November 19, 2007 7:50 AM, EST

UPS Executive Urges Shippers To Back Taxes for Infrastructure

By Jonathan Reiskin, Associate News Editor

This story appears in the Nov. 19 print edition of Transport Topics. Click here to subscribe.

ATLANTA — UPS Inc.’s incoming chief financial officer told shippers here what freight carriers have long heard: The U.S. transportation network is so clogged — and getting worse — that Congress must create an infrastructure improvement plan and pay for it with dedicated taxes on the system’s users.

Kurt Kuehn addressed members of three freight transportation trade groups on Nov. 12 at TransComp and the Intermodal Expo, where the new chairman of one of those groups, the Intermodal Association of North America, unveiled a 10-point infrastructure proposal for the intermodal sector.

Meanwhile, National Industrial Transportation League board members said they were educating their bosses — who run manufacturing and retail firms — about the necessity of supporting port, rail and highway improvements.

“The state of our transportation infrastructure threatens industry. Congestion chokes the very movement of freight and will stall the economy,” said Kuehn, who will become UPS’ CFO Jan. 1.

Based on his company’s experience with trucking, rail, intermodal, air and ocean transportation, and having read studies that predict steady, heavy increases in the amount of freight between now and 2020 and beyond, Kuehn said, “We must agree on a national transportation vision.”

He said the National Surface Transportation Policy and Revenue Study Commission, which is scheduled to report findings to Congress by the end of the year, will help advance such a vision, but there also will be the issue of how to fund more than $1 trillion in projects.

Kuehn said he supports tax increases on gasoline and diesel fuel, and ocean, air and rail facilities, as long as they are dedicated to infrastructure.

“The money from fuel taxes should be dedicated to highways and not put in general fund accounts. It would be the same for rail and air, with user fees and taxes dedicated solely to infrastructure improvement,” he said.

Kuehn’s remarks were similar to those made Oct. 22 by American Trucking Associations President Bill Graves when he addressed his group’s Management Conference & Exhibition (10-29, p. 1).

NITL President John Ficker told Kuehn, “The league is pretty much in sync with you.” Ficker also advised shippers to lobby their federal and state legislators. “We have to elevate the issue and make officials aware of the depth of the problem,” Ficker said.
In a press conference after Kuehn’s speech, NITL officers largely agreed.

“We need to invest in infrastructure and environmental solutions. This is just going to be a fact of doing business for the next 10 years,” said Phil Marlino, a NITL director and logistics manager for ConocoPhillips Co.

“The key is to make sure we stay cost-competitive versus our competition,” he added.
“It’s always a challenge to get information to your board of directors. I think they understand transportation costs won’t be going down, but it’s a constant challenge to remind them,” said Matt Ehlinger, director, corporate transportation for NCH Corp. and NITL treasurer.

While Kuehn and NITL addressed the issue of nationwide needs across all modes, IANA’s new board chairman, Theodore Prince, concentrated on pushing for improvements in intermodal shipping facilities.

Prince, who is president of Consolidated Chassis Management LLC and a consultant who has worked for rail and ocean carriers, released “Leveraging the Freight Network, 10 Steps to Improved Modal Connectivity,” which he wrote with Thomas Finkbiner, a trucking and railroad executive.

Finkbiner and Prince argued for a national plan to get freight smoothly in and out of ports and rail yards.

Elements of the plan include:

An independent commission to propose projects Congress could approve or reject — but not amend. In this way, they hope to avoid earmarks for local, pet projects.

Improved transportation facilities both “inside and outside the gate.” Not only do ports and rail yards need work, the report said, roads and bridges leading to them also must be improved.

Maintaining the Highway Trust Fund firewall so that revenue feeding the fund is used for its intended purpose. The authors endorse fuel-tax revenue as a funding mechanism because “it works” and no superior alternative is readily available.

Creating an intermodal facility and connector charge to be assessed on all freight movements across multiple modes of transportation to pay for future intermodal projects.

Finkbiner and Prince said their proposal was based on a survey of 178 freight transportation executives in all modes and 40 in-person interviews. While they argued passionately for their plan to remedy a problem that poses “a threat to America’s economic growth and security,” they expressed doubt about the likelihood of effective action.

The third group involved in TransComp is the Transportation Intermediaries Association.