Transportation is one of the world’s largest industries. Its sectors range from taxis to trucks to airplanes, trains, courier services, ships, barges, pipelines, warehouses and logistics services.

In total, during 2010, the U.S. transportation industry (in both for-hire and not-for-hire sectors, including support and repair) had revenues of about $1.75 trillion. At a bit more than 10% of America’s economic activity, transportation is remarkably efficient, considering the fact that it is a vital service to every other sector of the economy. In fact, thanks to increasing use of advanced information systems and such strategies as the use of intermodal containers (sending freight via containers that are easily transferred from ship to rail car to truck as needed, without repacking), the transportation industry’s productivity is excellent.

In the U.S., employment in the transportation and warehousing sector totaled 4.183 million people in 2010. To put the size and scope of the industry in perspective, this vast pool of workers helped to facilitate, among other things, 635 million domestic airline passengers, $180.7 billion worth of truck transport and $1.277 trillion in U.S. exports.

The 2011-12 period looks promising for transportation on a worldwide basis, in terms of demand. However, soaring oil rates as of March 2011 may put a damper on profits as fuel costs are rising dramatically thanks largely to turmoil in the Middle East. If fuel costs remain especially high, then demand for transport may slow. Globally, the transportation sector had been under extreme pressure since mid-2007. At first, it was pummeled by rising fuel costs. Then, the global recession slashed traffic of all types, including airline passengers and ship cargo. The decline in business was felt by all types of firms within this sector, from freight brokers to railroads.

The global financial crisis created several distinct problems for the transportation industry. For example, in early March 2009, the number of massive container ships sitting idle globally was estimated at an all-time high of 453 vessels.

However, the global transportation sector rebounded sharply in 2010. High load factors were enjoyed by passenger airlines, marine shipping firms and courier companies. Global trade in goods has a direct effect on transportation, and by the beginning of 2011, trade had rebounded to pre-recession levels. However, this bounce back in business has been felt most in fast-growing, emerging nations like Brazil and China, and to a lesser extent in the U.S. and European Union.

Financial results at global shipping giants FedEx and UPS are good indicators of the health of transportation revenues in general. For its second fiscal quarter, which ended November 30, 2010, FedEx reported revenue growth of 12% from the same period of the previous year. While FedEx’s priority package shipments increased 11% by volume, led by exports from Asia, the same category of shipments were up only 3% in the U.S.

Over recent years, globalization placed intense new demands on the transportation and supply chain sector. For example, United Parcel Service (UPS) offers delivery to more than 200 nations worldwide (including every nation in the world where the firm is not barred from doing business due to U.S. government embargoes), and international revenues have been key to its growth. UPS’ total revenues soared 9.4% during 2010 to $49.5 billion. Revenues from international package shipments were up 14.8%, while U.S. shipment revenues were up only 5.6%. Meanwhile, the firm’s increasingly important supply chain and freight division saw revenues soar 16.5% to $8.6 billion.

Transportation continues to evolve, no matter whether the type of transport involved is on the road, on the sea or in the air. For example, China had only about 200 kilometers of expressways in 1989. Today, it has more than 50,000 kilometers of expressways, second in terms of length only to America’s famous Interstate Highway system (roughly 47,000 miles or 75,600 kilometers). India, the world’s second most populous nation, is woefully behind in transportation infrastructure, especially highways, but has hopes to dramatically boost construction in this regard, with some funding to come from public-private partnerships. Other emerging nations including Brazil must focus on infrastructure development as well, including ports and airports, or risk seeing their currently brisk economic growth derailed.

The information age, with its introduction of sophisticated databases that can track inventory levels and shipments on a global basis via the Internet, has created vast transport and logistics efficiencies. As a result, supply chain technology has been one of the fastest-growing segments in the information field.

Next, the rapid adoption of outsourcing has led many companies, when shipping is vital to their businesses, to turn to logistics services providers for all manner of shipping support, including warehousing, scheduling and distribution services. The sectors of transport, supply chain management and logistics services are permanently intertwined, creating efficiencies once undreamed of in the transportation arena.

All nations worldwide face a daunting task in maintaining airports, seaports, highways and railroads that can handle commerce and passenger traffic efficiently. The amount of government funds available for roadway development is never enough to keep up with long-term needs. For example, researchers at Texas A&M University’s Texas Transportation Institute estimate that traffic delays cost the U.S. economy $115 billion in 2009 alone, thanks to 4.8 billion man-hours lost to frustrating traffic slowdowns.

One of the biggest challenges facing the global transportation sector over the mid- to long-term is a focus on lowering carbon emissions and enhancing energy efficiency. (In the U.S., the transportation sector is estimated to create 32% of all carbon dioxide emissions.) Airlines have placed large orders for fuel-efficient jets like Boeing’s new 787, promising efficiency gains of 15% to 20% per passenger mile. Container ship operators are under intense pressure to reduce contamination and emissions while in port and at sea, and the latest designs, such as Maersk’s massive new Triple-E class of ships, are making huge strides in this regard. Automobile and truck manufacturers are struggling to respond to demand for fuel-efficient vehicles. (Over the long term, many new cars will be at least partially electric drive.)
View More