The urgent need to protect the global supply chain
Every day, staggering numbers of air, land and sea passengers, as well as millions of tons of cargo, move between nations. International trade and commerce has long driven the development of nations and provided unprecedented economic growth. Indeed, our future prosperity depends upon it.
At the same time, threats to trade and travel — whether from explosives hidden in a passenger’s clothing or inside a ship’s cargo, or from a natural disaster — remind us of the need for security and resilience within the global supply chain. A vulnerability or gap in any part of the world has the ability to affect the flow of goods and people thousands of miles away. For instance, just three days after the earthquake, tsunami and nuclear tragedies struck Japan last March, U.S. automakers began cutting shifts and idling some plants at home. In the days that followed, they did the same at their factories in more than 10 countries around the world.
Ten years after the terrorist attacks of Sept. 11, 2001, we also continue to see the determination of individuals and groups to disrupt economies by targeting our transit and cargo systems. Understanding the seriousness of these threats underscores the need for a continued focus on protecting the global supply chain.
Just as important, we must move away from the outdated dichotomy that we have to choose between trade and travel efficiency, and trade and travel security. Security and efficiency must no longer be seen as mutually exclusive. It is possible to enhance security without increasing wait times, creating more paperwork and driving costs higher – and we are doing so already.
As I announced at the World Economic Forum in Davos this week, the United States released a National Strategy for Global Supply Chain Security, the product of more than two years of collaboration across the U.S. government, and with international and domestic public and private partners.
The National Strategy, created with the input of more than 60 subject matter experts and hundreds of supply chain stakeholders, takes a whole-of-nation approach to global supply chain systems, with two explicit goals: promoting the efficient and secure movement of goods; and fostering resiliency.
We will pursue this strategy in three main ways:
More taxis mean more traffic
“There’s something for everyone,” exulted New York City taxi czar David Yassky over the December agreement between Governor Andrew Cuomo and Mayor Michael Bloomberg to expand taxi service. The disabled get 2,000 new wheelchair-accessible yellow cabs, up from around 250 at present. Outer-borough residents get the right to hail non-yellow “livery” cabs instead of having to phone for them. And the city gets a billion-dollar “one shot” from auctioning medallions for the new yellow cabs.
Oh, and all New Yorkers get something they need like a hole in the head: a permanent jolt of new gridlock from the extra taxi traffic.
No one mentioned traffic when the taxi deal was rolled out last month at City Hall and in Albany. After all, with 800,000 motor vehicles already entering the Manhattan Central Business District (CBD) each weekday, what difference could a mere 2,000 additional yellow cabs possibly make?
Plenty, it turns out. Yellow cabs spend three-fourths of each shift, around seven hours, plying CBD streets and avenues. (And of course some are active for two shifts a day.) Most private cars driven in Manhattan don’t do so for long. Even at the CBD’s notoriously labored traffic pace ― now averaging 9.5 mph, up from 8 mph before the recession ― the two to three miles per day logged by the average car below 60th Street occupy 15 to 20 minutes.
Adding one new medallion is thus equivalent to adding 40 private cars. Adding 2,000 of them ― as the city now intends to do during the next three years ― would be the traffic equivalent of adding 80,000 cars, a 10 percent increase in volume.
That 10 percent would be a big deal. The Manhattan CBD already runs so close to maximum capacity that a relatively small increase in the number of vehicles operating there makes a very considerable difference in the outcome. There’s a mathematical way to state this, but there’s also a proverb referring to straws and camels’ backs.
I’ve spent the last few years developing a computer model to analyze congestion pricing. If you put these extra cabs into the mix, the results aren’t pretty, even allowing for the replacement of some car traffic by the increased taxi traffic, as well as the divergence between peak usage periods for taxis (evenings) and cars and trucks (daytime). The model predicts that raising yellow-cab traffic volumes by 15% (the proportional increase in the number of medallions) will cause travel speeds to fall by 12%, averaged across all of Manhattan south of 60th Street from 6 a.m. to 6 p.m. weekdays. (Details of my analysis can be found here.)
If all of the taxis were wheelchair accessible, there wouldn’t be a need for a separatte fleet!
A better way to fund roads
–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-
Just as motorists began the summer driving season, U.S. Department of Transportation Secretary Ray LaHood told Congress that the Highway Trust Fund will run out of money by August. Rising gasoline prices and the recession mean less driving, and less driving means lower revenues from gasoline taxes for the Highway Trust Fund.
At the same time, President Obama wants to spend $13 billion as a downpayment on high-speed rail, an expensive form of transportation that will reach only small segments of the country and that will not substitute for highways. The money would be better spent on developing a more stable source of revenue for highways, based on miles driven rather than gasoline used, that would help to reduce traffic congestion and greenhouse gas emissions.
When the Highway Trust Fund ran out of money in 2008, Congress transferred $8 billion to the fund from general revenues as a repayment from 1998, when the fund was in surplus, and $8 billion was moved into general spending. This year, if Congress transfers money, it would be a direct expenditure, with no fig leaf. Without a transfer, work on many projects would stop or slow down.
The federal government financed the interstate highway system by means of a fuel tax because that was the best method available. Legislation passed in 1956 provided that, on completion, the federal tax would be repealed and funding restored to the states. The highway system is now complete, so there is no rationale for continuing federal involvement in financing state roads.
The $13 billion allocated for high-speed rail would be better spent to encourage the states to adopt a new way of charging for road use. Driving is the primary method of transportation for Americans. They own about 235 million registered passenger cars, vans, pickup trucks and sport utility vehicles, and drive over 2.5 trillion miles a year.
Mechanisms for improving road finance were addressed earlier this year in a pathbreaking bipartisan report by the National Surface Transportation Infrastructure Financing Commission entitled Paying Our Way: A New Framework for Transportation Finance.
The only responsible choice in this situation is to start a shift that pulls us away from needing such a high Trust Fund for roads. If Americans drive more than any other country it isn’t likely because they all want to do so. If you could get to the same place equally fast (if not faster because of traffic) and save money doing it on your commutes to work… you would. But the sad fact is, that even in the best cities in America rail and other mass transit is a laughable alternative to driving a car. We have to start somewhere, so a rail system that doesn’t hit a lot of places just yet, I’m all for. When it grows, as long as it maintains good speeds and regular departures, you will see a shift away from the individual propulsion pods we call SUVs.
Global Supply Chain Security sounds very promising but it takes time to develop and implement. I think there should be something private sector can do to help government now. Security is traditionally the integral part of supply chain risk management. In order to enhance the level of security of global supply chain, private sector should know how to identify each type of risk.
According to this paper http://www.scm-operations.com/2011/08/pr actical-supply-chain-risk-management.htm l there are some types of risks that have direct impact on global security. Human Resource risk is the first example. We should conduct HR audit at overseas facilities to ensure that suppliers and their employees don’t have any link with terrorist groups. Distribution risk should be monitored to ensure that cargoes will be transported through proper route with sound security measure. Most manufacturing companies transmit a lot of data to trading partners overseas so IT risk should be monitored to make sure that terrorist groups can’t intercept valuable data.