West Deserves Better Logistics Infrastructure

By Frank-Jürgen Richter

Nikkei Asian Review, May 1, 2014

All roads lead to Rome, the expression goes. Of course, that depends where you are. When the Roman Empire was at its height, it had a web of roads radiating from its seat of power, Rome. The empire had conquered many surrounding territories and had left garrisons in those places to maintain control. These armies needed troop turnaround, weapons renewal and food. Today we would call this material logistics. This was made possible by well-built roads allowing an army to travel up to 30km a day; horse riders even moreso.

This advantage of good roads could be seen farther east as well. China had its silk roads from about 200 B.C. India had great roads serving its provinces. Still earlier, roads are evident in the Indus Valley from 4000 B.C. It seems that all great leaders in history understand the value of logistics, and that all their roads must lead to their capitals.

Many of these roads fell into disarray as the kingdoms and empires they served waned. Rising use of sea trade also made many roads less needed. Canals, too, became new inland roads in their own right. And in the early 1800s came the railways, which rapidly covered the globe. By 1860, India had 25,000km of track. The U.S. was connected from the Atlantic to the Pacific by 1869. The Trans-Siberian Railway was ready by 1905 — the trans-Australian by 1917.

Grand road networks were not redeveloped or broadly integrated again until the mid-1950s, notably when the U.S. launched its interstate highway system, which by 2012 comprised 77,000km, second only to modern China. Europe holistically embraced a communications infrastructure policy only in the 1990s to link road, rail, short-sea shipping and telecommunications.

Ancient Rome’s logistics systems helped trade, as free passage was made possible by having everything inside a single empire. This empire had a common taxation policy and army to guard trade routes. It was much the same for China back then, a point not lost on Genghis Khan a millennium later as he used many of the extant roads to quickly conquer the plains of Asia, from the Black Sea to the Pacific.

Much later, national leaders were fearful of allowing roads to pass freely from country to country. Differing railway gauges were even used to prevent neighbors from easily moving armies. Today, this decision of more than a century ago continues to be a headache for trade between Europe and Asia. Which crumbles first?

Roads in modern America, Europe and Asia, especially China, carry the bulk of the logistics load simply because trucks are the go-to transport from port to most places beyond — especially where rail does not reach. China now has almost 100,000km of roads and 100,000km of rail.

As people become more affluent, they progress through owning bicycles, to scooters and then to cars. They use these machines to carry goods and themselves, increasing their trading range. This in turn clogs city roads. It is no wonder politicians tend to push for urban mass transport systems in some vein hope of turning back the clock to the cleanliness and openness of what the capitals used to feel like.

All roads lead to the capitals, and that has been the undoing of all big cities — their very success creates more use of roads, which creates overwhelming congestion in the central city.

China has the only example of extensive transport growth happening right now. Many think tanks suggest there is a global trillion-dollar gap between current spending on communications infrastructure and what is needed to really make the systems work for the future. But economies in the West continue to sputter, and we might just find, like the Romans, that our modern systems will start to crumble and trade will suffer.

Dictating the future
A policy of putting off infrastructure upkeep is unwise, and it looks like China will become even more dominant as it pumps money into its development. It will be able to harness its human and material resources ever-more efficiently and then ship this outputs via its huge modern ports to sell to (lesser-developed) Western nations.

Somehow the financial short-termism in the West needs a rethink and more cash needs to be put in long-term projects. From these, a good revenue stream will result as the West better uses its roads, rail and waterways to maintain material health. Longer term risk-assessing needs to become more fashionable — it has in China, but it has a strongly centralized government. Surely democracies ought to be able to realize the benefits of new communications systems without the decision being left to those who protest seeing it in their backyards.

Frank-Jürgen Richter is founder and chairman of Horasis, a think tank.