21 March 2013 19:23 [Source: ICIS news]
By Joe Kamalick
WASHINGTON (ICIS)--Parts of critical US transportation links are in such poor repair that they pose a threat to the economy, a new engineering report said this week, and faltering roads, bridges and waterways pose both risks and opportunities to the chemicals industry.
In its new quadrennial assessment of the nation’s infrastructure, the American Society of Civil Engineers (ASCE) said that while some parts of US transportation links and other key elements of commerce have shown some improvement, it assigns near-failing grades to most segments due to delayed maintenance and underinvestment.
There have been incremental improvements in some areas, such as solid waste disposal, drinking water supplies, wastewater treatment, roads, bridges and rail, the assessment reports.
However, the analysis said, “While the modest progress is encouraging, it is clear that we have a significant backlog of overdue maintenance across our infrastructure systems [and] a pressing need for modernisation.”
In addition, unless policymakers at the federal, state and local levels along with private sector interests can intervene, even those modest recent improvements will be wiped out without new and substantial long-term funding.
“The total investment needed by 2020 across all infrastructure categories was estimated at $3.6trn [€2.8trn], leaving a shortfall of $1.6trn,” the study said.
Unless those additional dollars can be found, the report indicates that key elements of the nation’s transportation infrastructure critical to the shipment of chemicals are at risk.
Although the study said there has been some marginal improvement for many of the country’s 607,380 bridges, more than 10% of them or nearly 61,000 “are rated as structurally deficient”.
ASCE cites data from the Federal Highway Administration (FHWA), saying that to remedy those bridge repair backlogs, “we would need to invest $20.5bn annually, while only $12.8bn is being spent currently”.
When a given bridge is declared unsafe for commercial loads or even all traffic, it is not likely to make the national news. But problems affecting the nation’s crucial inland waterways and rivers – essential to bulk chemicals shipments and other commodity cargoes – sometimes draw broad attention.
Late last year, drought-related low water levels in the Mississippi River and longstanding delays in channel dredging projects created a crisis for commodities shippers.
“Our nation’s inland waterways and rivers are the hidden backbone of our freight network,” the ASCE said, noting that waterborne carriers account for the equivalent of some 51m truck trips each year.
“In many cases, the inland waterways system has not been updated since the 1950s,” the study noted. “Barges are stopped for hours each day for unscheduled delays … [with] an average of 52 service interruptions a day throughout the system.”
“Projects to repair and replace aging locks and dredge channels take decades to approve and complete, exacerbating the problem,” ASCE said.
In a related area, the study said that US port authorities and their private sector partners plan to spend $46bn in capital improvements by 2016, a positive development.
However, ASCE also noted that federal funding has declined for navigable waterways and landside freight connections that are critical in moving goods from docks to inland destinations.
Even when bulk freight can be efficiently moved from portside inland, the delivery process quickly encounters another bump in the infrastructure – deteriorating roads.
ASCE reports that “42% of America’s major urban highways remain congested, costing the economy an estimated $101bn in wasted time and fuel annually”.
According to the assessment, road repairs nationwide have improved moderately, and federal, state and local government capital investments are expected to rise to $91bn annually.
However, said ASCE, “that level of investment is insufficient and still projected to result in a decline in conditions and performance in the long term”.
Instead, “the FHWA estimates that $170bn in capital investment would be needed on an annual basis to significantly improve [road] conditions and performance”.
Three other areas of critical infrastructure that are key to chemicals production and shipping – freight rail, pipelines and electric power – fare better in the assessment, but they are not without problems.
ASCE credits the nation’s rail carriers for “a resurgence in energy-efficient freight”, noting that freight railroads renewed rails on more than 3,100 miles of track in 2010 alone.
And, since 2009, capital investment in both freight and passenger rail service has exceeded $75bn and actually increased during the 2008-2009 recession, the assessment report said.
But the status of electric power and pipeline systems is less sanguine.
The US, said the study, “relies on aging electrical grid and pipeline distribution systems that in some cases originated in the 1880s”.
“Investment in electric transmission has increased since 2005,” the report said, “but on-going permitting issues, weather events and limited maintenance have contributed to an increasing number of failures and power interruptions.” Those shortcomings will be aggravated as demand for electric power grows through the rest of this decade.
The permitting issue – in which multiple government and non-government organisations are increasingly interventionist – could impede growth in this area.
“Although about 17,000 miles of additional high-voltage transmission lines and significant oil and gas pipelines are planned over the next five years, permitting and siting issues threaten their completion,” the report said.
The four-year-long saga of federal and state review and re-review of the Keystone XL pipeline project is only the most noteworthy of examples.
The Keystone approval process – which is still not complete – raises concerns about the drilling and pipeline permit issues that potentially could impede on-going and full development of the nation’s newly abundant shale gas resources, so essential to the renaissance in US chemicals production and the broader manufacturing sector.
The ASCE analysis builds on an earlier study by the congressionally chartered National Surface Transportation Policy Commission (NSTPC), which in its January 2008 report ominously warned that disrepair of transportation infrastructure “puts the future of our nation’s well-being, vitality and global economic leadership at stake”.
However, while crumbling roads and bridges pose a challenge to the chemicals sector on one hand, the pressing need for their repair presents an opportunity.
A wide-scale government and private sector effort to bring US infrastructure up to speed would drive increased demand for a broad range of chemicals, resins and derivative products in construction materials, adhesives and sealants, concrete additives, paints and coatings, polymers, foams and insulation among others.
The American Chemistry Council (ACC) estimates that for every $1,000 spent on infrastructure construction, about $8 is expended on chemicals and related products.
Consequently, the chemicals industry could help restore the infrastructure on which it is critically dependent – and gain some growth in the bargain.
That assumes, though, that federal, state and local governments are going to have the tax revenues needed to fund what the 2008 commission study said would require some $11trn in expenditures over the next 50 years.
($1 = €0.77)
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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