Which of the following is a distribution channel activity in global transportation?
Author: Dr. Jean-Paul Rodrigue
1. A Diversity of Modes
Transport modes are designed to either carry passengers or freight, but most modes can carry a combination of both. For instance, an automobile has the capacity to carry some freight, while a passenger plane has a bellyhold that is used for luggage and cargo. Each mode is characterized by technical, operational, and commercial characteristics defining its market opportunities. Technical characteristics relate to attributes such as speed, capacity, and motive technology, while operational characteristics involve the context in which modes operated, including speed limits, safety conditions, or operating hours. The demand for transport and the ownership of modes are dominant commercial characteristics, as transportation modes are used to support economic activities and generate income.
Main Passenger Modal Options
Main Freight Modal Options
Performance Comparison for Selected Freight Modes
Atomization versus Massification in Transportation Modes
a. Road transportation
Road infrastructures are large consumers of space with the lowest level of physical constraints among transportation modes. However, physiographical constraints are significant in road construction, with substantial additional costs to overcome features such as rivers or rugged terrain. While historically, road transportation was developed to support non-motorized forms of transportation (walking, domestic animals, and cycling at the end of the 19th century), it is motorization that has shaped most of its development since the beginning of the 20th century, particularly with the setting of national highway systems.
Road transportation has average operational flexibility as vehicles can serve several purposes but can rarely operate outside roads. Road transport systems have low barriers of entry, but high maintenance costs, both for the vehicles and infrastructures, which are related to low life spans of less than 10 years for a vehicle. They are mainly linked to light industries and freight distribution, where rapid freight movements in small loads are the norm. With containerization, road transportation has become a crucial link in freight distribution between ports and commercial hinterlands.
b. Rail transportation and pipelines
Railways are composed of a traced path for a right of way on which wheeled vehicles are bound. Rail transportation also includes monorails and maglev, which are more recent developments of guided rail technology. They have an average level of physical constraints, and a low gradient is required, particularly for freight. Heavy industries are traditionally linked with rail transport systems, although containerization has improved the flexibility of rail transportation through its connectivity with road and maritime modes. Rail is the land transportation mode offering the highest capacity, with a 23,000 tons fully loaded coal unit train being the heaviest load ever carried. Gauges, however, vary around the world, often challenging the integration of rail systems.
Pipeline routes are practically unlimited as they can be laid on land or underwater. They aim to move liquids such as petroleum products over long distances cost-effectively. The longest gas pipeline links Alberta to Sarnia (Canada), which is 2,911 km in length. The longest oil pipeline is the Transiberian, extending over 9,344 km from the Russian arctic oilfields in eastern Siberia to Western Europe. Physical constraints are low and include the landscape and pergelisol in arctic environments. Pipeline construction costs vary according to the diameter and increase proportionally with the distance and with the viscosity of fluids (from low viscosity gas to high viscosity oil). The Trans Alaskan pipeline, which is 1,300 km long, was built under challenging conditions and had to be above ground for most of its path. Pipeline terminals are essential since they correspond to refineries and harbors.
World Main Road Network
World Rail Network and Rail Systems
Major Gauges of the Global Rail Systems
Major Oil Pipelines
c. Maritime transportation
With physical properties such as buoyancy and limited friction, maritime transportation is the most effective mode of moving large quantities of cargo over long distances. Main maritime routes are composed of oceans, coasts, seas, lakes, rivers, and channels. However, due to the location of economic activities, maritime circulation takes place in specific parts of the maritime space, particularly over the North Atlantic and the North Pacific. The construction of channels, locks, and dredging are attempting to facilitate maritime circulation by reducing its discontinuity, but such endeavors are highly expensive. Comprehensive inland waterway systems include Western Europe, the Volga / Don system, the St. Lawrence / Great Lakes system, the Mississippi and its tributaries, the Amazon, the Panama / Paraguay, and the interior of China.
Maritime transportation has high terminal costs since port infrastructures are among the most expensive to build, maintain, and operate. These high costs also relate to maritime shipping, where the construction, operation, and maintenance of ships are capital-intensive. More than any other mode, maritime transportation is linked to heavy industries, such as steel and petrochemical facilities adjacent to port sites. Yet, with containerization, maritime shipping has become the linchpin of globalization, allowing the trading of a wide range of goods and commodities.
d. Air transportation
The core advantage of air transportation is speed and flexibility in network configuration. Air routes are practically unlimited, but they are denser over the North Atlantic, inside North America and Europe, and over the North Pacific. Even if planes can have a long range, the majority of services link city pairs less than 2 hours apart. Air transport constraints are multidimensional and include the site (a commercial plane needs about 3,300 meters of runway for landing and take-off), the climate, fog, and wind currents. Air activities are linked to the tertiary and quaternary sectors, notably finance and tourism, which lean on the long-distance mobility of people. More recently, air transportation has been accommodating growing quantities of high-value freight and is playing an increasing role in global logistics.
e. Intermodal transportation
Intermodalism concerns a variety of modes used in combination so that the respective advantages of each mode are advantaged. Although intermodal transportation applies to passenger movements, such as using the different, interconnected modes of a public transit system, it is over freight transportation that the most significant impacts of intermodalism have been observed. Containerization has been a powerful vector of intermodal integration, enabling maritime and land transportation systems to interconnect.
Telecommunication systems are paradoxical in terms of if they can be considered as a transport mode since telecommunications often do not have an apparent physicality. This physicality is real since they are structured as high-capacity networks with low constraints, which may include the physiography and oceanic masses crossed by fiber optic cables. They provide for the instantaneous movement of information (speed of light). Wave transmissions, because of their limited coverage, often require substations, such as for cellular phone and data networks where WiFi connections are of even more limited range. Satellites are often using a geostationary orbit, which is getting crowded.
High network costs and low distribution costs characterize many telecommunication networks, which are linked to the tertiary and quaternary sectors (stock markets, business to business information networks, etc.). Telecommunications can provide a substitution for personal mobility in some economic sectors, but the major impact is related to e-commerce, which has opened a whole range of commercial opportunities. More recently,
Domains of Maritime Circulation
Major Air Traffic Flows Between Regions, 2010
Global Submarine Cable Network
Each transportation mode has key operational and commercial advantages and properties. However, contemporary demand is influenced by integrated transportation systems that require flexibility in the respective use of each mode. As a result, modal competition exists to various degrees and takes several dimensions. Modes can compete or complement one another in terms of cost, speed, accessibility, frequency, safety, comfort, etc. There are three main conditions that ensure that some modes complement one another:
Thus, there is modal competition when there is an overlap in geography, transport markets, and level of service. Cost is one of the most important considerations in modal choice. Because each mode has its price/performance profile, competition between the modes depends primarily upon the distance traveled, the quantities shipped, and their value. While maritime transport might offer the lowest variable costs, road transport tends to be most competitive over short distances and for small bundles of goods. A critical factor is the terminal cost structure for each mode, where the costs (and delays) of loading and unloading a unit impose fixed costs that are incurred independent of the distance traveled.
Relative Efficiencies of Rail and Trucking in the United States
Modal Competition and Complementarity
Distance, Modal Choice and Transport Cost
Distribution of Freight Demand by Mode
Average Length of Haul, Domestic Passenger and Freight Transport, United States
Freight Transport Revenue per Ton-Mile
With increasing income levels, the propensity for people to travel rises. At the same time, international trade in manufactured goods and parts has increased. These trends in travel demand act differently upon modes. Those that offer faster and more reliable services gain over modes that might provide a lower cost but slower, alternative. For passenger services, rail is challenged by road transport competition over short distances and aircraft for longer trips. For freight, rail and shipping have been impacted by competition from road and air modes. While shipping, pipelines, and rail still perform well for bulk shipments, competition has seen road and air modes capture an important market share of the high revenue-generating goods over the last decades. Road transportation continues to dominate the passenger and freight transportation markets.
Although intermodal transportation has opened many opportunities for complementarity between modes, transport operators are now competing over many modes in the transport chain. A growing paradigm thus involves supply chain competition with the modal competition component occurring over three dimensions:
Forms of Modal Competition
Passenger Modal Split by Travel Distance, United States
It is generally advocated that a form of modal equality (or modal neutrality) should be part of public policy where each mode would compete based on its inherent characteristics and merits. Since different transport modes are under different jurisdictions and funding mechanisms, modal equality is conceptually impossible, as some modes will always be more advantageous than others. Modal competition is influenced by public policy, particularly over the funding of infrastructure and regulation issues. Roads are usually provided by the public sector, while many other transport infrastructures are financed by their operators. This is the case for rail, air, and maritime transportation. For instance, in the United States, the Federal Government would finance 80% of the costs of a highway project, leaving the state government to supply the remaining 20%. For public transit, this share is 50%, while the Federal Government will not provide any funding for passenger rail. Under such circumstances, public policy shapes modal preferences.
3. Modal Shift
The technological evolution in the transport industry aims at adapting transport infrastructures to growing needs and requirements. When a transport mode becomes more advantageous than another over the same route or market, a modal shift is likely to take place.
The comparative advantages behind a modal shift can be in terms of costs, convenience, speed, or reliability. For passengers, this involved a transition in modal preferences as incomes went up, such as from collective (public transit) to individual modes (motorbikes, automobiles) of transportation. For freight, this has implied a shift to faster and more flexible modes when possible and cost-effective, namely trucking and air freight. A modal shift can further be nuanced by time shift, for which the use of the same mode takes place at another time period, likely when there is less congestion. In a situation of congestion, it is thus likely that a time shift will be preferred to a modal shift, particularly if the time shift is relatively marginal (e.g. a few hours). An individual may delay travel at a later time while a freight delivery can be rescheduled.
There are important geographical variations in modal competition. The availability of transport infrastructures and networks varies enormously, with corridors subject to the highest modal competition level. Corridors have many different modes that, in combination, provide a range of transport services that ensure an efficient commercial environment. Thus, in contrast to the European Union, China, and Japan, rail freight transport occupies a more significant market share in North America, but passenger rail has a negligible share. However, there are only limited services in many parts of the world, and some critical modes, such as rail, may be absent altogether. This limits the choices for passengers and shippers and acts to limit accessibility. Passengers and freight are forced to use the only available modes that may not be the most effective to support their mobility. Areas with limited modal choices tend to be among the least developed. On the other hand, advanced economies possess a wide range of modes that can provide services to meet the needs of society and the economy.
All modes are affected by fuel price volatility, from the individual car owner to the corporation operating a fleet of hundreds of aircraft or ships. Different pricing mechanisms are used, namely direct rate adjustments, as in the case of shipping, or indirect adjustments, as in the case of airlines, with the reliance on fuel surcharges when energy prices are increasing. In the context of higher energy prices and environmental concerns and, therefore, higher input costs for transportation, the following can be expected:
Principles of Modal Shift
Modal Share of Freight Transportation, Selected Countries
Modal Competition, Complementarity and Shift along a Corridor
West Texas Intermediate, Monthly Nominal Spot Oil Price
Still, modal shift strategies that are often supported by public policy goals have initial difficulties competing with existing transport alternatives. Evidence underlines that subsidies are usually required to support initial attempts at modal shifts, but if the shift needs to be constantly subsidized, it may not be a viable option.
4. Passengers versus Freight
There is a complementarity between passenger and freight transport systems. With some exceptions, such as buses and pipelines, most transport modes have developed to handle both freight and passenger traffic. In some cases, both are carried in the same vehicle, as in air transport, where about 80% of the freight is transported in the cargo holds of passenger aircraft. In others, different types of vehicles have been developed for freight and passenger traffic, but they share the same infrastructure, such as rail and road traffic. In shipping, passengers and freight used to share the same vessels and often the same terminals. Since the 1950s, specialization has occurred, and the two are now entirely distinct, except for ferries and some RORO services.
Operational Differences between Passengers and Freight Transportation
Sharing freight and passenger modes is not without difficulties, and indeed some of the major problems confronting transportation occur when the two compete for the use of scarce transport infrastructure. For example, trucks in urban areas are seen as a nuisance and cause congestion by passenger transport users. Daytime deliveries and double-parked trucks are perceived as a particular nuisance. The poor performance of some modes, such as rail, is seen as the outcome of freight and passengers having to share routes. There is also growing interest in using transit system segments to move freight, particularly in central areas. This raises the question as to what extent and under which circumstances freight and passengers are compatible. The main advantages of joint operations are:
The main disadvantages of joint operations are:
Consequently, the ongoing separation of passengers and freight on specific gateways and corridors is a likely outcome, involving a growing divergence of flows, modes, and terminals.
5. A Growing Divergence
Passengers and freight are increasingly divergent activities as they reflect different transportation markets. In several modes and across many regions, passenger and freight transport are being unbundled.
It has already been mentioned that passenger services have become separated from freight operations in the maritime sector. Ferry services are the exception, where ro-ro ships on high-frequency services adapt to the needs of both passenger and freight market segments. These ferry ships can transport cars, buses, and trucks carrying freight with the respective proportions determined by the demand. Deep-sea passenger travel is dominated by cruise shipping, which has no freight-handling capabilities, and bulk and general cargo ships rarely have an interest or the ability to transport passengers.
Most rail systems improved passenger and freight services, maintaining both segments sharing the same infrastructures. Proportions have a strong geographical variation, with much of the developing world having passenger rail as the dominant mode for inter-city transport, particularly in India and China. In Europe as well, national rail systems have prioritized passenger service as a means to expand regional mobility. Significant investments have improved the comfort of trains and passenger rail stations, but most notable has been the upgrading of track and equipment to achieve higher operational speeds. Rail freight transport has tended to lose out because of the emphasis on passengers since such systems were optimized for passenger flows. Because of their lower operational speeds, freight trains are frequently excluded from day-time slots, when passenger trains are most in demand. Overnight journeys may not meet the needs of cargo owners. This incompatibility is a factor in the loss of freight business by most rail systems still trying to operate both freight and passenger operations.
In North America, the separation between the freight and passenger rail business is the most extensive. Private railway companies could not compete against the automobile and airline industry for passenger traffic and consequently withdrew from the passenger business in the 1970s. They were left to operate a freight-only system, which has generally been successful, especially with the introduction of intermodality. Public agencies have taken over the passenger business, AMTRAK in the US, and VIA Rail in Canada. The major problem is that they have to lease trackage from the freight railways; thus, slower freight trains have priority.
Freight and passenger vehicles still share the roads. The growth of freight traffic is increasing road congestion, and in many cities, concerns are being raised about the presence of trucks. Already, restrictions are in place on truck dimensions and weights in certain parts of cities, and there are growing pressures to limit truck access to non-daylight hours. For example, certain highways exclude truck traffic, which is likely to become a growing trend; the need to separate trucks from passenger vehicle traffic. This separation can be spatial (separate roads or lanes) or temporal (evening deliveries).
d. Air transport
Air transport is the mode where freight and passengers are the most integrated. First, they share the same terminal facilities, although there is a specialization with some airports focusing on freight activity. Yet, even here, a divergence is being noted. The growth of all-freight airlines and freight-only planes operated by some major carriers, such as Singapore Airlines, is a trend. The interests of the shippers, including the timing of the shipments and the destinations, are sometimes better served than in passenger aircraft. The divergence between passengers and freight is also being accentuated by the growing importance of charter and low-cost carriers. Their interest in freight is minimal, especially when their business is oriented toward tourism since tourist destinations tend to be lean freight generating locations.
Which is the most commonly used and flexible mode of transport for transporting goods?
Sea Freight More than 90% of all goods are transported by ships. That's because ships can carry significantly heavier loads than air freight at a fraction of the cost. As a result, it's the preferred choice for transporting bulk materials like agricultural produce and raw materials.
What is the second step in global transportation planning?
The second stage of the transportation planning process is to use the collected data to build up a transportation model. This model is the key to predicting future travel demands and network needs and is derived in four recognised stages, i.e., trip generation, trip distribution, traffic assignment and model split.
Which mode of transportation is most important in terms of passenger miles?
Highway travel is the most extensive mode of transportation, and currently accounts for over 90% of all transportation, in terms of passenger-miles.
Which mode of transportation is appropriate for the movement of high value finished goods between continents?
Road freight is one of the most common of all modes of transportation. It is widely used in continents such as Europe, Africa, and North America. The single customs document process provides a seamless movement of goods even across various states and countries.