Logistics is modern business development
Traditionally, logistics is extremely important for the successful business development. At the same time, effective logistics is impossible without well-developed infrastructure because infrastructure facilitates logistics, increases the speed of delivery of products and parts, and allows businesses to grow fast. In this regard, the US was traditionally viewed as the country with well-developed infrastructure. Moreover, the development of infrastructure in the US boosted the economic development nationwide. In this regard, it is possible to refer to the time of the Great Depression, when the development of infrastructure became one of the major way out of the ongoing economic depression. Today, the US faces the problem of the deterioration of the nation’s infrastructure that puts under a threat the further economy growth and fast business development in the US.
The continued deterioration of the nation’s infrastructure is one of the major challenges to the logistics of the US (Lynch, 2010). The deterioration of the infrastructure in the US has started since the mid-2000s and carries on today. In this regard, the economic downturn in 2008-2009 deteriorated the national infrastructure even more because many investment projects were frozen and the infrastructure was neither reconstructed nor developed successfully. Instead, investors waited for the better time to come to invest into the infrastructure projects, while the government grew more and more concerned with saving instead of spending.
Today, the national economy is in decline and the government as well as private investors are not interested or just cannot afford investing into the development of the national infrastructure. The improvement of the national infrastructure is extremely costly and needs billions of dollars on the annual basis. On the one hand, the government cannot spend substantial funds on the development of the national infrastructure, when the government policy focuses on the spending cut, while private investors either cannot afford such investments or do not expect substantial return on investments to take the decision to invest into infrastructure development projects. In such a situation, the infrastructure becomes an unbearable burden for the government, while private investors cannot afford developing the infrastructure without the government support or are just unwilling to invest funds into infrastructure projects at the moment because they want to secure their capital and use it efficiently.
The public is accustomed to the efficient infrastructure but policy makers and the public are unaware that the infrastructure is deteriorating (Mohrman, 1998). The improvement of the infrastructure should start before signs of its deterioration become obvious. Otherwise, the reconstruction of the stagnating infrastructure will be too costly and unaffordable neither for the federal budget, nor for state budgets, nor for private investors. Therefore, the public does not push on policy makers to invest into the reconstruction and improvement of the infrastructure.
At the same time, today, well-developed infrastructure is the key to the fast and successful development of trade and, therefore, to the economy growth. The well-developed infrastructure is crucial for logistics, while many businesses operate nationwide or internationally. Therefore, the quality of logistics and, thus, infrastructure is crucial for them. The deterioration of the national infrastructures leads the US-based companies to the deterioration of their competitive position in the international markets and rising inflation in the US (Peters, 2002). The poor infrastructure leads to the poor logistics that results in delays in products and services delivery. As a result, American companies turn out to be in a disadvantageous position compared to foreign ones, which have better logistics. In addition, it is customers who cover logistics costs. Hence, the poor infrastructure increases costs companies spent on logistics, while it is American customers who cover those costs because companies have to include their costs on logistics into the price of their products and services.
The problem affects the national infrastructure, although the most densely populated areas face the particularly high risk of the deterioration of the infrastructure (Robbins&Finley, 1995). The traffic pressure grows and the economy growth increases the pressure on the national infrastructure. Current government policies focus on the stimulus of the national economy but little is done for the development of the national infrastructure. However, the capacity of the national infrastructure is not unlimited.
Possible solutions may include abundant government funding of the development of the nation’s infrastructure. For instance, the government can create new public jobs to build up and improve the national infrastructure (Schneiderman, 2002). Building new roads and infrastructure system can enhance the national infrastructure and to solve the problem of the high unemployment rate, at least partially. In this regard, government programs should be developed at both federal and state level. In such a way, the federal and state government will encourage the creation of new jobs, improve infrastructure, decrease costs companies spend on logistics and, thus, improve the economic situation nationwide. In this regard, the close cooperation between states could facilitate the development of the national infrastructure.
Thus, the deterioration of national infrastructure is the threat to logistics of companies and to economic interests of the US. The solution can be found in the government programs and close cooperation states, the federal government and private investors.
