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Supply Chain Management, SCM, SCRC Supply Chain Resource Cooperative, Poole College of Management, North Carolina State University

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SCRC Article Library: A Brief History of the Highway Transportation System in the U.S.

A Brief History of the Highway Transportation System in the U.S.

Published on: Jul, 05, 2006

by: Rob Handfield, SCRC

Related site link: The Transportation Crunch

The highway infrastructure as we know it today began expanding rapidly after President Dwight Eisenhower, 50 years ago this month, signed the Federal Aid Highway Act of 1956 which committed the government to invest heavily in a national network of interstates. The law offered to pay 90% of the costs for the new highways, with relevant state governments picking up the rest of the tab. Most of the new roads were at least four lanes wide, with no level crossings; these standards became mandatory in the 1960s. States were allowed to bring their existing toll roads in the systems provided they met these standards.

Besides the obvious economic reasons, one of Eisenhower’s goals was to improve national security. The network that he authorized was often referred to as the National System of Interstate and Defense Highways. The US military understood the importance of logistics, and in effect created roads that would make it easier to move military convoys quickly across the country in the event of an attack from Germany and/or Russia (a big worry during this Cold War period). The overpasses were made high enough so that ballistic missiles could be transported beneath them. In effect, this was fortuitous, as they also allowed the common transportation container to pass as well! Though the atom bombs and Communist invasion never occurred, this in effect became the highway infrastructure that we know today.

The US now has 46,876 miles of interstate highways coursing the length and breadth of the country, including Alaska, Hawaii, and Puerto Rico. Some are long and straight, while others meander due to political issues or natural constraints. The longest, I-90, is one of four east-west routes that span the whole continent, and stretches 3000 miles through 13 states.

The Interstates have become the lifeblood of the US supply chain, and have remade the country’s social and economic landscape. It has been studied by the Russian and Chinese, as they rebuild their economies. The interstates enabled the growth of the US economy in the 1950’s and 60’s, more than any other factor. One reason that companies like Walmart became a cost-cutting leader was because it exploited the logistical advantages of the new system faster than its competitors did.

Manufacturers now treat interstate highways as if they are part of the assembly line, clustering factories near the access ramps so that parts and raw materials can arrive at the right moment. Of the 15 new car and truck plants that opened in America between 1980 and 1991, all but two were build along Interstates 65 and 75, which form a narrow corridor running from Indiana and Michigan down through the Ohio valley into Kentucky and Tennessee. Since then, carmakers have build more plants farther south along I-65, which ends in Mobile, Alabama, and have also branched out along intersecting east-west routes such as I-40.

The big question now is whether Americans are willing to keep spending more than $80 billion a year of their tax money to maintain and upgrade the system. Clifford Winston, at the Brookings Institution, has tried to measure the benefits reaped from improved logistics. He believes that government-financed highway investments have run into steeply diminishing returns since the 1980s.

Some state governments that face tighter fiscal constraints are toying with ideas for letting the private sector take over stretches of highway. For $3.8 billion, Indiana agreed this year to lease it Skyway toll road through Chicago, which is part of I-80 and I-90, to an Australian-Spanish consortium for the next 75 years. The consortium will maintain the highway and keep the tolls. No doubt, there will be more of this to come.

Source: “Roads to Somewhere”, The Economist, p36-38, June 24, 2006.

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