Chain of Thought

Caterpillar Hoping for Transportation's Metamorphosis

Tom France is frustrated. As director of global transportation for Caterpillar—one of America's largest exporters of earthmoving and mining equipment—the country he represents is putting road blocks between him and the markets he serves. We've all heard about the sputtering, stalling contraption called the Transportation Bill. Though it was designed to smooth the routes of commerce for companies like Caterpillar, it has been burdened by so much political gamesmanship the only thing that has moved as a result of its existence is the jaws of politicians arguing for the earmarks they've attached to the Bill as a condition for its passage.

I talked to Mr. France recently for an article on transportation strategies to appear in MH&L's May issue, and one of the strategies he wishes was not part of his job is talking to politicians. However, the transportation bill has made that a big part of what he does. Caterpillar competes with Chinese counterparts for chunks of the world's capital equipment market—companies who benefit from having a better transportation infrastructure to work with than he does.

“It's difficult to be an exporter from here when you have the problems we do with our outdated infrastructure,” he told me. “Our harbors need to take the bigger ships. Every business pays a harbor maintenance fee today, but that money doesn't seem to be appropriated for such upgrades. We want that money to be earmarked for infrastructure improvements. America needs us to be a top 10 exporter so we can create more jobs. I spend a good portion of my time in meetings with representatives to get that story out. It's unfortunate we have to do that.”

I asked Mr. France if he's optimistic about 2014, when the Panama Canal will be bringing in those mega container ships we've all been told about. After all, that will mean higher volumes of product on ships and we all know that transportation efficiency will mean lower costs and faster transit times through the canal, right?

“The problem is there's only one port in the U.S. those big ships can get into, and that's the Port of Virginia because it's deep enough to take aircraft carriers,” he responded. We need harbor deepening projects now and the funny part is even before this Transportation Bill there was money we paid every year for harbor maintenance fees. We just want them to use that money that was earmarked for years to deepen the ports. Those expansion projects have been delayed forever and by the time the Panama Canal is ready it looks like most of the ports in the U.S. will not be able to take those big container ships. That makes us less competitive compared to the rest of the world. We're competing against worldwide companies.”

This message does seem to be getting attention in Congress. U.S. Rep. Bill Huizenga of Michigan acknowledges that the $6 billion to $7 billion Harbor Maintenance Fund has been raided by politicians to cover the general budget deficit and that not enough funds remain for annual dredging projects in the Great Lakes.

“I'm fighting to have harbor maintenance funds to be used for harbor maintenance,” Huizenga told The Muskegon Chronicle editorial board in an interview recently.

And it is a fight, not only in Michigan but in other port regions as well. In New York the absence of dredging in the Port of Oswego since 2009 has left it with increasingly shallow areas, especially around key access point for ships. That means ships must carry lighter loads to remain more buoyant. That also means shippers have to pay for more ships because cargo must be spread out among several vessels.

Last month the Senate approved a resolution calling on Congress to address the chronic backlog of harbor maintenance projects, and Sen. Carl Levin, D-Mich., took his opportunity to reinforce the message business people like Tom France have been sending to Washington.

“I am pleased that the Senate has now gone on record supporting the full use of the Harbor Maintenance Trust Fund for its intended purposes: to operate and maintain our federal navigation channels, including the 69 federal harbors and channels in Michigan,” Levin said. “While I will continue to work to strengthen this provision so that it more closely mirrors the Harbor Maintenance Act, I believe including this resolution in the transportation bill is an important first step towards addressing this issue legislatively in support of our maritime infrastructure.”

First step? For business people like France, this has been a long hard slog. There's still a massive backlog of harbor maintenance projects yet to be done, and the consequences of inaction have hit hard in the Great Lakes, where the U.S. Army Corps of Engineers estimates it needs to dredge more than 18 million cubic yards of material from harbors to ensure safe navigation.

2014 is two years away. Let's hope by that time the opening of the Panama Canal's new locks will actually mean something more than a ribbon cutting to the logistics professionals responsible for keeping their companies competitive.

Related Editorial:

‘Rally for Roads' Urges House to Pass Transportation Spending Bill

Importers Ordering More, Restocking Shelves

Which Port is Your Chain's Best Link?

Infrastructure Congress Coming

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