Right now, the transportation systems that support the
economy appear to be highly efficient. To the casual observer, whenever a
company needs to move its goods around the country or around the globe, it can
do so fairly cheaply and easily.
Yet, according to a recent Harvard Business Review1 article by George Stalk of the Boston
Consulting Group, the present recession is masking a crisis of global
proportions. When the economy rebounds and demand begins to exceed its
previous peak levels by even a little, there won’t be enough capacity to move
the world’s goods around. For example, truck traffic is increasing at a rate
that far outstrips the construction of roads in the U.S. and Europe. Similarly,
while freight volume is going up sharply, the railroads are actually reducing the amount of track they have available and delays are already increasing.
In terms of global shipping, the largest seaport ports in
the U.S. and Europe were already up against their capacity before the
recession.
Twenty U.S. airports are expected to exceed their capacities
by 2015. Yet, no new U.S. airports are in the works.
As the world’s biggest business economy, the U.S. is
particularly vulnerable and few executives even recognize it today. One of the
reasons for this problem is explained by the history of manufacturing in the
U.S. In past decades, companies attempted to reduce the costs of production by
building large, efficient factories in low-cost areas where labor was
relatively cheap and regulation was favorable. It didn’t really matter that
the customers were far away. The nation developed new roads, faster rail
service, better air transport, and more efficient container ships, which made
shipping cheaper. Fuel costs were also low and stable.
All of that has changed in recent times, as fuel became more
expensive and the supply chains became overburdened and overcrowded. When
transportation reaches a bottleneck, it burns more fuel, exacerbating the
problem. Goods become tied up in transit, increasing effective inventory and
reducing profits and working capital. Logistics costs soar.
Even when deliveries are delayed, a company can adapt. But
if the system becomes erratic, then scheduling becomes a problem that can
quickly escalate costs, as...
