Two weeks ago, Canada announced a C$50 million ($37 million in U.S. dollars) investment in supply chain digitalization that promises to significantly improve efficiency in the movement of goods, a strategy that the U.S. should take note of.
This relatively small investment will help Canada and those moving goods through the country’s ports, along highways, and on rail lines, do more with existing infrastructure by improving visibility, reducing waste, and increasing fuel efficiency and cost savings.
While Canada has taken this important step toward modernizing its supply chains, the U.S. lacks any such dedicated funding, meaning investment in digital infrastructure is woefully underappreciated and underfunded. It is also important to recognize the significant investments other countries, such as China, have made in developing standardized data exchanges. For example, Logink, a Chinese supply chain platform aggregates cargo data from global ports.
The U.S. should follow Canada’s lead and invest in upgrading its digital infrastructure that facilitates the U.S.’s own interconnected freight network, which will be critical to maintaining U.S. competitiveness and national security.
Doing More with Less
As ReMo highlighted in its report, Solving the Global Supply Chain Crisis with Data Sharing, relatively low-cost investments in improving digital tools will result in a more sustainable, efficient, and resilient freight sector.
ReMo found that improved digitalization of freight—by allowing shipping companies and ports to more efficiently route cargo, reduce wait times, and better coordinate overall—can reduce emissions by 22%, and costs by 6%.
That would translate into the freight industry using 2.5 billion fewer barrels of oil a year, a significant reduction given the need to meet climate goals and reduce oil dependence at a time of rising geopolitical tensions.
Supply Chains Are National Assets
Canada’s $50 million set aside is part of a larger $4.7 billion National Trade Corridors Fund, a nationwide fund administered by Transport Canada which invests in infrastructure to support domestic and international trade over an 11-year period from 2017-2028.
Canada understands the importance of its interconnected freight network and invests in the system as a national asset. By carving out funds for the digitalization of the network, Transport Canada can specifically target low-cost, high-impact digital infrastructure investments.
The increased efficiency that results from better digitalization also reduces the costs of other, more expensive improvements, such as investment in low- and zero-emission fuel vehicles, by enabling increased asset utilization and informing more strategic transition plans.
Prioritize Digitalization in U.S. Infrastructure Funding Opportunities
It’s important to note that modernizing America’s infrastructure and creating a stronger and more resilient supply chain has been a key focus of President Biden’s administration, which issued an Executive Order on Supply Chains in February 2021 and stood up a Supply Chain Disruptions Task Force.
That commitment to improve supply chain performance continued with the signing of the Bipartisan Infrastructure Law and Inflation Reduction Act, making historic investments of funding available across the U.S. transportation sector.
The law enables record levels of grant funding available through the Maritime Administration’s Port Infrastructure Development Program (PIDP), dedicating more than $700 million in 2022 to fund projects benefiting coastal seaports, Great Lakes ports, and inland river ports to help improve supply chain reliability through increased port capacity.
These competitive grants, however, focus on capital construction: expanding or renovating port facilities. Similarly, the National Highway Freight Program is dedicated to investing in roads critical to freight movement in the United States.
Given the relatively low cost of improving digital infrastructure, it’s clear the resources are there. But U.S. funding guidelines for freight infrastructure almost entirely ignore the vital role digitalization could play in strengthening supply chains.
By neglecting to set aside funds explicitly for upgrading the digital infrastructure of its freight system, smaller investments in digitalization lose out to major capital expansion projects and the U.S. loses out on near-term gains in efficiency, resilience, and environmental quality.
Canada recognizes the importance of a modern, digitized freight network to a thriving and resilient economy. It is time for the U.S. to do the same and channel resources toward that end.
Rachel Aland is the Freight Program Manager for the Coalition for Reimagined Mobility (ReMo).