One month before the National Black Chamber of Commerce opened its 17th annual convention in Washington, D.C., Harry C. Alford, the chamber’s co-founder, president and CEO, sent out an eBlast in which he promised a “scrubbing” of the Department of Transportation’s disadvantaged business enterprise program during the three days of the convention.
“We will show you how to analyze your local airports and evaluate their compliance with contracting and concessions, weeding out front companies, plus monitoring those entities benefiting from federal airports such as hotels, restaurants, etc.,” declared the electronic alert, which was sent to a list that included The Network Journal. “You will learn how to track the transportation contracting dollars coming to your applicable state, county and city … With the [chamber’s] National Office pressuring from the top-down and you pressuring from the bottom-up, billions of new dollars and opportunities should start to flow at last. If local governments can’t or won’t do it, the NBCC will.”
A multibillion-dollar industry
Transportation of people and freight, encompassing road, rail, air and maritime networks built, maintained and overseen by federal, state and local governments; the privately owned carriers and networks; and companies that provide the range of goods and services required by those systems, is a multibillion-dollar industry. The freight sector is expected to grow as domestic and international trade increase. Similarly, the passenger sector is expected to grow as more people travel for work, school and recreation. “It’s big and it affects all our communities,” Alford said in a telephone interview with TNJ from the chamber’s Washington, D.C., headquarters.
According to the Bureau of Transportation Statistics’ 2007 annual report, its most current, U.S. households spent $8,344, on average, on transportation in 2005, second only to spending on housing. Transportation-related demand (a broad measure that includes consumer and government purchases of goods and services ranging from
vehicles, fuels, and insurance to road building and public transportation) accounted for more than 10.3 percent of U.S. gross domestic product in 2005, the bureau says.
Opportunities for Blacks abound in both sectors, but those opportunities do not come without challenges. For example, the federal government’s budget for the upkeep of the nation’s transportation infrastructure, which includes airports, seaports, highways, bridges, tunnels, railroads and transit systems, amounts to some $80 billion a year, but far too little of that reaches so-called disadvantaged business enterprises by way of goods-and-services supply contracts, Alford says.
“We’ve been following this since the 1990s and little compliance is done in terms of what DOT can be doing with disadvantaged businesses, especially African-American businesses. A lot of games are played,” he says. “Federal Express should be [made to comply with] the DBE program, so should UPS. The program is not being monitored that well.”
With the Obama administration investing $48 billion under the American Recovery and Reinvestment Act to fix roads, strengthen bridges, re-pave airport runways and upgrade seaports, monitoring the flow of contract
dollars becomes even more imperative. Addressing the DOT-Commerce Department Supply Chain Infrastructure Conference in Washington, D.C., in May, Transportation Secretary Ray LaHood said nearly all of the DOT’s Recovery Act funds already had been made available to the states and territories. “More than 2,800 projects are under way and there’s much more to come,” he said. “We’re serious about finding new ways to engage all the critical supply chain players in a concerted effort to find out what works, how to fund it, and then implement as soon as possible.”
Those were antenna-raising words for the National Black Chamber of Commerce. “During July 22 through 24, we will be scrubbing the DBE program of the U.S. Department of Transportation,” Alford promised in his eBlast.
According to the U.S. Census Bureau’s most current figures, there are 1,197,661 Black-owned businesses in the United States, 10 percent of them in transportation. On the consumer side, The Selig Center for Economic Growth at the University of Georgia’s Terry College of Business reports that Blacks spend on average 17.7 percent of their total expenditures on transportation, most of it on vehicle purchases. The buying power of Blacks in the United States totaled $913 billion in 2008 and is projected to top $1.2 trillion by 2013.
Blacks have been engaged in passenger transportation service since the mid-19th century when they were employed porters to serve railroad passengers traveling first class in the new, luxurious Pullman sleeping cars. Black ownership in the passenger sector, however, is more recent and is most pronounced in such areas as limousine service, tour buses, taxicabs, “dollar” cabs that ply city-bus routes, transporting children to and from school and hearses.
“Passenger transportation is often a highly regulated industry at both federal and local levels, requiring high financial outlays, as is the case in purchasing a medallion to operate a taxicab in New York, and insurance costs,” says an industry expert who declined to be identified by name. “Access to political insiders and to cash has been a hurdle for Blacks in terms of expanding into ownership of fleets.”
Blacks have begun to move into such high-opportunity areas as ambulette services, employee transportation, airline charters and even jet and helicopter charters for corporate executives.
On a typical day, some 50 million tons of goods move throughout the United States via an interconnected network of highways, railroads, seaports and aviation according to the Bureau of Transportation Statistics. Truck is the dominant mode for transporting U.S.-North American freight, followed by rail, maritime and air. Shippers are gradually moving from overnight air shipping to rely more on trucking, which is cheaper. Shippers are changing buying patterns and shifting from overnight to two- to three-day delivery. Small air freighters are falling from favor because those airplanes can be easily replaced by trucks, which cost one-tenth of the price of air shipping, according to MergeGlobal Inc., a research firm that tracks the transportation industry.
Black independent truckers, from panel trucks to big rigs, have had modest success without growing into large fleets. Some suspect that the reason for the lack of expansion into fleets has to do with the highly competitive nature of the industry and the fact that fleet operators, especially those operating interstate, come under strict scrutiny and regulatory pressure.
Courier service is one area in which Blacks have operated for a long time. However, Black enterprises came under severe pressure with the advent of the fax machine and those that survived had to pretty much reinvent themselves to do so. Among the survivors is Corporate Courier Inc., established in 1983 and still serving a clientele of Fortune 500 companies, as well as small and mid-size companies. Based in New York City, it uses foot messengers, bikers, vans and trucks to cover several states in addition to New York, including Connecticut, Massachusetts, New Jersey, Pennsylvania and Vermont. Its online presence, at www.corporate-courier-messenger.com, offers a rate menu and tracking, part of its reinvention to compete in the electronic era.
The company attributes its longevity to clients like Con Edison, McGraw Hill and Met Life, which have stuck with
it because of its on-time service and support.
With the possibility of expanding into full-fledged airline companies, freight forwarding stands out as a bright light as ethnic communities and global trade within these communities grow. Miami-based Laparkan Inc., a success story in this arena, offers air and ocean services to move goods and personal effects to and from the Caribbean.
Logistics management is another growing field in the movement of passengers and freight, presenting opportunities for the future as technology and the need for cost and time reduction become more critical.
Maintenance of vehicles, or rolling stock, is an often overlooked profit center within transportation. “There is a tendency to run the equipment into the ground trying to make money while ignoring the value of preventive maintenance and proper management,” says the industry expert who did not want to be identified. “In the final analysis, safe and efficient delivery of passengers and goods depend on the quality of your equipment. Black entrepreneurs should not overlook this continuing growth area.”