both much higher fuel prices most of the year AND rising unemployment. Rather than checks and balances, the two factors snowballed, significantly dampening" highway traffic and congestion."
"Traffic congestion decreased over the past 18 months and hit bottom in the second quarter of 2009," said Bryan Mistele, president and CEO of Inrix. "Now, our nation's roadways are starting to jam up again. Traffic is a great indicator of the pulse of the economy and as the economy improves we expect gridlock to head towards 2007's record levels as people return to work, freight transportation increases, and consumers switch back to vacations from staycations."
Creating more gridlock on highways than normal will be the many stimulus-funded highway projects underway. The U.S. Department of Transportation has made $48.1 billion available for highway, road, transit, bridge and airport construction and repairs nationwide. Of that, $26.5 billion already has been obligated to fund more than 7,988 approved projects in 55 U.S. states and territories. And while those improvements will help traffic flow in the long-term, in the short-term it likely means closed lanes for paving and bridge repairs.
As part of its report, Inrix analyzed freight traffic patterns and found that while the nation's busiest long haul freight roadways cut across 28 states, more than 95% of this mileage comes from just 10 states. "Our findings highlight the national interconnectivity of the truck and highway portion of our national freight system and demonstrate that changes in freight movement trends and the effects of system improvements can have a significant impact on overall traffic congestion," said Rick Schuman, vice president of public sector, Inrix. "The analysis highlights that long haul freight movement is spread equally between urban and rural roadways, underscoring that the development of a national freight strategy to optimize highway network efficiency and reliability—for both trucks and passenger vehicles—is in the interest of both rural and urban constituencies."
Dan Murray, vice president of research at the American Transportation Research Institute says shippers can expect to see overall decreases in truck speeds over the next year or two, for two reasons: 1) as the economy picks up more vehicles enter the system, and 2) from the dramatic increase in road construction work zones.
"This latter effect, even though stimulus projects were supposed to be 'shovel-ready,' has probably not yet fully reared its head because many projects are just now completing final design," Murray says. "In addition, the big transportation-targeted pot of stimulus money is just now being allocated."
But after a stabilizing period, there will be an overall improvement in truck speeds and efficiency as the benefits of stimulus spending for infrastructure are realized, Murray says. And in the near-term, shippers and carriers should build more time into delivery schedules.
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