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S. HRG. 110–1253 

SURFACE TRANSPORTATION AND 

THE GLOBAL ECONOMY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TRANSPORTATION 

AND INFRASTRUCTURE 

OF THE

COMMITTEE ON ENVIRONMENT AND 

PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

APRIL 16, 2008 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.access.gpo.gov/congress.senate 

(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

JOSEPH I. LIEBERMAN, Connecticut 

THOMAS R. CARPER, Delaware 

HILLARY RODHAM CLINTON, New York 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

AMY KLOBUCHAR, Minnesota 

SHELDON WHITEHOUSE, Rhode Island 

JAMES M. INHOFE, Oklahoma 

JOHN W. WARNER, Virginia 

GEORGE V. VOINOVICH, Ohio 

JOHNNY ISAKSON, Georgia 

DAVID VITTER, Louisiana 

LARRY E. CRAIG, Idaho 

LAMAR ALEXANDER, Tennessee 

CRAIG THOMAS, Wyoming 

CHRISTOPHER S. BOND, Missouri 

BETTINA POIRIER, Majority Staff Director and Chief Counsel 

ANDREW WHEELER, Minority Staff Director 

SUBCOMMITTEE ON TRANSPORTATION AND INFRUSTRUCTURE

BAUCUS, MAX, Montana, Chairman 

THOMAS R. CARPER, Delaware 

HILLARY RODHAM CLINTON, New York 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

BARBARA BOXER, California (ex officio) 

JOHNNY ISAKSON, Georgia 

JOHN WARNER, Virginia 

GEORGE V. VOINOVICH, Ohio 

DAVID VITTER, Louisiana 

JAMES M. INHOFE, Oklahoma (ex officio) 

(III) 

C O N T E N T S 

Page 

APRIL 16, 2008 

OPENING STATEMENTS 

Baucus, Hon. Max, U.S. Senator from the State of Montana .............................. 1 

Craig, Hon. Larry, U.S. Senator from the State of Idaho .................................... 4 

Inhofe, Hon. James M., U.S. Senator from the State of Maryland ..................... 63 

WITNESSES 

Yam, Siva, President, United States-China Chamber of Commerce ................... 5 

Prepared statement .......................................................................................... 8 

Isbell, John, Global Director of Logistics, Nike ..................................................... 19 

Prepared statement .......................................................................................... 21 

Responses to additional questions from: 

Senator Carper ................................................................................................. 24 

Senator Inhofe .................................................................................................. 24 

Kuntz, Ray, Chief Executive Officer, Watkins and Shepard Trucking, on 

Behalf of the American Trucking Associations .................................................. 24 

Prepared statement .......................................................................................... 27 

Responses to additional questions from: 

Senator Carper ................................................................................................. 42 

Senator Inhofe .................................................................................................. 42 

Wytkind, Edward, President, Transportation Trades Department, AFL–CIO ... 43 

Prepared statement .......................................................................................... 46 

(1) 

SURFACE TRANSPORTATION AND 

THE GLOBAL ECONOMY 

Wednesday, April 16, 2008 

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

SUBCOMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:05 a.m. in room 

406, Dirksen Senate Office Building, Hon. Max Baucus (chairman 

of the subcommittee) presiding. 

Present: Senators Baucus and Craig. 

OPENING STATEMENT OF HON. MAX BAUCUS, 

U.S. SENATOR FROM THE STATE OF MONTANA 

Senator BAUCUS. The hearing will come to order. 

Good morning, everybody. Thank you for being here today. I 

know some of you have changed your schedules to accommodate 

the hearing today, and we deeply appreciate that. 

Welcome to the first hearing of the Transportation and Infrastructure Subcommittee. A few years ago, I led a group of Montanans to China and to India on a trade mission. China now has 

capital markets that rival America’s and Europe’s, and as we discovered on our trip, their infrastructure is not far behind. 

We landed at Chongqing, China, the airport there. I was 

stunned. It is a modern, fancy airport in Chongqing, China, SouthCentral China. The counsel from Chungdo met us there and he was 

very upset that none of America’s firms had participated in building that fancy airport. The Germans were there. I think the German engineers, maybe a German construction crew, but there were 

no Americans that helped build that airport. 

Then we got in the cars and drove to our hotel. I was stunned 

again at the fancy highways, the interState highway system at 

Chongqing. I mean, the American InterState system is not better. 

I was stunned. And there are miles and miles of ribbons of roads. 

Now, the city population I think is about 12 million or 13 million. 

The province is about 33 million. And for whatever it is worth, at 

dinner that night I asked the Mayor: How did you pay for all of 

this? And he admitted that the central government in Beijing just 

gave him the money and wanted it built as part of the effort just 

to build out into Western China and get away from the coasts. 

So I have to tell you, I was just really stunned at what China 

is doing, and seeing that airport and seeing those highways made 

a huge big impression on me. 

2 

The New York Times described the city of Chongqing as China’s 

Chicago. I can say first-hand that it is reminiscent of Chicago’s rail 

yards and docks that are carrying Western beef and barley for 

nearly a century. The Chinese government intends to invest nearly 

$200 billion in the next decade to develop Chongqing into a transportation hub. That is the equivalent in inflation-adjusted terms to 

what the U.S. spent to build the InterState Highway System in the 

1950’s in the whole Country. 

China and other countries such as India are planning for the future. Clearly, they have plans. They have seen what we have done 

in the U.S. They have taken some of what they think are the best 

features of the U.S., discarded what they think are not the best 

features of the U.S., and they are going their own way, as they 

should. I take my hat off to them for doing so. 

The question I have, are we Americans making the same commitment? Are we looking to the future as aggressively as are some 

other countries? 

Today’s hearing focuses on that question: How do we plan our infrastructure for the more developed and connected and competitive 

world economy, not just today, but for the future? How do we plan 

to put a system together that anticipates the demands of the world 

in conjunction with the U.S.? By investing in U.S. infrastructure, 

we are investing in our own future. In the next half-century, the 

population of the U.S. is expected to increase by approximately 150 

million people. This will mark an increase of 50 percent over current levels. Just think about that for a second—50 percent over a 

half-century. That is more people, more cars, more trucks, highway 

users. 

My State of Montana is a participant in the global economy. We 

are one of the few States in the Union that has a positive trade 

balance. We export a lot of our wheat, a lot of our barley. We export a lot of other manufactured products. We have a positive trade 

balance. We depend upon our transportation systems, whether it is 

surface, ports or shipping or air. 

This bill we are talking about, the highway bill, not only funds 

highways, roads and bridges, but also keeps rural communities connected to each other across vast distances. It keeps those communities connected to the rest of the Country and to the rest of the 

world. 

There are also a lot of minerals in my State of Montana which 

we export worldwide—the copper, the molybdenum being twos, as 

well as platinum and palladium for that matter. 

But serious tests for our Nation’s transportation system are presenting themselves. We witnessed the tragic collapse of the bridge 

in Minnesota. We know that a lot of our bridges are worn out and 

need a lot of help. Some of our highways are in pretty rough shape. 

About one-third of our major roads are in poor or mediocre condition, and clearly we know that shoddy roads result in lots of costs 

to America. One estimate I saw is about $67 billion in extra vehicle 

repairs and operating costs due to inadequate highways and 

bridges. More important, poorly maintained roads contribute to 

one-third of all highway fatalities. 

With all these issues in mind, we have an excellent panel of witnesses. They will discuss infrastructure development in other counVerDate Aug 31 2005 11:46 Feb 05, 2015 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\85530.TXT VERN
3 

tries. Mr. Yam clearly knows a lot about China. We will get to hear 

the perspectives of shippers and transporters in our global economy. And finally, we will get organized labor’s viewpoint of indeed 

to fully fund infrastructure investment. 

I might say, too, and I know I am saying things that others have 

said before, but I am almost blown away with what China is doing 

at the Shanghai Harbor. About a couple of years ago, I was talking 

to the Business Roundtable about potential, if not threats over the 

horizon, but just concerns. You know, we Americans respond to crises. We do a good job. We are the can-do Country. We are creative. 

We are entrepreneurial in our spirit more than any other country. 

We are just a can-do attitude and individuals can do it because 

there is more mobility in America. There is more opportunity in 

America than any other country so there is a greater opportunity 

for individuals and companies to do things in our Country. 

We respond to crises. Look at World War II, we responded. Pearl 

Harbor, we responded. Depression, Sputnik—we respond to crises. 

I think this is in the nature of a crisis, frankly. The trouble is this: 

It is a stealth crisis. It is harder to see. It is not like Sputnik. It 

is not like Pearl Harbor. It is not a physical event that galvanizes. 

It is not one event. It is just a series of lots of different developments. 

I was talking to the Business Roundtable about this, and actually there was one person who is the head of a major railroad, and 

he said, Senator, I have seen Sputnik; it is Shanghai Harbor. 

When you see it, you know it is true, what has developed there 

now and what China is thinking of developing. They are moving. 

It is like what I saw in Chongqing. And I know this is true in other 

countries as well. It is not just China. I think Mexicans are trying 

to develop the biggest port off the coast on the Pacific Coast to rival 

L.A. and Long Beach and other ports on the West Coast. They are 

moving. 

The hearings on this bill is to get a better understanding of what 

is going on, get a better understanding of what we can do as a 

Country, and to get a better understanding of what this Subcommittee can do. A lot of it has to do with funding, which is a 

whole other subject which we will address. 

I am excited, frankly, and relish taking up the challenge, so we 

are here doing and serving our people in our Country the way we 

should. 

Senator BAUCUS. Our first witness today is Mr. Siva Yam. He is 

President of the United States of America-China Chamber of Commerce. Mr. Yam has kindly postponed a trip to China in order to 

join us today. We deeply thank you for that, Mr. Yam. I am also 

very eager to hear your testimony about what China is and is not 

doing and why. 

Next, we will go through a little global management supply 

chain. We will first hear from Mr. John Isbell, the Global Director 

of Delivery Logistics for Nike, the shoe, apparel and sports equipment giant. He will share with us what Nike sees on the global 

stage, and he will give us his perspective for future business models that depend on the global economy. 

Then, we will hear from Ray Kuntz, the CEO of WatkinsShepard. Ray has two very important distinctions. For one thing, 

4 

he is the Chairman of the American Trucking Associations. That 

is the trucking industry’s leading association. But of greater importance to me personally, Ray is from Montana, a close friend, and 

I personally value Ray’s friendship and contribution to our country. 

And finally to round out the panel, we will hear from Ed 

Wytkind of the Transportation Trades Department. Ed will discuss 

the labor community’s role, both in constructing and using roads 

and highways and bridges. 

I will just finish where I started. We are a can-do people. We like 

challenges as Americans. We have done a lot for our Country. I am 

excited about in this year leading up to what we do, not only this 

year, but next year with the transportation bill to address these 

challenges. 

Senator CRAIG. Mr. Chairman. 

Senator BAUCUS. Yes, Senator Craig. 

Senator CRAIG. Before we turn to our panelists, let me add a couple of comments. 

Senator BAUCUS. Sorry, I neglected to—— 

Senator CRAIG. No, that is fine. 

OPENING STATEMENT OF HON. LARRY CRAIG, 

U.S. SENATOR FROM THE STATE OF IDAHO 

Senator CRAIG. I certainly in no way disagree with anything you 

have just said. As we move toward the reauthorization of our Surface Transportation Act, SAFETEA-LU, there is no question that 

we have to look at the future and look at the funding. That is going 

to be critical. 

I will ask unanimous consent that my full statement become a 

part of the record, but I think it is important to recognize that in 

the world of global competitiveness, a report that was done by the 

World Economic Forum listed infrastructure as one of the nine elements critical to a country’s sustained productivity and competitiveness. However, the World Economic Forum also noted that the 

U.S. has slid from first to sixth in global competitiveness behind 

Switzerland, Finland, Sweden, Denmark and Singapore. 

Now, I know you were focused on China, and I have been there 

and I agree with you. As it relates to impact in the world economy 

and growth, there is no equal at this moment. At the same time, 

clearly what is happening in the European Community today and 

the growth that is occurring there, although in a different way, is 

critically important. We cannot continue to neglect our infrastructure as other nations with whom we compete in business and global marketplaces are making the kind of investments they are making. Some would argue they are simply catching up. No, I don’t 

think that is the case. I think you mentioned it with the Singapore 

Harbor. That isn’t catching up. That is going well beyond the capacity of a variety of our ports and it is phenomenally significant. 

The road structures of China, 53,000 miles of national expressway system are under construction in China now. India has its own 

national system that is being looked at and reviewed. 

So it is appropriate for this Committee under your leadership, 

Mr. Chairman, to get out in front of this with the best possible 

knowledge we can muster and challenge this Congress to do what 

we do well, as you have mentioned, but more importantly, the apVerDate Aug 31 2005 11:46 Feb 05, 2015 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\85530.TXT VERN
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propriate funding and the funding mechanisms that will help drive 

modernization and the restructuring of some of our older structures 

as we move into the 21st century. 

So thank you for the hearing. I look forward to the witnesses, 

and thank you for being with us today. 

[The prepared statement of Senator Craig follows:] 

STATEMENT OF HON. LARRY CRAIG, U.S. SENATOR

FROM THE STATE OF IDAHO

I’ll be brief so that we may get to the panel, but I welcome our witnesses to the 

Subcommittee, and look forward to working with you Mr. Chairman, and the full 

Committee as we begin the process toward reauthorizing our surface transportation 

programs and the SAFETEA-LU bill in 2009. 

This hearing, Mr. Chairman, is a good opportunity for us to hear first hand the 

comparisons between the investment the United States is making in its infrastructure, and the investments being made by the rest of the world. These witnesses can 

provide first hand information on the advances they have seen around the world, 

and give us their views on how those advances compare to the investment we are 

making here in the United States. 

Trading partners like China, India, and others around the globe are realizing that 

one of the keys to economic prosperity and growth is a strong surface transportation 

and port infrastructure. These are the necessary arteries for the free flow of people, 

goods and information; three things necessary in a manufacturing and export economy. 

In fact, the U.S. Chamber of Commerce has noted that the five major economic 

sectors of manufacturing, services, retail, agriculture and natural resources account 

for 84 percent of the overall U.S. economy and each is heavily depending on our 

transportation infrastructure. 

In its 2006–2007 Global Competitiveness Report, the World Economic Forum listed infrastructure as one of nine elements crucial to a country’s sustained productivity and competitiveness. However, the World Economic Forum also noted that the 

U.S. has slid from first to sixth in global competitiveness behind Switzerland, Finland, Sweden, Denmark and Singapore. Similarly, in its recent Logistic Performance 

Index, the World Bank ranked U.S. infrastructure as only seventh in the world, behind that of the Netherlands, Singapore, Germany, Switzerland, Sweden and Japan. 

We cannot continue to neglect our infrastructure as other nations with whom we 

compete for business in the global marketplace make significant investments in 

their infrastructure. 

China and India are prime examples of nations who have recognized the importance of making these investments. China has dramatically increased its investment 

in transportation and is generating between 8 and 10 percent in economic growth 

each year over the past several years. China has begun construction on a 53,000 

mile National Expressway System to connect all large and medium-sized cities. 

When completed, this system will be larger then our own interState system. The 

impact of these investments are already being felt on the West Coast, where Chinese shipping containers are already filling ports. 

If our nation cannot provide quality infrastructure to facilitate the free flow of 

goods, manufacturers and other businesses will move their operations to nations 

that can. This body and this Committee have a responsibility to the American people to continue the significant investments we have made in our infrastructure in 

the past. Failure to do so will be catastrophic to our economy. 

Thank you Mr. Chairman, I yield back. 

Senator BAUCUS. Thank you, Senator, very much. I appreciate 

that. 

Mr. Yam, proceed. Your statements will automatically be included in the record, as will yours, Senator, and we encourage you 

to stick within 5 minutes when you are giving your testimony. 

Thank you very much. 

STATEMENT OF SIVA YAM, PRESIDENT, UNITED STATESCHINA CHAMBER OF COMMERCE 

Mr. YAM. Thank you very much, Mr. Chairman, Senator Craig. 

6 

On behalf of the U.S.-China Chamber of Commerce in Chicago, 

I would like to thank you for the opportunity to be here with you 

today to share a few observations that we have. 

Over the last 15 years, we have worked with hundreds of U.S. 

companies to help them to stay competitive with a focus on China. 

So we have learned something and would like to share with the 

Committee. 

In the last 15 years, we have seen there was a major change in 

the global economy. We believe that this was due to three major 

events: the collapse of the Soviet Union, the opening of the door of 

China, and also Internet, computer, and information technology 

that suddenly empowered the consumers. Now the consumers have 

multiple channels that they can go to compare prices, and they are 

looking for the lowest possible price on the products they purchase. 

So we have seen a shift in the production from developed countries to developing countries for basic manufacturing. And China 

has become the winner in this transformation. 

Many people will argue that the success of China was due to its 

labor, with 1.3 billion population, who make $1,000 U.S. dollars a 

year. However, if we just look at labor, and you can go to some 

other countries like Bangladesh, certain some African countries 

that have lower labor costs. So labor alone would not make China 

such a force in the global economy. 

It is the will, the planning of the government, the determination 

for export, the Chinese culture, and the wealth and knowledge of 

the millions of overseas Chinese that help to build the country. But 

most importantly, it is the Chinese government’s investment in infrastructure and transportation systems that makes a difference. 

Since the year 2003, China has been consistently investing enormous amounts of money in infrastructure. The growth of investment has been over 25 percent. That happened year after year. It 

is one of the few countries in history that have done that. In the 

year 1988, China had zero miles of expressway. In 1989, they had 

168 miles. By the year 2005, they had 25,000 miles of expressway. 

They are planning to link all cities with a population of over 

200,000 by the year 2020. 

What China is able to do no other country can do. I say that because of the will of the government and the planning. One big difference is in China, there is no private landownership. The government owns all the land, so the government can move millions of 

people around, build an industrial park, build a highway, so forth 

and so on. 

Infrastructure for transportation is critical to the global economy, 

particularly for developing countries, because they have to rely on 

exports. They have to manufacture the goods at a competitive 

price, and also they need to be able to ship the goods from the factories to the ports. China has been able to do just that. 

If you look at the statistics, in the last couple of years China has 

substantially completed the construction of the highways. And even 

though China has been losing jobs in the manufacturing sector, 

they have become more efficient. Their exports have grown substantially, and they have the largest surplus in the history of 

China. 

7 

Now, as China is moving from a developing country to a developed country, it is critical that they are able to integrate all parts 

of China, because costs in the coastal region have gotten very expensive. So they need to build highways to go to other areas. That 

is what they are planning to do that by the year 2020. By doing 

that, China will become more competitive We always compare 

China with India. In 1981, the GDPs of both countries were essentially the same. Both of them were under $250 billion. Today, China’s GDP is three times as big as India’s, and the length of highways in China is nine times as much as that of India. 

The the transportation system is critical to the global economy. 

For a developing country, they need that so that they can export 

to build a domestic economy. When they move one step further, 

they need to integrate to even-out the distribution of wealth. 

Thank you very much. I appreciate the opportunity. 

[The prepared statement of Mr. Yam follows:] 

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Senator BAUCUS. Thank you, Mr. Yam, very much. 

Mr. Isbell. 

STATEMENT OF JOHN ISBELL, GLOBAL 

DIRECTOR OF LOGISTICS, NIKE 

Mr. ISBELL. Chairman Baucus and Senator Craig, thank you for 

the opportunity to testify on the freight infrastructure problems 

facing our Nation. 

My name is John Isbell. I am responsible for overseeing the global flow of Nike cargo from sourcing origins to arrival at destination 

distribution facilities. My brief testimony will cover the need for a 

national freight transportation plan and freight transportation 

metrics, as well as insights on public-private partnerships. 

Nike’s U.S. footprint includes major distribution facilities in Tennessee, Oregon, California and New Hampshire. On an annual 

basis, Nike imports over 30,000 40-foot equivalent units of containers, making Nike the 23d largest container importer. Over 85 

percent of our containers are imported through the West Coast 

ports, and nearly 85 percent of those containers move on rail to 

reach their final interior destination points. 

Our concerns about the State of the U.S. freight transportation 

infrastructure began in 2004 when the perfect storm hit Southern 

California and the Nation. The combination of record imports entering through the ports of Los Angeles and Long Beach, combined 

with the shortage of waterfront labor, and equipment and labor 

shortages experienced by our two western class I railroads, resulted in cargo delays from one to 3 weeks for most intermodal 

shippers. 

Responsive actions by all parties and the slower growth of the 

U.S. economy has averted a reoccurrence of the problem. However, 

the U.S. infrastructure continues to operate at near capacity in 

many sectors, so there is certainty that future supply chain delays 

will impact American business and ultimately U.S. consumers, especially given the fact that container import volumes will double by 

2020. 

The problems will be particularly acute in Southern California, 

where the two ports account for 43.2 percent and 24.4 percent of 

the Nation’s container imports and exports respectively. 

Why should we be concerned about supply chain delays? Delays 

mean that just-in-time supply chains such as Nike’s time-sensitive 

product launches, would need to produce products earlier in order 

to meet key delivery dates. This increases inventory carrying costs. 

For Nike, the cost to finance an additional week of inventory is a 

one-time cost of approximately $4 million. 

The absence of a national freight transportation plan leaves 

American business with no assurances that our international trade 

will be able to continue to flow at the speed of commerce. Some 

critics might say you only have to look at the current highway bill, 

SAFETEA-LU, to know that without a plan, needed freight infrastructure projects of national significance were shortchanged because the current system permits an earmarking process that diverts money to many less essential transportation projects. 

We believe by working in partnership with the Administration 

and this Congress we can develop a consensus blueprint for freight 

20 

transportation that will provide mandatory funding for freight infrastructure projects of national significance. An important component of a national freight transportation plan is the development 

of freight metrics that can monitor transportation flow in key sectors in order to identify bottlenecks and capacity constraints. These 

metrics would include the measurement of marine terminal capacity, the average speed of container trains, and transit times in key 

truck freight corridors. 

Secretary of Transportation Mary Peters in her testimony in February before the full Committee said, ‘‘Future transportation improvements should be paid for by a combination of tolls, vehicle 

mile taxes, and public-private investment.’’ Nike and other shippers recognize we need to partner with the Federal Government to 

support the funding of freight infrastructure projects. Therefore, we 

are willing to work with Congress and the next Administration to 

develop a framework for public-private partnerships that meets the 

needs of all stakeholders. Private-public partnerships can take 

many forms, but we strongly believe the following underlying principles should apply to all partnerships. 

No. 1, projects should be of national significance as determined 

by a public-private stakeholder group. No. 2, the fees or contributions must be firewalled and used exclusively for the project. Funds 

cannot be reallocated for general revenue appropriations. Three, 

fees and contributions must be collected from the actual users of 

the infrastructure. Four, fees must be assessed on the physical unit 

of movement, and not on the dollar value of the cargo. And five, 

there must be accountability and transparency in the use of project 

funding. 

I conclude by using a quote in the recent U.S. Chamber of Commerce Transportation Report, ‘‘If the United States continues to 

under-invest in its transportation system, and fails to meet the 

transportation needs of its key industry sectors, the U.S. economy 

will become less productive and less globally competitive.’’ 

We thank you for the Committee’s leadership on this issue and 

the shipping community looks forward to working with you to build 

a better tomorrow. 

Thank you. 

[The prepared statement of Mr. Isbell follows:] 

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RESPONSES BY JOHN ISBELL TO ADDITIONAL QUESTIONS

FROM SENATOR CARPER

Question 1. Unfortunately, we do not have unlimited resources and there is a 

large demand on those resources. Much of our current surface transportation infrastructure is crumbling. But new communities are being built and need additional 

transportation capacity. Both have important implications for our competitiveness. 

In terms of competitiveness, is it more important to maintain our current transportation and bring it up to a State of good repair or to build new capacity? 

Response. With the projected doubling of container imports by the year 2020, the 

U.S. unfortunately has to do both the repair and build new capacity. Otherwise, congestion is going to get worse. This means adding more time to people’s commute, 

increasing fuel consumption and causing American businesses to operate in a less 

than time environment. The latter could drive up the cost of products and services 

for Americans and make American companies globally less competitively. 

Question 2. We are currently spending about $30 billion a year on transportation 

and not coming close to meeting our needs with regard to maintenance and new capacity needs. Would that $30 billion go further if transportation decisions were 

made in conjunction with economic development and housing decisions? 

Response. In order to get a better return on transportation spending, the U.S. 

needs a National Freight Transportation Plan so money from the highway bills are 

spent wisely on projects of national significance. These projects need to be financed 

by mandatory funding in order to maintain America’s economic global leadership. 

RESPONSES BY JOHN ISBELL TO ADDITIONAL QUESTIONS

FROM SENATOR INHOFE

Question 1. Much of the criticism of our nation’s current transportation policy revolves around our lack of focus on National priorities such as large regional projects 

and freight movement corridors. As we prepare for reauthorization, what suggestions would you have for this Committee on how to structure a truly national freight 

(only change was to add ‘‘freight’’) program? 

Response. We would encourage Congress and the Secretary of Transportation to 

work with industry stakeholders to develop a National Freight Transportation Plan. 

This plan will produce a consensus blueprint for freight transportation that will provide mandatory funding for freight infrastructure projects of national significance. 

Question 2. Many voices are calling for a new freight program funded outside of 

the current gas and diesel taxes. Do you think an increase in the diesel tax is the 

best way to pay for truly national freight transportation projects? If we do not increase motor fuel tax rates, how would you assess a new user fee to fund a new 

freight program? 

Response. The majority of industry leaders do not think increasing the diesel tax 

is the best way to fund national freight transportation projects. All users of the infrastructure need to pay its fair share of the project costs and environmental cleanup. Nike has taken an extra step in this effort and is a founding member of the 

Coalition for Responsible trucking, which was created for private sector companies 

to address environmental issues, to implement innovative solutions to alleviate diesel-related emissions, and to promote better business practices in communities surrounding our nation’s blue-water ports. 

Senator BAUCUS. Thank you, Mr. Isbell. 

Mr. Kuntz. 

STATEMENT OF RAY KUNTZ, CHIEF EXECUTIVE OFFICER, 

WATKINS AND SHEPARD TRUCKING, ON BEHALF OF THE 

AMERICAN TRUCKING ASSOCIATIONS 

Mr. KUNTZ. Chairman Baucus, thank you for this opportunity to 

testify on a very important subject today. I am Ray Kuntz, Chairman of the Board of the American Trucking Associations, and 

Chairman and CEO of Watkins and Shepard Trucking in Montana. 

Our highway system connects all modes of transportation, all 

modes of mining, agriculture, manufacturing and warehousing. It 

plays a real key role in our global economy, and it is what allows 

a company like our own in Montana, which travels about only 13 

25 

percent of its miles in Montana, but employs a majority of Montanans to work in a global economy. 

The rest of the world also understands the importance infrastructure plays in the ability to compete in the global economy. The European Union has launched a coordinated long-term initiative to 

address freight and other transportation needs. I also visited China 

last year and was able to visit the Shanghai Port, and what I saw 

is that China was building railroads, highways, and ports at an unbelievable pace. The alarming thing is that the port that they built 

in Shanghai that you mentioned, Mr. Chairman, that project took 

3 years from start to finish. And we all know in America that we 

could never get something like that licensed in 3 years or 20 years. 

So we have other problems that we have to compete with in infrastructure. 

Today, that system is aging and overloaded. To maintain our position as the envy of the world, which we were with infrastructure, 

we have to get serious about investing in repair and expansion. 

The cost of infrastructure has grown dramatically in recent years, 

and we have not increased our main funding source, fuel taxes, 

since 1993. That puts us where we are today with the costs going 

up, and holding down flat we have this gap in what we need to 

spend and what we have. 

As a result, many of our States are facing large highway funding 

shortfalls and looking at alternative solutions, primarily tolling and 

privatization. The move toward privatization will create long-term 

costs that greatly exceed the short-term economic benefits. I use as 

an example in 2006, the State of Indiana agreed to a 75-year lease 

with Macquarie-Cintra in exchange for $3.85 billion. How does that 

affect trucking? Prior to privatization, the toll rate for a five-axle 

truck traveling that toll road was $14.55. Today, just 2 years later, 

that same rate is $27.25. By 2010, we estimate it will be as high 

as $39.24. As this rate progresses, by 2016, it will be equivalent to 

a $2 per gallon fuel tax. By 2031, our estimates, based on their formulas, would put it at $4.42 per gallon. 

So to argue that privatization is an alternate funding that 

doesn’t raise taxes is pretty simplistic thinking. That is why we 

take our position against privatization. We are also very concerned 

that it would hurt rural America, especially States like Montana, 

North Dakota, and Wyoming where we don’t expect that private 

partnerships would have any interest. 

ATA believes that leasing highways to private interests is inconsistent with efficient and cost-effective movement of freight, not in 

the public interest, and represents a vision for our Nation’s system 

that is short-sighted and ill-conceived and will hurt rural America. 

The other big problem that we are facing in this Country is congestion. A recent report of the Texas Transportation Institute 

shows that in 2005 drivers in metropolitan areas wasted 4.2 billion 

hours in traffic, burning 2.9 billion extra gallons of fuel, and adding 

annual congestion costs in urban America of $78 billion. A preliminary study of Federal highways shows that bottlenecks are costing 

trucking more than 243 million hours a year, with a direct cost of 

$7.8 billion a year, growing a 8 percent a year. It is taking our 

guys longer to get from point A to point B every single year since 

26 

2002, so we are becoming less and less efficient as a trucking industry. 

ATA estimates of congestion in these areas were added over a 10- 

year period and over 32 billion gallons of fuel would be saved, and 

we would reduce our carbon emissions by 314 million tons. We believe, along with other groups, that a segregated program is needed 

to deal with congestion and funding should be walled-off from the 

highway trust fund. 

Currently, Senator, our Country is in a recession. We are facing 

an energy crisis, and many believe we are facing an environmental 

crisis. A long-term plan to rebuild our highway infrastructure and 

reduce congestion would stimulate our economy, reduce our fuel 

consumption, and reduce our carbon footprint, and ensure our ability to compete in global economics. The correct path, though not 

easy, seems pretty clear to me. 

Mr. Chairman, I appreciate this opportunity to come before you, 

and I hope that as we move forward that you have the political 

courage and will to get us an adequate infrastructure for the future. 

Thank you. 

[The prepared statement of Mr. Kuntz follows:] 

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RESPONSES BY RAY KUNTZ TO ADDITIONAL QUESTIONS

FROM SENATOR CARPER

Question 1. Unfortunately, we do not have unlimited resources and there is a 

large demand on those resources. Much of our current surface transportation infrastructure is crumbling. But new communities are being built and need additional 

transportation capacity. Both have important implications for our competitiveness. 

In terms of competitiveness, is it more important to maintain our current transportation and bring it up to a State of good repair or to build new capacity? 

Response. Both infrastructure maintenance and capacity expansion are crucial, 

and investment decisions should be made on the basis of a cost-benefit analysis that 

allows agencies to determine which improvements would produce the best safety 

and economic benefits. Smooth pavement surfaces significantly reduce truck operating costs due to better fuel economy, less tire wear and fewer accidents. In addition, bridges that fail or are load-posted force trucks to take more circuitous alternate routes. However, as my testimony points out, congestion imposes an enormous 

cost on the trucking industry and the economy. Resources must be available to meet 

these needs. Recognizing the fact that resources are limited, it is imperative that 

future transportation authorization bills ensure that these resources arc invested in 

the most cost-beneficial projects. 

Question 2. We are currently spending about $30 billion a year on transportation 

and not coming close to meeting our needs with regard to maintenance and new capacity needs. Would that $30 billion go further if transportation decisions are made 

in conjunction with economic development and housing decisions? 

Response. Unfortunately, planning for new development and planning for transportation facilities to serve new development do not always go hand-in-hand. It is 

imperative that when traffic-generating facilities an: being planned, opportunities to 

minimize traffic congestion arc considered through land-us? planning. Furthermore, 

transportation capacity expansion should occur in conjunction with development so 

that transportation agencies are not constantly playing catch-up.. 

RESPONSES BY RAY KUNTZ TO ADDITIONAL QUESTIONS

FROM SENATOR INHOFE

Question 1. Much of the criticism of our nation’s current transportation policy revolves around our lack of focus on National priorities such as large regional projects 

and freight movement corridors. As we prepare for reauthorization, what suggestions would you have for this Committee on how to structure a truly national freight 

(only change was to add ‘‘freight’’) program? 

Response. The next highway authorization bill must produce a more logical system for making investments in infrastructure that are in the national interest. 

SAFETEA-LU’s ‘‘Projects of National and Regional Significance Program’’ was a 

positive step in that direction. Unfortunately, all of the money for this program was 

earmarked, eliminating the logical project selection process that Congress had created. 

Congress should empower the U.S. Department of Transportation with the authority and responsibility to develop a model which allows the department to determine where and how freight is moving today, and how freight movement is likely 

to evolve in future decades, and to then determine the most significant obstacles to 

moving freight efficiently. USDOT has effectively started this process through development of the Freight Analysis Framework and nationwide identification of freight 

bottlenecks on the highway system. These initial research tasks can and should be 

more fully developed. Based on this evaluation, resources should be focused on those 

projects that are likely to produce the greatest national or regional benefits according to criteria created by Congress. Funding for these projects should be meritbased. and a dedicated, fire walled revenue stream should be created to fund the 

projects. 

Question 2. Many voices are calling for a new freight program funded outside of 

the current gas and diesel taxes. Do you think an increase in the diesel tax is the 

best way to pay for truly national freight transportation projects? If we do not increase motor fuel tax rates, how would you assess a new user fee to fund a new 

freight program? 

Response. ATA supports increases in diesel taxes if the revenue is dedicated to 

addressing the most pressing obstacles to moving freight on the highway system. 

We would be very much opposed to a multimodal freight program that is funded 

solely or primarily by diesel taxes on trucks. This would run counter to the decadesold user pays principal that has been the hallmark of the Federal highway program, 

and which is a key factor in motorists’ willingness to pay a fuel tax. 

43 

Furthermore, we urge Congress to consider new freight-related fees (e.g. container 

tax, bill of lading tax), with revenues dedicated to freight improvements. However, 

we are concerned about the significant legal and administrative obstacles to imposing these fees. In addition, we would oppose any new fees that placed the burden 

of payment or collection, or verification of payment, on motor carriers. 

Senator BAUCUS. Thank you, Mr. Kuntz. 

Mr. Wytkind. 

STATEMENT OF EDWARD WYTKIND, PRESIDENT, 

TRANSPORTATION TRADES DEPARTMENT, AFL–CIO 

Mr. WYTKIND. Thank you, Senator, and thank you to the Committee for providing transportation labor an opportunity to appear 

before you on such an important subject. 

The labor movement has always been a very vocal proponent for 

aggressive Federal investment in the physical infrastructure of our 

Nation. The fact is that America’s strength as an economic power 

has always been linked to its ability to transport goods and people 

safely and efficiently. Our transportation system and the employees 

of this great industry make this Country great, make its people 

and its businesses prosperous and form the backbone of our national economy. 

But absent a bipartisan commitment to developing and implementing a long-term strategy to rebuild our transportation infrastructure, we fear the Nation’s economy and its workers will be at 

risk. Last year’s collapse of a bridge in Minnesota reminded all 

Americans of the horrible State of our aging infrastructure. That 

horrific event also confronted the Nation with what we see as a 

very clear challenge. Will this be the generation that rebuilds 

America and the infrastructure beneath it? Or will we permit our 

infrastructure to deteriorate and crumble? 

I believe that is the question facing our leaders in Congress, and 

also serves, I believe, as a backdrop for today’s hearing. Investing 

in transportation creates and sustains millions of good jobs in this 

Country, and at the same time provides a critical ingredient for our 

Nation’s economic growth. Building and maintaining transit systems, roads, bridges, rail lines and ports puts millions of our members to work every day, and if you include the multiplier-effect, 

even more workers throughout the economy who all rely on the 

transportation system for their jobs. 

For every billion dollars we spend on transportation, 34,000 to 

41,000 good jobs are created in this Country. Thanks to strong collective bargaining rights and prevailing wage laws, these are good 

jobs with strong benefits. They are the type of quality jobs that are 

evading too many Americans, perhaps millions, in this national 

economy that is wracked by recession. 

Transportation investments are also a proven way to stimulate 

the economy immediately, and thus must be a part of what we 

hope will be a second stimulus package when Congress considers 

such legislation. There are billions of dollars in projects ready to 

go that are identified by departments of transportation, by transit 

and commuter rail systems and authorities, and by AMTRAK that 

could be implemented in short order. These are not initiatives that 

will take years to launch. They are ready-to-go projects that have 

the potential to deal with some of the very serious transportation 

44 

and logistics problems facing the economy, but also to provide a 

much-needed boost to State and local economies that are suffering. 

It is time to put to rest the myth that transportation infrastructure investments have no immediate impact that would stimulate 

our economy. Our competitors abroad understand that global competitiveness depends on a comprehensive investment strategy. As 

my testimony points out, and as you have heard from the other 

witnesses, the European Union, China, India and countries across 

the globe are literally spending billions on their transportation system. I find the statistic to be starting that between 2006 and 2010, 

it is estimated that China will spend $200 billion on its railways. 

We spend about $1 billion or $1.5 billion a year on our railways. 

We are not keeping up with the needs of the Nation across all the 

modes of transport. 

In contrast, the U.S. commitment overall to infrastructure improvements has been lacking if you look at what is happening globally. Since 1980, our transportation spending as a percentage of 

GDP is actually down 33 percent in the last 27 or 28 years. This 

is all occurring at a time when all estimates show that we need 

about $1.6 trillion in infrastructure spending over the next 5 years 

just to bring our current system into good condition. 

These problems are exacerbated by the significant shift in the 

burden of spending away from the Federal Government onto States 

that quite frankly are not in a position, especially in this economy, 

to take on this financial burden. The needs of the old system are 

quite significant. 

Mass transit has reached a 50-year high in ridership, but we are 

spending one-third of what is projected to be needed to deal with 

the transit investment needs of the Country. Vehicle miles traveled 

are reaching a staggering 1.8 trillion by 2035, yet we are spending 

a fraction of the $142 billion a year needed to repair deficient highways and decaying bridges. 

Freight rail traffic will soar 50 percent by 2020, but the amount 

of investment in our freight rail system is insignificant compared 

to what the needs are. As a result, freight delays are choking interState commerce, and as a result it is costing people jobs and is creating congestion that is off the charts if you measure it against 

past situations. 

Similarly, AMTRAK is chronically underfunded, and will need no 

less than $60 billion over the next 20 years just to give our rail 

transportation infrastructure the opportunity to succeed and to 

give the employees of AMTRAK the right to not only have good jobs 

that are stable jobs, but good jobs with fair wages. 

While our 361 seaports see container volume grow by 7 percent, 

we need to double terminal acreage. We must invest significant resources to widen and deepen navigation channels. And the spending we are doing pales in comparison to what our port infrastructure needs in this Country are. 

I would last end by just saying that election-year gimmicks like 

tax holidays are not going to help advance this debate. That would 

cost the highway trust fund and the transit account $9 billion, potentially risk 310,000 jobs, and would set back our ability to follow 

leaders like you, Chairman Baucus, to try to build a national dialog 

45 

about the need to reinvest and expand our Nation’s infrastructure. 

We hope that that proposal will not see the light of day. 

I will conclude with that, and look forward to any questions you 

may have. 

Thank you. 

[The prepared statement of Mr. Wytkind follows:] 

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Senator BAUCUS. Thank you all very much, because you are accepting the challenge of coming up with analysis of where we are 

and what we need to do. That is something that was not done to 

any significant degree in previous transportation bills in the runups to them. 

Mr. Yam, if you could again just tell us what is happening, and 

I know this is a restatement, generally in other countries’ infrastructure planning and spending? And what effect will that have 

on the U.S. if we pursue in the United States the same general 

kind of policies in the last transportation bill, but don’t go much 

farther? 

Mr. YAM. Well, let me focus just on China. China has built an 

enormous infrastructure that no other country has done for the last 

several hundred years. They do that because they focus on the exports, and most of the wealth has been concentrated on the coastal 

region, so some of the people became disenfranchised. China had 

to expand the transportation network to the western inner areas. 

By doing that, China will stay competitive relative to some other 

countries. 

Because they understand that they need to get the raw material 

parts to the factories so that they can process efficiently, and they 

have to transport the finished goods or partsto the ports for export. 

And also now China is developing specialized industries in certain 

cities, just like if you look at the furniture industry, they are in the 

southern part of China and also in the Shanghai area. By doing 

that, they have created a more efficient economy. They also are trying to phaseout some of those industries that are not efficient. 

So as we see, China is going to link all the cities with a population of 200,000 by the year 2020. By doing that, China will continue to sustain the growth of the economy, will continue to dominate the manufacturing sector, even though labor costs are rising. 

They have become more efficient. 

If America does not improve the transportation system, I think 

that this would increase the cost of manufacturing. As the cost of 

manufacturing increases, we cannot compete with the model that 

China has created by learning from some other nations. They designate certain areas for specific industries, create the economy of 

scale, and improve efficiency. 

So I think it is very important that our Country, since I am a 

U.S. citizen, so when I talked about our Country, I refer to the U.S. 

to keep up the investment in infrastructure. By investing in the 

transportation, we create basically a few things: to make it more 

efficient, and make it more environmentally friendly. These are 

some of the challenges China is facing now. They built a highway 

system that was initially poorly designed, and now they have a lot 

of traffic jams. People don’t follow the rules in China. So in China, 

they are trying to fix that. 

I think if America does will not make investments in infrastructure, this will hurt our economy in the future. We cannot compete 

efficiently on a global basis in the manufacturing sector. 

Senator BAUCUS. I would like to ask all of you. Assuming we had 

the money available to make very significant infrastructure investments, make that assumption, and whatever amount that is, let’s 

assume it is quite significant and makes a big difference. My quesVerDate Aug 31 2005 11:46 Feb 05, 2015 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\85530.TXT VERN
55 

tion is, how would you spend it? Let me ask each of the four. Let 

somebody get ready, and whoever wants to go first goes first. I am 

going to ask each of the four of you that question. 

Mr. Isbell? 

Mr. ISBELL. I think the key is having a national freight plan. The 

current Administration has developed an outline of a national 

freight transportation plan. but it has not filled in the details. 

Without a plan, we won’t know what projects are really significant 

so we won’t have the priority right when it comes to spending 

money on freight infrastructure projects. 

Senator BAUCUS. And this is primarily rail? 

Mr. ISBELL. No, rail is one component but highways and bridges 

are currently inadequate to handle the volume of freight expected 

in the years ahead. 

Senator BAUCUS. Surface? 

Ms. ISBELL. Surface transportation, yes. If you look at the situation, you have rail, and if rail capacity is not adequate, if the train 

speeds are not adequate, and shippers like Nike are having unpredictable delays in moving their cargo, then they are going to shift 

it to road. That shift is just going to add to the problems of our 

highway network. 

So we need to work in conjunction with all modes of transportation. But rail is traditionally privately funded by the railroads. 

But the acceleration of developing rail capacity can be enhanced by 

the government providing investment tax credits to the railroads to 

encourage them to build that infrastructure faster then they normally would with their normal return on investment. 

To put the right focus on developing freight infrastructure, we 

need a stakeholder group of public and private individuals that are 

involved in the process to develop a list of projects of national significance. And then we need to make sure that in the next Highway bill, those projects have mandatory funding requirements so 

that the money isn’t siphoned off to projects that are important to 

other areas of the country, but are less important when it comes 

to keeping the United States economically competitive. 

Senator BAUCUS. So it would be tax incentives to the rails, and 

then also make sure money is designated for highways of national 

significance. 

Mr. ISBELL. Mandatory spending requirements in the next highway bill. 

Senator BAUCUS. OK. Who wants to go next? Mr. Kuntz. 

Mr. KUNTZ. Yes. 

Senator BAUCUS. Where do we spend the money, assuming we 

have a significant amount? 

Mr. KUNTZ. Yes, Senator, to begin with, coming from a rural 

State, it is very important that we maintain the ability of rural 

States to compete with highway funding. So a significant amount 

of money needs to be lying out in the same way we do today in 

such a way that rural America can compete. 

Montana, as you know, without the help that we get from the 

Federal Government, would not have much of a highway system at 

all. So we have to maintain that. 

Senator BAUCUS. That is right. Iowa would stop at the border. 

56 

Mr. KUNTZ. Right. However, as I said before, our company does 

a significant amount of business with Montana employees on other 

highways. The biggest problem that we are facing now is congestion, and the time it takes to get from A to B is getting longer and 

longer every year. We are burning more fuel. We are throwing our 

drivers out in a situation where the accident risk is a lot higher, 

and we have to deal with congestion. And so, as I said before, we 

believe we need a separate fund that focuses on congestion and fixing our bottlenecks. A lot of those bottlenecks are in places that 

aren’t rural, but we need a two-pronged approach, one that fixes 

bottlenecks, takes care of freight corridors, and the other one that 

makes sure that the rural States like Montana are adequately 

funded to maintain their highway system. 

I agree that the railroads also need to be part of the key. I don’t 

know that I would agree that giving them a tax credit is the way 

to go, because if you look at how we are asking trucking to fund 

the highways, it is through some kind of an increased tax, privatization, or whatever. In the railroads, the difference is they own 

their infrastructure and they get a return on whatever they invest. 

Senator BAUCUS. So you say spend money essentially on congestion. 

Mr. KUNTZ. A significant chunk of the money has to be spent on 

congestion to get us out of the mess we are in, and allow us to compete in the global economy. However, we can’t forget about rural 

America because there are some congested areas in rural America 

also, but not near what we face. If you look at the written testimony I submitted, if we just focused on the top 25 congested areas, 

we would dramatically reduce our congestion tomorrow. As I said 

before, we have an energy crisis and we are burning so much extra 

fuel in stop-and-go traffic. The amount of fuel it takes to speed up 

a truck that is heavily loaded, step on the brakes for traffic, and 

constantly do that is an incredible waste. And cars are doing the 

same issue. 

So congestion has to be fixed. The amount of carbon that we are 

throwing in the atmosphere is incredible, and we are all concerned 

about carbon footprint, and there is legislation looking at cap-andtrade and several other types of ways to deal with the carbon. This 

is a way we can deal with carbon that doesn’t cost a whole new regulatory system to be implemented to deal with it. 

Senator BAUCUS. OK. Who wants to go next? 

Mr. WYTKIND. I am happy to try. I am obviously not a planner 

and can’t speak directly to every specific project. What I do know 

is—— 

Senator BAUCUS. That is not obvious. 

[Laughter.] 

Mr. WYTKIND. It is obvious to me. I view this a little differently. 

We have a job deficit in this Country. That deficit is one that is 

focused on the lack of good jobs. The transportation industry historically has provided some of the best jobs in the U.S. economy 

across all the modes of transport. I represent a fair amount of 

those workers. 

I think if you look at the national picture, I keep hearing that 

there are major freight bottlenecks. I keep hearing that our ports 

are under-invested. I keep hearing that public transit is breaking 

57 

its ridership numbers each year, but they don’t have the resources 

to buy the buses, to buy the subway cars, to hire the people and 

train them to operate the system that its people want in those particular cities that they operate in. 

I know from 17 years of advocating for a strong AMTRAK system 

that it is the most chronically underfunded transportation operator 

in the Country. It has had to live on about half of the funding that 

it needs to run a viable railroad, and yet when there are delays in 

trains, when there are not enough frequencies of trains, when there 

is a shortage of specifically skilled crafts in those trains, you wonder why AMTRAK can’t hire the people they need or operate the 

trains it wants to. 

And so I come at it a little differently. I think America needs to 

have a debate like the one you are trying to spur through your 

Committee about what the priorities are of our Nation and what 

the priorities are of our economy, and until we have our national 

leaders, including those running for the highest office in the land, 

making transportation infrastructure a priority and making it a 

national issue that speaks to the national economic needs of this 

Country for the next 50 years or more, then it will continue to be 

a stepchild in Administration in both parties that doesn’t get the 

focus that it needs to deal with all the problems you are hearing 

across this table, that you are hearing across the whole economy 

about a transportation system and infrastructure that is failing the 

Nation. As a result, workers in our economy suffer as well. 

Senator BAUCUS. You sound like a pretty good planner to me. 

[Laughter.] 

Senator BAUCUS. That is a plan. 

Mr. Yam. 

Mr. YAM. Mr. Chairman, I may not be able to answer your question directly, but I would like to share a couple of observations. The 

amazing thing about China is that even though they have spent an 

enormous amount of money in building the infrastructure, they 

still have a lot of foreign reserves. They still have a lot of money 

in the bank. 

Actually, the government does not really spend a lot of money. 

They use the private funding, like the BOT 

[phonetically] build, operate and transfer. Almost every highway 

in China is toll road. People have to pay the toll. And a lot of those 

toll roads are owned by companies set up by the government or by 

private individuals; for example, the world’s longest bridge linking 

Shanghai and Ningbo—you will be driving on the bridge for 45 

minutes to 1 hour. They even have gas stations on the bridge. 

Senator BAUCUS. What is beef? 

[Laughter.] 

Mr. YAM. Yes. 

Senator BAUCUS. 

[Remark off microphone.] 

Mr. YAM. Yes, that is right. 

Senator BAUCUS. No, I am asking. That is a joke. I am sorry. 

[Laughter.] 

Mr. YAM. And I am sorry. 

Senator BAUCUS. No, go ahead. 

58 

Mr. YAM. So you see that in the Chinese model it is a little bit 

of difference. Like the bridge, it was built by a private company, 

not by the government. But what the government does is they give 

them the rights and they give them the land basically free of 

charge or minimum cost. 

Senator BAUCUS. Interesting. 

One of the problems in our Country that you mentioned, Mr. 

Kuntz, is the time it takes to get permits and so forth to get something done. How big of a problem is that in America? Either you, 

Ray, answer that, or Mr. Isbell or Mr. Yam or anybody. How big 

of a problem is that? 

Mr. KUNTZ. I think it is a huge problem, Max. The time it takes 

and the money it takes to get a project license and ready to go, during that phase the cost of building that project sometimes is as 

much as doubled. And so somehow we have to look at why it takes 

so long to get these things licensed and see if we can maybe trim 

back some of these issues to speed up. 

As it sits right now, if we wanted to build some new lanes or add 

some lanes and stimulate our economy, the economy would be long 

down the road before any construction started unless we did what 

he suggested and pick on those projects that are ready to go, which 

is a good idea. But as far as any new lanes, new capacity, new 

bridges, new ports, it would take forever to get them licensed. 

And then if you look at it, when was the last time we built a new 

port? When was the last time we actually added a brand-new highway of any significance? It is not happening now, and I think that 

is part of the reason why. 

Senator BAUCUS. Mr. Isbell? 

Mr. ISBELL. First, I want to say to Ray’s point about making sure 

rural highways are taken care of. I think that is a good point, particularly in Montana. I am a great fly fisherman and I appreciate 

good highway systems in your State. 

But speaking to the point about the environment, I will give you 

an incident. Down in Los Angeles, TraPac, one of the terminals, is 

trying to increase the size of their terminal, but environmental regulations have continually held up in that process. I think they have 

been trying to build this terminal for 3 or 4 years but they continue 

to run into one environmental hurdle after another. They finally 

have reached a point where they believe they can complete that 

terminal, but in the meantime they have completed a brand-new 

terminal in Jacksonville, FL while they were waiting. In other 

words, the environmental impact issues need to be addressed but 

they also need to be reasonable in order to prevent delaying construction of much needed infrastructure. 

Long Beach, Mayor Foster has said that until we deal with the 

diesel emission issue there will be no further infrastructure 

projects built. So that has prompted companies like Nike to form 

the Coalition for Responsible Transportation. This group is taking 

a private sector view on dealing with environmental issues and to 

develop innovative solutions to address and reduce the diesel emissions in Southern California. 

Nike has taken a leadership role in this area. We were one of the 

first companies to investigate the use of LNG trucks for the 

drayage business. We have committed 55 percent of our local 

59 

drayage off the terminals using LNG trucks to distribution facilities in Southern California. 

So it is very important from the shipper’s community that we 

really address the environmental issues because until we do so, 

there is not going to be any investment in infrastructure. 

Senator BAUCUS. Is it true that one of the L.A. problems is all 

that diesel burning is on ships waiting to unload, and those are foreign-flag carriers and we don’t have jurisdiction over them. I am 

told that at one point that was about 20 percent or 30 percent of 

the problem down there. 

Mr. ISBELL. Well, the ports have adopted a clean air action plan. 

In that plan are provisions to clean up the ships. The plan requests 

that ships burn non-bunker fuel when they are within 20 nautical 

miles offshore. 

There is also the issue of diesel emissions and their carbon footprint, that is being imposed on the drayage trucks that access the 

terminals, as well as on the other vehicles that work on the terminal. 

Senator BAUCUS. OK. Thank you very much. I have taken more 

than my time. 

Senator Craig. 

Senator CRAIG. And I apologize for cutting out a couple of times. 

I had some constituents I needed to meet with. 

As we walk our way through what is necessary and look at new 

funding mechanisms, some of you might want to reflect on this. 

While it is not a big item in this Country yet, Mr. Yam’s comment 

about the bridge reminded me of an experience I had in Madrid not 

long ago. We were being hosted by our Ambassador at a meeting 

and in walked a gentleman who said, we just took over the operations of a highway in your Country, a private company from 

Spain, a 70-plus-year lease or something like that. It was a Chicago-Indiana connector of some kind, where they took over the 

management of it, and in that management plan was maintenance 

and refurbishing and expansion. They are working with the State. 

It was a State-Federal highway. 

Are there impediments to this kind of an investment relationship? And if there are, is this something we ought to be looking at, 

along with looking at obviously other funding mechanisms including expansion of the current trust funds and all of that type of 

thing. Has that been part of your purview? Are we restricting a potential private investor or investors from new types of transportation or investments in transportation that otherwise might come? 

Ray. 

Mr. KUNTZ. Senator Craig, if I could answer that. I last summer 

spoke at a safety conference in Brazil and met with the Brazilian 

Trucking Association. Brazil has a lot of public-private partnership 

highways. What they told us is it was a huge mistake. 

Senator CRAIG. OK. 

Mr. KUNTZ. At the time that they decided to build public-private 

highways, it was a highway or no highway. But today, those highways cost almost a $1 a mile to drive a truck over. The trucks are 

all crowded on the secondary highway system. The fatality rate in 

Brazil is 10 times-per-mile what it is in the United States. As I like 

to say when I speak, in this Country we have a choice. It is not 

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a highway or no highway. We have adequately funded our highways for years, and as I spoke earlier, the Indiana toll road, which 

was privatized, in 2 years the cost of driving a truck over that has 

almost doubled. 

So a lot of questions need to be answered before we head down 

this path. If you look at the cost of collecting tolls, in the United 

States today it costs somewhere between 20 percent and 35 percent 

to collect tolls, and it costs 1 percent or less to collect the Federal 

fuels tax and around 2 percent for a State fuel tax. 

So if you just look at the math, if you are going to replace a system that cost 3 percent to collect with one that costs 30 percent to 

collect, and then build in a profit contingency for the private partnership, and even for the sales. The Indiana toll road, I have read 

numbers, I don’t know exactly, is that the commission for that deal 

was $120 million. How many times do you have stop at a buck-acrack to come up with $120 million? There are a whole lot of questions that have not been answered. 

Senator CRAIG. That is why I ask it, because obviously what is 

happening in Brazil would be a natural reaction. If there is another 

way to get there that is going to cost you less, you go to the least 

cost, potentially—time may be of value in that situation—but if you 

have toll roads and non-toll roads in this instance, I would guess 

you would gravitate toward the non-toll road. I think my Scotch 

blood would cause me to do something like that. 

OK. Thank you. 

Mr. WYTKIND. Senator, if I could add something? 

Senator CRAIG. Yes? 

Mr. WYTKIND. I have been really disheartened by the public comments made by the Secretary of Transportation on this because 

those comments have been suggesting that this is a choice between 

public-private partnerships and the status quo, and that there 

somehow isn’t anything in between. The truth is that the private 

sector has always had a significant role in our transportation industry in this Country. But if I look at the privatization models 

across all the modes of transport over many years, I have seen one 

disaster after another that gives me pause about what these publicprivate partnerships actually mean. 

If you look at the British Rail experience. They handed the whole 

thing over to private interests. It is to this day one of the greatest 

political debacles in Great Britain in their transportation industry, 

and they literally undid the whole thing at a significant cost to the 

taxpayer in Great Britain. If you look at some of the mass transit 

privatizations, there have been many, many horror stories of overpromising and under-delivering once they get the service. 

So when you pivot to large infrastructure projects like highways 

and you see these massive projects like in Indiana and Chicago and 

the New Jersey Turnpike and elsewhere, we haven’t taken a formal 

position against all of them. What we have said, though, is that 

there is a lot of very, very complicated public policy questions about 

what you do with the people’s assets before you let private interests come in, write their check, take over something for 99 years, 

and then extract all the profit revenues out of it with very little 

accountability. 

61 

So I think there has to be a pause here about what all this 

means. I am not speaking against all private sector involvement, 

nor am I speaking against innovative finance. In the last two highway transit authorization bills, the labor movement actually 

worked with the Republicans and Democrats on innovative finance 

and have been on record supporting a number of those initiatives. 

So it is not about whether the private sector belongs in the debate. It is whether we should be shoving this large public asset out 

there and giving it over to the private sector. I think that should 

give us some pause. 

Senator CRAIG. Yes, Mr. Yam. 

Mr. YAM. Senator Craig, I would like to share with you my opinions on how it may work in China. China is an exceptional situation because of the following. No. 1, is the Chinese culture. A lot 

of the toll roads started from the overseas Chinese who went back 

to China and built a toll road. Because of the Chinese culture, they 

always go back to their home country to build. 

Then the second thing is that Chinese are very speculative. They 

like to speculate and make money. Certainly toll roads are one of 

the ways for them to do that. 

Then the third thing is the characteristic of China. All land is 

owned by the government, so the government can get the land and 

give it to the investment company for zero dollars or at a minimum 

price. So day one, investors already make the money on the book. 

And then, because of that, they can go to the bank to get the financing. 

So this private-public and public-private partnership will work 

very well in China. Also the government always got involved, so if 

anything goes wrong, the government will immediately jump in 

and they don’t have to go through a lot of legal procedures like 

other countries. 

So this system works very well in China particularly. In other 

countries, certainly the system may work, but would not work as 

well as the model in China. 

Senator CRAIG. Point well made. Thank you. 

Thank you, Mr. Chairman. 

Senator BAUCUS. I think we all agree we need significant additional investment in infrastructure. I don’t think there is much 

doubt about that. You hear it here in the Congress talking to Senators on both sides of the aisle, people know that. 

The question is, how much to spend, how to raise the revenue, 

how to decide where to spend the money knowing it must be done, 

and how to get American public opinion—that is not fair, strike 

that—how to get this momentum going so that we can start to 

tackle this thing and start to not just talk about it, but do something about it in a positive way. 

Any thoughts on that? How are we going to get a little momentum here? I mentioned in my opening comments about a crisis. 

America responds to a crisis. We just do. We do a good job responding. We move quickly. We don’t worry about the permits. When 

there is a crisis, we move. 

So the question is, how do you portray the crisis, in your judgments, what do you do, what do we say, how do we galvanize 

forces, momentum here to solve this thing? 

62 

Mr. WYTKIND. If I might, I have a couple of observations. First, 

I think public opinion is on the side of where you are coming from 

on this issue. Every poll I see, even when the poll asks would you 

pay a little more to help deal with our transportation gridlock problems in the Country, they are always overwhelmingly yes. Seventy 

percent of public transportation State initiatives in the last few 

years have passed. I think that is partly because of the absence—— 

Senator CRAIG. Seven or seventy? 

Mr. WYTKIND. Seventy. 

Senator CRAIG. Seventy. Thank you. 

Mr. WYTKIND. I believe that is somewhat a product of the absence of action in Washington, not necessarily by Congress, but by 

the government more widely, Congress and the government. I 

would argue that public opinion is there. We just need to figure out 

a way to break through the noise. I keep saying that. I have been 

saying this now all year leading up to a Presidential election, is 

that transportation doesn’t seem to find a way to break through the 

noise of all the other national issues that are being debated, whether it be health care, Iraq, whatever it is that the politicians are debating and trying to run for President. They are not debating who 

has a better plan to rebuild America and make our economy more 

competitive and deal with the global challenges. 

Senator BAUCUS. I agree with that. I agree. 

Mr. WYTKIND. That is an important question. 

Senator BAUCUS. I agree with that. 

Senator CRAIG. Good point. 

Senator BAUCUS. Does anybody have an idea on that? 

You know, one thought I have, and this is a bad metaphor, but 

there is kind of a train wreck coming down the road here. It is not 

just an infrastructure train wreck. There are a couple, three train 

wrecks. The other ones are tax code. The 2001 tax cut expires in 

2010. The 2003 tax cut expires in 2010. The Federal eState tax is 

zero in 2010. The alternative minimum tax, the big 1,000-pound 

gorilla in the tax code, is going to be a 100,000-pound gorilla in 

2010. It is just growing. 

Those all have to be addressed by whoever our next President is. 

Whoever is elected, he or she is going to have to make a major proposal to the Country in 2009 dealing with the tax code. These pressures are developing. This train wreck is developing. But everything is an opportunity. In 2009 is when we are going to take up 

this bill, the transportation bill next year. 

So I am just wondering out loud, it just occurred to me, if there 

is some way for the next Administration and for all of us who really care about all these things to be talking, whoever the nominees 

are, whoever the Democratic nominee is and Senator McCain, and 

whoever is elected President, to figure how to put two and two together here. The tax train wreck, the infrastructure train wreck, 

and there is also a health care train wreck coming down the road, 

too. 

There might be an opportunity to start putting a couple of things 

together here to solve some of this and prevent the train wrecks. 

Mr. ISBELL. Senator, at Nike when we have a problem, we bring 

in the relevant stakeholders who are affected by the problem, and 

then we develop a plan. We get consensus on that plan, and then 

63 

we work the plan. And we measure our results against our expected results and make corrections. 

Senator BAUCUS. As all good businesses do. 

Mr. ISBELL. I think that is what is missing right now is an effective dialog with stakeholders who know what the issues are and 

who have ideas to solve those problems. Private industry, Congress 

and the Administration need to come together to engaged in a 

meaningful dialog that will develop this national freight transportation plan and make sure that adequate funding is made not only 

for freight corridors, but also for the safe movement of people because they are all competing with the same highway space, i.e., 

trucks, vehicles, and commuters. 

As a result, what we are dealing with are minority points of view 

instead of the consensus point of view from having the right stakeholders sitting at the table. I think getting the right stakeholders 

at the table to develop a national freight transportation plan, 

should be one of the key pillars of the next Administration. 

Then to your point, Senator, not everybody knows that the Sputnik is circling the globe. If you are not involved in the movement 

of goods, you do not understand what the problems are. If you are 

driving along side of a truck trying to get to work on a rainy morning, you are experiencing a problem you really don’t want to have. 

You don’t want that truck next to you. So we have to find ways to 

develop corridors by which we can move freight at the speed at 

which commerce needs to move and provide a safer experience for 

all drivers. 

Senator BAUCUS. This has all been very helpful. I am going to 

have to wrap up here. This is a very good kick-off hearing. We are 

going to have many more. Thank you to all of you for rearranging 

your schedules to be here today. We will be in touch. Thanks a lot. 

The hearing is adjourned. 

[Whereupon at 11:15 a.m., the subcommittee was adjourned.] 

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR

FROM THE STATE OF OKLAHOMA

Thank you, Mr. Chairman. I appreciate the opportunity to examine our nation’s 

infrastructure investment and its contributions to our future competitive trade advantage with other nations. There is no denying that the level of commitment to 

our nation’s infrastructure is directly linked to the United States continued place 

as a world economic leader. Thus, I am pleased, Mr. Chairman, that you have convened this hearing to get us thinking about how decisions we make with regard to 

transportation will eventually affect our place in the world market place. 

Nations like China and India now pose a serious threat to the United States as 

emerging world economic powers. To put this in perspective, China will be investing 

$200 billion in its railways over the next 3 years which will lay the groundwork for 

a sophisticated freight system that far exceeds our own freight movement capabilities. Additionally, China is planning almost 100 new airports and 190,000 miles of 

new roads, which doesn’t include the 33,000 miles in highways built since 1990. I 

believe that these growing countries are experiencing an economic renaissance not 

unlike what our nation went through when President Eisenhower first conceived the 

National InterState System over 50 years ago. Our vision of a Federal network of 

highways, once coveted by the world for its innovative planning and connectivity, 

is now struggling to accommodate the exponential growth in people and goods movement. 

As I have said many times before, current funding of our highway program is 

barely enough to maintain the system, let alone provide for much needed new comprehensive investment in future infrastructure needs. We cannot afford to ignore 

the consequences of merely ‘‘maintaining’’ our transportation networks while the 

64 

rest of the world continues to spend heavily on bigger and better ways of competing 

with our once superior highway system. 

As the rest of the world continues to finance new ports, highways, and sophisticated rail networks to attract new commerce, I am concerned about the impact this 

will have on our own industries. If we fail to provide a free-flowing transportation 

system to accommodate our ‘‘just in time’’ economy, our manufacturing industries 

will be forced to export much their operations abroad. Canada and Mexico are committing billions to the construction of new high capacity ports and rail systems of 

their own in an effort to divert foreign cargo trade away from our heavily congested 

ports in the Northeast and Southern California . The United States economy cannot 

afford to be outpaced in infrastructure spending by other rapidly growing countries, 

eager to attract new commerce to their economies. 

As we gear up for re-authorization of the Highway Bill, it is critical that we consider the above mentioned facts. Mr. Chairman, you are in a unique position in that 

you are not only the Chair of the authorizing subcommittee but also Chairman of 

the Finance Committee that will find the money to pay for what I hope will be an 

increased investment in transportation infrastructure. I look forward to working 

with you to write the authorization language and want to offer my support as you 

struggle with how we pay for transportation moving forward. As I understand it, 

the Commission established by SAFETEA designed to solely look at the financing 

of transportation has yet to issue their recommendations. My hope is they will be 

able to provide us with some useful and workable ideas. 

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