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International Trade Transportation and Logistics Public – Private Partnerships

Sometimes the goals and objectives of organizations that are fundamentally different in purpose and nature intersect. In these instances, they frequently “team up” by combining their respective resources and expertise in ways that result in a common benefit. A concrete manifestation of this notion resides in the creation of what are commonly referred to as Public – Private Partnerships, or PPPs. These arrangements and relationships can focus on issues dealing with any matter of common interest, including international trade transportation and logistics.

Public Private Partnerships, as the name suggests, bring together taxpayer-funded entities, that are duly charged with the mission of using community resources to enhance the public welfare, and private businesses which have the goal of producing and delivering value-added goods and services that meet the needs and satisfy the wants of their consumers, as well as generate profit for the businesses themselves.

In well-structured and effective PPPs, both types of participating organizations can successfully address and achieve their respective goals.

The importance of forming strong international trade transportation and logistics public – private partnerships is particularly important along the United States border with its southern neighbor, Mexico. Congestion, mainly as a result of US-Mexico commercial bridge traffic volume between the two countries at El Paso, Texas and Ciudad Juarez, Mexico has long been the source of a number of vexing problems for both business and government, as well as a general drag on economic activity in the region and beyond.

From the perspective of private business, traffic congestion on the bridges that connect the two cities that is related to international trade transportation and logistics, and the associated time delays in US-Mexico commercial crossings creates one set of problems. According to the Texas Transportation Institute, among the concerns created for private business as a consequence of this state of affairs are a need to:

• account and plan for a higher risk of inventory and production failures

• make an effort to mitigate a greater risk of product degradation

• address greater job site expenses

• deal with problems related to increased congestion at loading docks and freight staging areas

• accept lower levels of worker productivity

In short, from the view of private businesses located on both sides of the US-.Mexico border, longer commercial crossing times result in economic inefficiency and negatively impacted bottom lines.

According to the same source, an identical set of circumstances gives birth to a different set of headaches when viewed from the public sector side of the fence. Traffic congestion at the US– Mexico border bridges at El Paso, Texas and Ciudad Juarez, Mexico generates:

• increased vehicle emissions and causes a subsequent lowering of air quality;

• accelerated bridge infrastructure degradation and the need for greater and more frequent bridge maintenance;

• congestion on regional roadways at peak crossing times;

• disruptions to neighborhoods that are situated in the environs of the bridges;

• safety concerns related to stationary and slow moving hazardous cargo.

Given the common root from which have sprung a disparate set of problems affecting parties in both realms in El Paso (the public and private sectors), the City of El Paso and a private sector company, Secure Origins, Inc., came together at the beginning of October of 2012. This joint effort was given the moniker “Project 21,” to begin to tackle the difficulties associated with this set of problematic international trade transportation and logistisc circumstances. At that time, El Paso’s city government agreed to fund Secure Origins in the amount of $195,000 to run a three month pilot program aimed at using a technology-based tracking system to expedite commercial cross-border flows at El Paso and Ciudad Juarez’s most congested point of international traffic, the Zaragoza Bridge. In addition to addressing the aforementioned problems faced by both of the parties to the agreement, it was anticipated that the program would also be of benefit to the multitude federal entities that carry out their respective missions at the bridge. For instance, hastening the speed of the flow of commercial traffic at the crossing point through the use of technology would free US Customs and Border Protection (CBP) to focus their resources on facilitating and expediting the movement of the passenger vehicles that traverse the bridge.

Upon the conclusion of the three month pilot project on January 15, 2013, a review of the results revealed that the average crossing time of the vehicles that were monitored and directed using the technology that was implemented by Secure Origins had decreased from an average of 76 minutes, to an average of 23 minutes. This represented a reduction of border wait times of an average of between twenty-six and thirty-three percent for conveyances carrying freight across the international boundary. This information was gleaned from a sample size of 174 tracked trucks per day making a total of 350 shipments.

The positive implications of the results of the pilot project are palpable, given the goals of both the public and private sector participants. On the private side of the ledger, shorter bridge transit times mean that:
• Companies will be better able to control inventories and meet their clients’ production schedules

• Because goods are in transit for shorter periods of time, the risk of damage or degradation (in the case of perishables, in particular) will be diminished.

• Costs at job sites will remain stable or, even, decrease. When freight moves freely, costs of warehousing and storage are reduced.

• Stress on company infrastructure (loading docks and freight staging areas) will be alleviated, thereby slowing or eliminating the need to invest monetary resources in its expansion.

• Workers’ productivity will not be lessened as a result of delays and bottlenecks in the supply chain.

The public sector will experience gains in a number of ways, as well. Among these are:

• A reduction in the time that trucks spend idling, while waiting to cross the international boundary. This will lessen vehicular emissions, and have an overall positive impact on the region’s ambient air quality.

• An even flow of traffic will reduce the stress on bridge infrastructure and save financial resources that would otherwise be spent in maintenance and repair.

• A steady movement of international bridge crossing traffic will result in the same on regional roadways, particularly at peak transit times.

• The clearing of traffic from neighborhoods tangential to and in proximity to international bridges. This will mean an improved quality of life for residents.

• A more expeditious movement of cargo through congested and more densely populated areas.

Although the mission, goals and objectives of the City of El Paso, in the public sector, and that of a private business party to the PPP, Secure Origins, are fundamentally different, pooling resources through “Project 21″ enabled them to begin to develop practical solutions to the sets of problems that pose challenges to each entity. If planned and executed well, the end result of a public private partnership project is the creation of a self-sustaining entity that performs its function and offers its services in a competitive marketplace, thereby eradicating the need for the expenditure of taxpayer dollars.

At the end of the pilot program, Secure Origins was tracking 174 trucks per day. The owners of these vehicles paid a fee per truck to have them monitored. Paying for end-to-end visibility of supply chain shipments, as well as increasing the security and speed of commercial conveyances proved to be worth the expenditure. As a result of the benefits that local shippers have derived from the service, the number of trucks tracked by Secure Origins on a daily basis has risen to more than 300. One of the main economic benefits on the firm level has been greater efficiency in the use of capital equipment. Trucks that were limited to two deliveries per day due to border congestion are now a capable of moving cargo across the international boundaries three times over the same number of hours. From a macro-economic perspective, what started as a public-private initiative is now a purely private sector endeavor. As such, it brings benefits to the community at large, area business interests and its employees. Economic inefficiencies that have congestion and slow moving traffic over the international bridge between the United States and Mexico as their root cause, are in the process of being diminished. This reduction will enable all parties involved in this commerce to spend less money on non-productive activities and issues, and increase investment in productive ones.

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