How Does Traffic Congestion Affect Your Supply Chain?

We've all dealt with traffic tie-ups in our personal lives particularly those of us who live here, in California! But, have you ever considered how much traffic congestion may be affecting the operational costs, supply chain efficiency and overall productivity of your company?

The Associated General Contractors of America polled nearly 1,200 construction firms in late April and May to take a close look at that question, and the data uncovered may surprise you.

For example, the survey found that:

A whopping 93 percent of the firms polled report that traffic and congestion are affecting their operations.

Nearly twothirds of firms lose at least one day of productivity per worker per year due to traffic congestion and that equates to 3.7 million days of lost productivity industrywide each year.

Threequarters of contractors say congestion adds more than one percent to their total costs, and one in ten report that traffic adds eleven percent or more to their cost of doing business.

All told, the survey revealed that traffic congestion and the delays it causes are costing the nation's construction firms an estimated $23 billion each year.

Officials from the Associated General Contractors of America feel that action from the Obama administration and Congress could go a long way to improving traffic problems on the nation's highways. As it stands now, Congress is months late in passing sixyear federal transportation legislation, and the industry is starting to feel the effects of the delay.

According to the survey, twothirds of transportation contractors report states are issuing an average of 17 fewer bid lettings this year worth 30 percent less than last yearbecause of the lack of the transportation bill. As a result, 60 percent of those firms report they are buying an average of $2.95 million less in equipment this year, 70 percent of firms are making an average of 26 percent less in revenue, and 63 percent of transportation construction firms report they are hiring an average of 77 fewer workers this year.

"Traffic tie ups nationwide are sapping productivity, delaying construction projects and raising costs for construction firms of all types," says Stephen E. Sandherr, the association's chief executive officer. "Given the hardships they are facing, the last thing contractors need is to burn time, fuel and money stuck in traffic."

More of Sandherr's remarks are available here.

TAGS: Finance
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