Deteriorating Roads and Bridges Impede Economic Growth, Including Ecommerce Deliveries

And you thought drone deliveries were a cheap stunt to garner attention!

Turns out Amazon and other ecommerce companies - along with their tangible economy counterparts - are struggling with the very real results of anti-tax fervor and deferred maintenance .

Deteriorating infrastructure likes roads and bridges is adding to delivery delays and rising costs. It's gotten to the point where even businesses who will move their headquarters half way around the world to avoid paying taxes at home are acknowledging the need for improvement and offering to pay for some of them.

There is a certain karmic justice in this since the rise of tax free ecommerce contributed to the decline of tax paying merchants (an their employees) which, in turn, drained government budgets of the wherewithal to keep up with needed repairs and improvements.

So drones may provide an answer to snafued deliveries, but that presumes trucks can navigate damaged roads to get products to the warehouses where the drones would be based. That's why they call it a supply chain. JL

Vipal Monga reports in the Wall Street Journal:

America’s crumbling infrastructure adds to the cost of moving parts, equipment and inventory. The resulting loss of sales could total $1 trillion between 2012 and 2020, while reduced productivity and higher expenses could drain $3.1 trillion from the nation’s gross domestic product
Five minutes here and there adds up to $105 million a year for United Parcel Service Inc.
That’s what average daily truck delays cost UPS.
The company has to send three of its signature dark-brown trucks instead of two onto heavily trafficked routes around New York, Chicago and Los Angeles to ensure on-time package deliveries.
“It’s ugly. We operate inefficiently and redundantly, because we have got to deal with the congestion,” said Thomas Jensen, the company’s vice president of transportation policy.
Transport is one of the weakest links in the corporate supply chain. Mile after mile, America’s crumbling infrastructure adds to the cost of moving parts, equipment and inventory across the country.
The resulting loss of sales could total $1 trillion between 2012 and 2020, while reduced productivity and higher expenses could drain $3.1 trillion from the nation’s gross domestic product, according to a 2013 study by the American Society of Civil Engineers.

For many businesses, time is money, and it’s running out: funding for the federal Highway Trust Fund lapses on May 31.
Aiming for a longer-term solution, President Barack Obama has offered a six-year, $478 billion transportation budget he plans to finance with a tax on companies’ foreign earnings. Political bookmakers give the plan little chance of survival.
The stakes are high, however: the federal government helps maintain over 4 million miles of roads and 600,000 bridges that knit the country together.
But sporadic funding for the system over the past decade has amounted to pothole patches, and with the White House and Congress unable to strike a deal on infrastructure spending, pressure is growing on state and local governments to pick up the slack by financing highway and bridge improvements with toll roads. In many locales, officials are asking businesses to shoulder more of the cost burden directly, imposing so-called “impact fees.”
Delivery companies are among the hardest hit by the federal gridlock, but many other industries share the pain. A group of companies including e-commerce giant Amazon.com Inc. is paying thousands of dollars a year in fees to one California county for reliable access to an interstate highway.
Meanwhile, educational publisher Cengage Learning Inc., which reserves space on a weekly plane to the U.K., struggles to get its shipments to the airport in time. The company’s boxes of textbooks snake along one of the busiest trucking routes and can get trapped on the aging Brent Spence Bridge between Kentucky and Ohio.
“If one thing goes wrong, we miss the flight” said Gary Bentle, Cengage’s vice president of global transportation. “All we can do is wait another week.”
The 50-year-old bridge was built to handle 80,000 cars and trucks a day, but now carries more than twice that traffic. In September, chunks of concrete fell from the bridge and crushed a car parked below.
Although the Kentucky and Ohio state governments are working toward approving a $2.6 billion plan to replace the bridge, Kentucky Gov. Steve Beshear is having trouble persuading legislators of the need for tolls to fund the project.
In states such as Texas and Florida, toll roads have become a popular way to fund new roadway projects. There currently are more than 5,400 miles of toll roads in the U.S., a 15% increase from a decade ago, according to the Federal Highway Administration.
While tolls make roads and bridges more costly, many companies prefer them to fighting congestion on taxpayer-funded highways, said Michael Ducker, president and chief executive officer of FedEx Corp. ’s freight division. “They increase cost, but there’s an efficiency component there as well,” he added.
FedEx Freight doesn’t break out its cost of using toll roads.
To be sure, there are alternatives. Between 2009 and 2013, railroad operators invested $115 billion in the nation’s 140,000-mile freight rail network.
Industry giant CSX Corp. invests 17% of its revenue on core infrastructure, said Fredrik Eliasson, the company’s chief financial officer. That helped the company boost fourth-quarter volume 6% from a year earlier, the same as rival Union Pacific Corp. and more than the 4% gain for Norfolk Southern Corp.
But trucks still dominate the commercial transportation scene, carrying nearly seven times as much freight by weight as rail in 2012, according to the most recent data from the Federal Highway Administration, and the ratio is projected to increase.
That’s forced many state and local governments to find funding shortcuts, such as charging companies fees and taxes to pay for road improvements.
Patterson City, in Central California, is charging Amazon $240,500 in annual fees on a 1 million-square-foot distribution center.
The money will help pay for a better highway on-ramp to Interstate 5, one of the country’s busiest roads. Amazon also agreed to pay a one-time “impact fee” of $200,000 for wear and tear on local roads.
The fees paid by Amazon and other companies, such as Restoration Hardware Holdings Inc., CVS Health Corp., and Kohl’s Corp., will finance new traffic signals and pavement repairs.
Patterson is in Stanislaus County, which funds much of its infrastructure upkeep with gasoline taxes. That income, however, will be slashed by a quarter this year because of lower gasoline prices and consumption.
“We’re in limbo with a whole lot less money. We’re just trying to be patient,” said Matthew Machado, a director of public works for Stanislaus County.
Amazon is trying to lessen its reliance on trucks. The company has asked the U.S. Federal Aviation Administration for special permission to test a new delivery system: aerial drones. But the FAA earlier this month proposed new guidelines that would preclude Amazon from using the unmanned vehicles from delivering its packages.