The transportation industry has experienced significant challenges in recent years. From a global pandemic that is still affecting the supply chain, to a declining workforce and issues in funding, the industry has seen its fair share of obstacles. And with changes in technology painting a future of autonomous cars and electronic vehicles, those challenges are not expected to go away any time soon. Recently, executives in transportation met to discuss the present and future of their industry at a roundtable sponsored by City National Bank and held in Las Vegas.
Connie Brennan, publisher and CEO of Nevada Business Magazine, served as moderator for the event. These monthly roundtables bring together different industries to discuss issues and solutions.
Is transportation consumer friendly?
Kristina Swallow: As people, we walk into our garage, get into our cars and get to work and it is all right. Maybe there was a pothole there along the way, maybe not, but generally it was okay. And if there is a pothole here or there, that is not terrible, but one pothole indicates future potholes to come. It is far more expensive to replace a road that has potholes than it is to just continually pave it. People get frustrated with these projects when we are on the I-15 or on the I-80 and all we are doing is putting down new asphalt. It is way cheaper to do that on a regular basis than it is to ignore the road. Just like your car, if you don’t do the oil changes, it is a lot more expensive. And so we have to figure out, how do we make sure people understand how important [infrastructure maintenance] is? Even if they are getting to work, it still costs them. There are safety implications. If there is a pothole and you lose control of your car, does it cause a crash? One of the biggest challenges of our industry is telling the story about maintaining the infrastructure we have.
Bill Thomas: The thing about public transportation, which most people do not understand unless you are in the business, is it is not a preferred choice. We are constantly struggling with this important public transportation service that really is on demand in order for the system to be there the way people want, which is the bus to be there at a certain time every day. We live in an on-demand world [but] in the world of public transportation with fixed route busses, people have to adapt. You have to decide you are going to go there at that time [in order to get on the bus]. You have to be willing to set the time aside. Maybe it is an extra 20 minutes. We have changed our model to say public transportation is more than just the fixed route bus. We have what we call a flex ride system, where we have a geographic area that is on demand, but it is shared. You have to be collected in that area based on the schedule and then it takes you to the fixed route. Then beyond that we work together, particularly with seniors, with Uber and Lyft, to subsidize those people who can’t afford it to get into the system. So what we are doing is we are serving everybody, but everybody’s served differently based on their geographical location. The idea is to have a network of resources, but people have to adapt and that is the biggest struggle.
Is there enough funding in this industry?
Dale Daffern: We have challenges with increased inflation and some of our construction costs are going up. But we are way ahead of the curve in funding right now. We have a solid ten-year model that I think works well. But after that ten-year model we will have to find creative ways for financing.
Swallow: Our biggest challenge is maintaining and improving the existing system while growing the system to meet the rapidly changing needs of our state in a resource constrained environment. And that is a broadly defined resource constraint. Financially, we have been working on really looking at that long term sustainable funding source to fund the system that serves over 50 percent of the overall state traffic and 70 percent of all the heavy vehicle traffic.
Mike Janssen: Our biggest challenge is aging infrastructure and the concern of having a sustainable funding source to maintain and modernize that infrastructure. Because of the funding challenges we are facing, we are shifting some of our local projects to federal funds. This year, I will be bidding out one of the largest arterial overlay projects that has ever been done in southern Nevada. Previously we funded them with local dollars, but we had an opportunity through the infrastructure bill, with some additional dollars being allocated from the formula side, to do a citywide arterial overlay project. The infrastructure bill has added additional formula dollars that we can all compete for. But the real opportunity that is in the infrastructure bill is under what is known as grant projects, where the Secretary of Transportation has been putting out many grant opportunities. Those opportunities are coming down, every month, there is another one. So how do you best position yourself to get our fair share of those dollars? Well, since they are not formula, you have to competitively go after them for a grant.
Swallow: Forty percent of the [infrastructure] bill is discretionary funding so we are competing every single day. We work together, we write letters of support for every project that we can, and we work with our federal delegation. I think it is important to also note that we are all in communication with our federal delegation on a regular basis and they are going to bat for us. They really are helping us bring those dollars [to Nevada]. It is not just a team here, it is a team with our federal partners as well.
What challenges do electronic vehicles present?
Paul Enos: We move electricity on copper wire and on aluminum transmission lines. And when those things go down [possibly due to a natural disaster], you do not have power. And if you have your mobility relying on that power, that is a problem
Anand Nandakumar: Only 3 to 4 percent of the general population can afford an electronic vehicle today. Even if you are able to afford it, you have to retrofit a house with some form of charging infrastructure. If you rent a house or have a very tight HOA (homeowner’s association), you can’t do it.
Enos: There is a place for electric vehicles, but one place where we are going to have to think about the workforce is mining all those resources that we need for those electric vehicles to be feasible. It takes a tremendous amount of resources, labor and time to be able to get those minerals that we all need. In a country that is much more anti-development than it ever has been, that is going to be a tougher and tougher tax. We have things [such as] lithium, cadmium cobalt, which right now is being mined by children in Africa. I don’t think that is anything any of us want to see happen. We are trading some systems that are efficient right now and that work well [but] that have a problem of carbon output. If we look at these other systems that we are trading them for, I am not sure that we have gamed out how all this is going to work, from the grid to the resources, to the environmental impact and labor impact of getting those resources. That is a challenge that we need to think about and look at in terms of how we move forward and how fast we want to move forward with this stuff.
Swallow: I do not know what the legislature is going to do [in terms of having electric vehicles and taxes]. The recommendation is that there would be a short term means by which to do that. In theory, it could be as soon as January of next year. It could also take a little bit longer to determine the best way to implement that. There are models where it is just an annual odometer reading, and that is how you do the per mile basis. And there are much more sophisticated models like the state of Utah has and has been working on. I think it would depend on what the legislature chose, and they have to decide whether or not to enact that.
Enos: There is a way to tax electric vehicles in the same line that we tax every other kind of fuel, where every kind of fuel is taxed on a diesel gallon equivalent. Every special fuel is. Diesel being the most energy dense is the highest, and then everything kind of goes down from there.
Can Nevada expect to see autonomous vehicles in the future?
Nandakumar: There was a big survey that was done in the federal side which said the majority of Americans would not get into an autonomous car. It is primarily because of trust. We do not know how it is built. We don’t know how it is tested. We don’t know who is rolling up or who is behind it. And the worst part is they say get in the back seat [because] they are going to lock you out of the driver’s seat so you cannot grab the steering wheel. Think about how a regulator is going to struggle with that. We are trying to find a way to bridge that gap from today to fully autonomous cars in the future by having a human drive the car into it.
Enos: We have already seen autonomous trucks. Do I think we are going to see trucks without a driver? Probably not. Whenever you are moving other people’s goods and freight, you are going to want a human being there. In terms of workforce, [autonomous vehicles] may take some of the skills away that those drivers have needed in the past away. [Drivers] may not have to be as skilled as they once were to be able to pilot an 80,000-pound grid [but there is still] that safety cushion that everybody is comfortable with. That is where I see autonomous [trucks] working. Not as a replacement, but just as an enhancement for safety.
Nandakumar: [Autonomous trucks are] very interesting, not only from a technology perspective, but from a margin’s perspective. [Trucking is the business of] moving thousands of dollars of goods, with only one person in the cabin [and] replacing that does not give us big margins. It is actually the wrong way to solve the problem. Coexistence with humans and technology to make it safer and more reliable for people when they are behind the cabin is what we need to focus more on.
Is the transportation industry facing workforce challenges?
Thomas: We are having a hard time finding drivers. Without drivers, it is hard to run the transit system.
Swallow: We have personnel challenges internally and we have personnel challenges externally. Our consultants are not necessarily rolling in people either and our contractors are [also] struggling in that space.
Enos: Trying to find people that are able to pass a drug test and who really want to take responsibility to get behind the wheel of an 80,000-pound truck is definitely a challenge. We are seeing that more and more. The last three years we have had a drug clearing house, which has been a fantastic thing in terms of making sure the people that are in those trucks are not on an altered substance, [but] that has knocked out over 100,000 drivers in those three years.
How is the supply chain affecting this industry?
Swallow: Something that happens in one part of the country that maybe does not have anything to do with your daily livelihood can have far reaching impacts on long-term issues in terms of the supply chain. It depends on what got taken out six months ago. It changes and fluctuates.
Enos: When those supply chain issues are not just domestic, but worldwide, it is tremendously more challenging. We saw the issue at the ports when we did not have enough chassis to move things. There has [also] been a tire shortage. I have members who had trucks parked because of a diesel exhaust fluid poly level sensor. We had hundreds of trucks parked in Nevada because of that one little device. [The supply chain issue] is kind of all encompassing.
Janssen: We are still suffering from shutdowns of factories from the pandemic. [For example], we have completely rebuilt a section of road in the medical district, a street called Shadow Lane between Charleston and Alta, and it took our contractor nine months to rip that old road out and completely rebuild it. [But it has taken] 16 months to get an electrical switch from Nevada Energy [for] an overhead power line. Our contractor is done, but we can’t finish the project, because during the pandemic, only two factories made switch gears. One of them shut down significantly and they just have never caught up.
Enos: Diesel fuel moves 72 percent of the freight in this country. Ninety-Five percent of the freight here in the Silver State is moved by truck and 97 percent of those trucks run on diesel. That is an issue. We have seen chip and diesel exhaust fluid [shortages] in other countries and we have had rumors of it here, which results in people going out and buying more than they need and creating that artificial shortage. A lot of it, ultimately, is about labor. When you do not have the labor to produce those things, that is where it starts, and all cascades down. That is part of that choke point throughout the entire supply chain that we see.
What are some major projects in transportation right now?
Sarah Watterson: We are going to have a [high-speed rail] system all the way from our station in Las Vegas, where we bought 110 acres of land on Warm Springs, Las Vegas Boulevard and I-15, and the system is going to run almost entirely in the median of I-15 to a station in Rancho Cucamonga, about a mile away from the Ontario Airport at the Ranch Cucamonga Metrolink station. Our system will therefore allow passengers, in about 2 hours, to get from Rancho Cucamonga to Las Vegas and in about 3 hours to get from downtown Los Angeles to Las Vegas through a partnership we have with Metrolink.
Janssen: [One project we have coming up is at] the last major intersection on the Strip that does not have pedestrian bridges. Everyone that has been in town a while knows that the Strip would not function if it was not for pedestrian bridges. We have a very cool pedestrian bridge that is going to be going through the Sahara and Las Vegas Boulevard intersection and it is going to be a little bit different than how it was handled at all the others. It will be a circular pedestrian bridge where all of the other intersections are four separate bridges. Ours is going to be a single circular [bridge]. I believe it will be a lot more efficient and provide a really cool gateway as you are coming in and out of downtown.
Daffern: Our APEX water line [is one of our larger projects]. We are going to be delivering water over to the next valley over the Garnet Valley. We have partnered with Southern Nevada Water Authority (SNWA) and a couple private developers to put the water line over there. We have about $70 million invested right now and probably have another $50 or $60 million to go. SNWA is going to return the effluent water back over the hill to the valley so we get a return flow credit, so we do not lose any water credits with the Colorado River Commission.
