Reuters Events | Supply Chain & Logistics Business Intelligence

Rhode Island has come out bottom of two separate reports into the state of the US’ infrastructure quality, both of which find much in need of improvement across the country.

Rhode Island has been given the dubious distinction of being named the worst state in the US for infrastructure by both CNBC and US News, amongst a poor outlook for the US as a whole by the American Society of Civil Engineers.

Rhode Island sits at the bottom due to a multitude of problems, with 70% of roads in poor condition and nearly a quarter of bridges across the state rated as ‘deficient’. To address these problems the tiny state is taking on a $5 billion programme to try and overhaul the transportation network by 2025, a cost equivalent to nearly $5,000 per citizen.

The cost might seem high but it sits in the context of a multi-trillion dollar gap in infrastructure funding. This is a national issue that logistics providers should take notice of in terms of both the general economic drag it is creating, and the damage it is causing to their performance through shipping delays and added costs.

Other poor performers alongside Rhode Island in both reports include Maine, New Hampshire, West Virginia, Connecticut, Mississippi, and, surprisingly, Massachusetts, all of which came in the bottom 10 in both reports. Some of the other economic big hitters in the US faring poorly alongside Massachusetts include New York and California. CNBC rated New York’s infrastructure as 44^th best out of the 50 states and US news noted that the state’s commuters had the worst commuting time in the country. Meanwhile, California, which came 41^st in US news’ rankings also had the second worst road quality across the US in their estimation.

States faring better include Minnesota, Georgia, Nevada, Florida, and Utah, which appeared in the top 10 of both lists. Georgia can lay claim to the nation’s best quality roads according to US News.

However, these successes are relative and stand in the context of a crumbling infrastructure nationally. Greg DiLoreto, past president of the American Society of Civil Engineers believes that “Every American family is losing about $3,400 a year in disposable income due to poor infrastructure.” Fixing this state of affairs is even more intimidating than that numbers, with the potential cost rising well into the trillions. The American Society of Civil Engineers' 2017 Infrastructure Report Card, finds that $4.5 trillion is needed from 2016 to 2025 to upgrade infrastructure country-wide to a grade of B, but only $2 trillion of this is currently pencilled in, leaving an unfunded gap of $2.5 trillion.

However, it estimates that the costs could be even higher for US business. According to their figures the costs to US between 2016 and 2025 could total:

• $3.9 trillion in losses to the U.S. GDP by 2025;
• $7 trillion in lost business sales by 2025; and
• 2.5 million lost American jobs in 2025.

Although infrastructure spending has been touted as a key policy goal at several of the most recent US elections and has been regularly mentioned by Donald Trump, little progress appears to be on the horizon currently. President Trump did release a $1.5 trillion infrastructure spending plan earlier in 2018, but with the vast majority of this cost is placed upon local governments and states. The legislation mandates that 80% of the overall funding will comes from these sources before the federal government will step in with financial support.  It is therefore highly unlikely that the plan will get very far on the ground and where it does, ambitions will probably be limited to fixing some of the worst offenders when it comes to states’ infrastructure issues.

What’s more, America’s record low unemployment rate and tightening of immigration law is not going to make any projects easier to implement. Already tight labour markets will mean that any major projects are going to face delays and longer implementation timetables, as well as higher costs than if the labour market had more spare or underutilised labour. It is not as if many of these projects are basic challenges either. The average age of US dams is now 56 years old, 54% of the country’s bridges are more than 40 years old, and repairing these requires skilled labour across the board, including civil engineers, whose median pay is just shy of $85,000. For the construction workers themselves there is also high demand: 91% of the construction companies surveyed in the Q2 2018 USG Corporation & US Chamber Of Commerce Commercial Construction Index reported difficulty in finding workers.

Changing the face of the US’ infrastructure is looking like a mighty challenge indeed but one that becomes more pressing every day that it is not addressed. For the logistics, shipping and supply chain industries this should be of the utmost concern, as the demand for the transit of goods is unlikely to diminish in an age where Amazon is the world's most powerful corporation and supply chains have become so globalised. Every delay and damaged road has a cost for logistics businesses, so this is something the industry needs to shout about and get the federal government to truly address. 

Alex Hadwick

Head of Research, eyefortransport