National transportation infrastructure fund legislation

October 3, 2008 by SwizStick  
Filed under Supply Chain Management

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In reference to my colleague’s post on Monday regarding proposed legislation to introduce a national container fee, here’s another piece of legislation being introduced that would create a national infrastructure fund:

According to the legislation, the $7-to-$9 billion in new fees for the fund would primarily be collected through two mechanisms:

* a waybill fee for beneficial freight rail and commercial motor vehicle cargo owners—or shippers—that is assessed against the cost of transportation and not the cost of the goods being transported; and

* a small increase in Customs fees that are already being collected, representing an additional 25 percent of the merchandise processing fee

“It is our belief that the cost of the transport of goods is going to be forced upward if we don’t take some sort of action like this to un-kink the bottlenecks to build out more capacity and increase throughput,” said Leslie Blakey, executive director of the Coalition of America’s Gateways and Trade Corridors (CAGTC), in an interview. “If we don’t do that, the consumer is going to have to pay higher prices either way. So, it would be better to have a more efficient system with more reliability, increase system efficiency across modes.”

Blakey also noted that the overall direction this bill is taking can be viewed as favorable, stating there needs to be a national freight fund, with allocations from that fund needed to prioritize the most important freight infrastructure projects that include merit-based criteria to make those determinations, as well as leverage public and private resources to create more capital to fund these projects from a wider variety of sources. She added the fund will need to be financed by freight system users and beneficiaries.

I honestly don’t have a huge problem with increasing the MPF (Merchandise Processing Fee) provided they don’t remove the max of $485.00. If they increase the MPF, it just means more entries will hit that max limit sooner and those that don’t pay a little more. At the current 0.21%, I don’t see it as being too cost prohibitive. Attaching a waybill fee based on transportation paid on rail and motor vehicle movements is a different question, I’m interested to know how much and how it would be reported, collected, etc.

The problem with anything like this, of course, is that it simply gets passed on to the consumer and in effect is an additional “tax” on product moving in and around the United States. And there’s the possibility of a double whammy for importers who would first pay more under a higher MPF and then have to pay waybill fees for the inland rail or trucking portion of the cargo to its final destination. At the end of the day, costs increase, which increases cost of product, which, most likely, eventually get passed on to the end consumer.

Then there’s the fund itself. Our enlightened Congress has two nasty habits that have yet to be cured: adding spending earmarks to bills and budgets that have no business being there and using funds from specific budgets for reasons unrelated to that budget – robbing Peter to pay Paul, so to speak. Unless there is strong language – and oversight – to ensure such a national infrastructure fund only spends money on valid infrastructure projects I fear politicians will find ways to steer money from the fund to their own pet projects or other priorities.

The big question is: Do the benefits outweigh the additional costs and risks? I don’t think we have enough information to determine that yet.

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