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Introduction to the Transportation, Supply Chain & Logistics Industry, Business and Industry Trends Analysis

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/supply chain services.  To a growing extent, it now 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 also being applied widely to the supply chain.  In 2022, Plunkett Research estimated global transportation sector revenues of $5.4 trillion.
The Coronavirus pandemic had a significant effect on the entire transportation and supply chain sector worldwide.  Among the hardest hit sectors was the airline industry, due to plummeting passenger ticket sales.  Logistics, supply chain, shipping and railroads have been affected in varying ways, depending on which of their customers you are considering.  Ecommerce has been booming, as online firms like Amazon became the preferred places for many consumers to shop.  This means that local delivery services, ecommerce warehouses and many other types of transportation services that support ecommerce are booming.
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 has been high.
Over recent years, globalization and international trade 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 virtually every nation in the world. 
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. 
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, 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 hoped 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 highways, ports and airports.  For example, it’s difficult and inefficient for farmers in such nations to get their produce to market without good highways, as well as refrigerated trucks and warehouses.  It is also difficult for manufacturing to prosper if ports, warehouses and highways are inadequate.
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 bookings and management directly to the smartphone.  For example, Uber and Didi famously enable individual passengers in 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, and is now in early stages, with many well-funded firms launching on-demand freight services.  Long-haul trucks that are partly self-driving will eventually revolutionize this segment.
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.
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.  Sea-going 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, such as buses, as well as the development of energy-efficient light rail. 
Meanwhile, consumers and government transportation agencies worldwide have a renewed interest in light rail, high speed trains and other forms of rapid transit.  Elon Musk’s “Boring Company” is attempting to revolutionize the construction of tunnels for roadways and railways. Trains in many parts of the world are enjoying booming times, particularly in China, as well as parts of Africa and Europe.  Over the long term, public transit ridership may get a boost in major 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).  The largest, most congested cities are experimenting with new types of fees for cars and trucks on the most highly traveled, inner city roads.  This practice, sometimes referred to as “congestion pricing” has already been tried in London.  The point is to reduce vehicle traffic while raising funds for public transit or road maintenance.
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.

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