German infrastructure skids into crisis on Merkel's autobahn

[FRANKFURT] In Langsdorf, a tiny 200-person village about 25 miles from Germany's Baltic coast, the only thing separating residents from the local tavern Zur Kastanie is a narrow strip of pavement. The normally sleepy main street is now clogged with about 10,000 cars and trucks a day, making a quick visit for a mug of beer and a plate of smoked pork all but impossible.

"The noise and the stench of traffic are the biggest hardships for us," Mayor Hartmut Kolschewski said standing alongside the cause of the problem: a stretch of the nearby A20 Autobahn that crumbled last year.

The latest reminder of the risks of aging infrastructure came Tuesday, when a highway bridge in Italy collapsed, killing at least 35 people. Germany is also exposed.

Its once-envied network of roads, bridges and railways are decaying due to decades of underspending. The country has fallen to 15th in road quality behind Oman and Portugal, according to the World Economic Forum's competitiveness rankings.

Snaking through the verdant flat lands of northeastern Germany, the A20 runs through Chancellor Angela Merkel's election district. She opened the key artery for the former communist region at a ceremony not far from the Zur Kastanie in December 2005, less than a month after she was first sworn in as the country's leader. But 12 years later, the four-lane highway caved in after the foundations gave way in the marshy landscape, marking the clearest sign of a growing infrastructure crisis.

In addition to the risk to human life, Germany's economy is dependent on well-functioning transport networks to deliver goods. Traffic jams caused more than 60 billion euros (S$93.9 billion) in damage to the country's economy last year from wasted working time and delivery delays, according to Michael Schreckenberg, a traffic researcher at the University of Duisburg-Essen.

Catching up will be costly. The overall investment gap for German municipalities, which doesn't include national and regional projects, amounted to 159 billion euros in 2017, according to a study by state-owned investment bank KfW. Traffic infrastructure accounted for roughly a fourth of that amount.

With about 11 per cent of German highway bridges in unsatisfactory condition, according to the Transport Ministry, Merkel's government has woken up to the neglect after reigning in spending in the wake of Europe's debt crisis. The coalition agreement earlier this year calls for record-level investment in infrastructure as well as 2.4 billion euros for patchy digital connectivity.

"We aren't closing our eyes to reality," Svenja Friedrich, a spokeswoman for the Transport Ministry, told reporters Wednesday in Berlin. To avoid an incident like in Genoa, inspectors need to report on highway conditions every six months, she said, adding: "Bridge modernization is a big issue in the federal budget. We're spending billions."

In addition to throwing money at the problem, authorities aim to speed up planning and approval procedures. Critics aren't satisfied though.

"There's still much too little happening when it comes to investments in Germany's traffic facilities," said Marcel Fratzscher, head of the Berlin-based DIW economic institute, pointing to Germany's investment backlog of 11.3 billion euros since 2013 as money spent by the government fails to keep pace with wear and tear.

Going Nowhere

Problems with Germany's aging infrastructure have increased in recent years: Because of structural issues, heavy vehicles were barred from using a highway bridge over the Rhine river between Leverkusen and Cologne in 2016, forcing thousands of trucks to re-route.

Frustration with choppy streets has spurred unusual action this summer: an artist in Moenchengladbach turned a pothole into a tiny goldfish pond and residents in Offenbach introduced pothole minigolf Berlin's high-profile new airport is more than six years late and costs have doubled to about US$6 billion due to planning failures. A controversial new rail station in Stuttgart is on track to be four years late and US$4 billion over budget.

While Germany's old-school infrastructure slowly decays, networks necessary for the evolving data economy are falling behind as well. In mobile-phone penetration, the country ranks 76th behind Algeria, Mali and Sri Lanka, according to the World Economic Forum.

Wireless dead zones are such a persistent problem that Transport Minister Andreas Scheuer plans to roll out an app by the end of the year so people can report reception failures. At a summit this summer with network operators Deutsche Telekom, Vodafone Group and Telefonica, Mr Scheuer also offered to reduce fees for new 5G licenses by one billion euros in return for expanding coverage of current networks.

"Data are the most important resource nowadays," said Bernhard Lorentz, a partner at consulting firm EY in Berlin. "If Germany wants to play a role here, it has to invest a lot more."

Langsdorf is effectively at the epicentre of Germany's infrastructure breakdown. Mayor Kolschewski often has to wander into his garden to pick up a mobile-phone signal. Meanwhile, traffic rumbles through town amid work on the damaged one-kilometre stretch.

"The repairs are fairly loud, but this is like music to us villagers," said the 64-year-old retired teacher, pointing to a bridge head where Ms Merkel opened the highway. The reopening isn't scheduled before 2021.

BLOOMBERG