Transportation, Supply Chain & Logistics Industry Market Research

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Transportation is one of the world’s largest industries.  Its sectors range from taxis to trucks, airplanes, trains, courier services, ships, barges, warehouses and logistics services.  To a growing extent, it now also includes the use of robotics and artificial intelligence in terms of self-driving cars and trucks, and eventually may include a significant level of robotic delivery vehicles.  Robotics are already providing a high level of automation in ports and warehouses, while artificial intelligence is being applied widely to the supply chain.

In total, during 2016, core transportation revenues in the U.S. were an estimated $1,058.0 billion, according to Plunkett Research estimates.  Worldwide, these revenues were an estimated $4.7 trillion.  This includes air, rail, water, pipeline, courier and warehousing segments.

At about 6% of global economic activity (GDP), transportation’s core sectors add up to a remarkably efficient industry, considering the fact that transportation is a vital service to nearly every other sector of the economy.  In fact, thanks to increasing use of advanced information systems and such strategies as 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.

Over recent years, globalization placed intense new demands on the transportation and supply chain sector.  FedEx, for example, provides a wide variety of freight and package delivery services in about 220 nations worldwide. 

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 a massive system of state-of-the-art highways surrounding the nation’s largest cities, in addition to a vast system of new high speed railroads and hundreds of new airports.  India, likewise one of the world’s most populous nations, is woefully behind in transportation infrastructure, especially highways, but it has hopes to dramatically boost construction in this regard, with some funding to come from partnerships between public and private entities.  Other developing nations, including Brazil, need to place more focus on infrastructure development as well, including ports and airports, or risk seeing their economic growth derailed.  Brazil took steps in 2012 to improve its aging major airports by selling a majority stake in three of them (in Sao Paulo, Campinas and Brasilia) to private operators who promised massive investments to modernize them in time for Brazil’s 2016 Summer Olympic Games.  The growth in Brazil’s transportation needs has been typical of that in other rapidly emerging nations.  Brazil’s air traffic rose by 118% from between 2003 and 2010, nearly three times the global average.

Business and technology trends have driven immense changes in the transportation sector over the past three decades.  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.

Mobile apps are also bringing transportation request and management directly to the smartphone.  For example, Uber famously enables individual passengers in many nations around the world to request transportation, tailored to their specific needs, to be delivered rapidly.  This business model is spilling over into services for local and long distance trucking.  The Uberization of the trucking industry will have profound effects.

Next, the rapid adoption of outsourcing has led many companies to turn to logistics services providers for all manner of shipping support, including warehousing, scheduling and distribution services.  In many cases, outsourced supply chain services provide just-in-time delivery of vital manufacturing components or replacement parts, eliminating the need for costly on-site warehouses filled with expensive inventory.  (These services are sometimes described broadly as “3PL” for Third Party Logistics.)  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. 

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.  Airlines have placed immense orders for fuel-efficient jets like Boeing’s new 787, which provides fuel efficiency gains of about 20% per passenger mile, as well as engines that are quieter and burn fuel in a cleaner manner.  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. 

Additional developments in transportation include the use of natural gas or electricity to fuel public transportation, as well as the development of energy-efficient light rail.  Natural gas is also slowly becoming a viable fuel alternative for large trucks.

Meanwhile, consumers and government transportation agencies worldwide have a renewed interest in light rail, high speed trains and other forms of rapid transit.  Trains in many parts of the world are enjoying booming times, particularly in China, as well as parts of Africa and Europe.  Ridership of public transit is rising in many cities due to several factors, including traffic congestion and costs of private car ownership, as well as the launch of recent light rail (such as the system in Denver, Colorado) and subway systems (such as new projects in New Delhi and Mumbai, India).  Nonetheless, when gasoline prices are especially low due to market conditions, car owners are much more likely to increase their usage of their own vehicles.

Another massive change is the growing interest of governments in outsourcing their transportation infrastructure to private operators and private ownership, often in public-private partnerships.  Governments are short of cash.  In some cases, they are selling or leasing toll bridges and highways to private operators, reaping cash windfalls in the process.  Elsewhere, governments are outsourcing their long-term highway development needs to private operators who build new toll roads, relieving governments of the investment burden while potentially creating large profits for the private operators.  The results from this trend are mixed, as there is sometimes consumer resistance to paying relatively high tolls for highway use.  For example, the SH 130 Concession Co., the private owner-operator of a major toll highway near Austin, Texas, filed for bankruptcy in 2016 due to disappointing toll revenues.  The Trump administration has indicated a high level of interest in utilizing public-private partnerships to upgrade America’s transportation infrastructure.