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10. The Future of Transportation

The transportation needs of society evolve with time to reflect changing

customer tastes, technological advances, and geopolitical/legislative cli-

mates. This chapter investigates this issue using the example of arguably

one of the most successful and historic transportation channels of all

time, the trans-Asian silk route (see Figure 10-1). Extending 4,000 miles

across the continent of Asia and into parts of Europe, the silk route got its

name from the lucrative trade in Chinese silk, which was a highly valu-

able commodity throughout Europe between the years 100 and 1400.

Land-based transportation was achieved by moving extensive cargo on

the backs of pack animals; water-based transport occurred by moving

large quantities of goods on wind-powered sailboats.

Figure 10-1 Asian silk route. Dotted lines represent land routes. Solid

lines are sea routes.

Silk was obviously one of the most valuable and frequently exchanged

commodities along the silk route, but several other goods were also ex-

changed, including pottery, paper, spices, precious stones, metals, and

even slaves. Customer demand for silk and spices in the West, coupled

with precious stones and metals in the East, made the route a particularly

lucrative one for merchants. Over time, technological advances such as

the development of caravans and caravan tracks also allowed for the

trade of more varied types of goods along this route. Together with a rela-

tively stable Mongol Empire controlling a substantial part of the route,

these developments ensured that the route continued to thrive for several

decades.

The Asian silk route was a great transportation network for its time.

Large cities developed along its path and served as what would now be

described as warehousing and cross-docking locations. Several of these

cities and the associated cultures thrive to this day. However, several

changes occurred in the thirteenth and fourteenth centuries that eventu-

ally brought an end to transport and trade along this route. For starters, a

sociocultural shift, the growing populations along the silk route, had a

deleterious effect on trade. Continuously expanding populations along

the route and the associated expansion of farmland implied that mer-

chants often had to travel through agricultural lands, arousing hostility.

Skirmishes became increasingly common. In addition, the waning power

of the Mongol dynasty in Europe and central Asia made it harder to sus-

tain the silk route because security for merchants was increasingly hard

to come by. Finally, in 1335, the Mongol ruler of the Middle East, Abu Said,

died without an heir. His officials and officers, having easy access to

weaponry and militias but being unable to agree on a successor, fought

one another to stalemate and collapse. The Middle Eastern branch of the

silk route closed, European traders lost contact with their Chinese coun-

terparts, and eventually the route disintegrated.

Several factors—sociocultural (the expanding population and the associ-

ated increasing private claim to land), technological (wide access to weap-

onry), and geopolitical/legislative (the collapse of the Mongol empire and

the battles among the militias)—contributed to the paradigm shift in the

viability of one of the most successful transport and trade routes of the

time. Several factors such as these are relevant even today, which could

affect the transportation field in the future. In this chapter, we discuss

many of the emerging issues that we feel might be relevant in shaping the

evolution of the transportation sector moving forward. We split our dis-

cussion into three broad trends that might have the largest impact:

changes in consumer behavior (sociocultural changes), changes in tech-

nology, and changes in legislation/geopolitical factors. Some of the tech-

nologies that we have discussed are already in place and in different

stages of being commercialized (some are even fully commercialized and

operating profitably); others are still very early in the lifecycle and are in-

cluded purely because of their potential.

Changes Affecting Consumer Shopping Behavior

Several new developments in the past decade either have changed or

have the potential to change the way consumers shop, which eventually

could affect the supply chain and, consequently, transportation needs in

the supply chain. Of these, unsurprisingly perhaps, two of the potentially

biggest changes are both intricately tied to one of the greatest inventions

of our time: the Internet. These relate to the use of the Internet for the

sale of goods (Internet retailing [IR]) and the distribution of goods (3D

printing). One of these (IR) is substantially more developed than the other

(3D printing) at the time of this writing, but both undoubtedly have sub-

stantial implications for the transportation industry of the future.

Internet Retailing (IR)

The year was 1994, and the first World Wide Web (WWW) browser had

been released for commercial use three years prior. A young entrepre-

neur, recognizing the business potential of the WWW to sell goods all

over the world, quit his job on Wall Street and made the nearly 3,000-mile

drive to Bellevue, Washington, where he started a unique online “store.”

Within two months, it was selling more than $20,000 of merchandise ev-

ery week. That store has today grown to be known as Amazon.com, one

of the largest online retailers in the world. It enjoys revenues that exceed

$61 billion.

Overall, customer adoption of the Internet for purchasing goods contin-

ues to increase at impressive rates. Online retailing has increased from

just 3 percent of total U.S. retail sales in 2002 to more than 6 percent by

2008, and it is expected to account for more than 8 percent of all sales by

2014. Although many online retailers were swift to embrace the Internet

for its marketing reach a decade ago, others were slow to recognize the

range of challenges associated with fulfilling the grand promises of timely

and efficient delivery. Nevertheless, it is now hard to find a retailer that

does not have some kind of online presence. As a result, customers have

many choices when they turn to the Internet to purchase goods, from on-

line versions of their favorite department stores to purely Internet-only

retailers with no physical presence.

From a retailer’s standpoint, the explosion of the Internet for shopping

purposes presents several unique challenges. Clearly, managing opera-

tions and order fulfillment to support online retailing presents challenges

distinct from those of brick-and-mortar retailing, for which the only three

rules that matter are still “location, location, location.” The Internet elimi-

nates from the equation the locational advantages that retailers in the

bricks-and-mortar world have to compete for, by offering home deliver-

ies of products bought online. However, this elimination of the location

issue comes at a cost, which has implications for transportation.

Transportation Implications of Internet Retailing

Smaller Pack Sizes: Traditional retailers and, by extension, traditional

transportation specialists have long been focusing on shipping goods in

relatively large volumes. The traditional manufacturer–distribution center

(DC)–retail store model of product distribution helped these business

partners focus on large shipments (typically several pallet loads or even

truckloads). The IR model, however, challenges this long-cultivated busi-

ness model, forcing managers to solve their transportation challenges in-

novatively. As would be expected, as pack sizes (and, consequently, order

dollar values) become smaller, transportation costs as a function of the

sales price keep increasing (because of diseconomies of scale). Moreover,

in the home delivery of online purchased products, most of the delivery

costs are variable, so there are few (if any) scale economies to be en-

joyed. The net result is that there are smaller profits to be had, unless

transportation costs can be managed. It has been suggested, for example,

that at the time, Kozmo.com was spending close to $10 for every package

delivered. This, coupled with the fact that the average order size was

about $15, has been blamed for the company bleeding money and eventu-

ally folding.

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Shipping to Multiple Locations: Traditional retail DCs were well

equipped for one configuration: receiving products from a defined set of

vendors and shipping those products to a defined (and often limited) set

of customers. A major fallout of IR is that DCs are now having to deal with

the challenge of shipping to several hundred thousand customers (most

of whom are geographically spread out). This creates a whole new level

of complexity because traditional transportation-related operational ele-

ments of DCs (palletizing, loading onto trucks, and so on) become sub-

stantially different in IR, compared to traditional retail. In the United

States, several calculations have shown that only New York City has

enough sales concentration and population density to support a pure

Internet sales delivery business model run profitably.

Additive Manufacturing/3D Printing

We have looked at how using the Internet to sell goods can change the

transportation field in the future. Now we look at how using the Internet

for the distribution of goods can achieve the same. Although IR has the po-

tential to change the way transportation occurs, 3D printing has the po-

tential to eliminate the need for transportation completely (or at least re-

duce it considerably). Imagine the following scenario: You wake up in the

morning and go to the sink to brush your teeth. However, just as you start

your electric toothbrush, the brush head snaps off. You have no spare

heads at home. In such a case, you would have to either run to the store

to buy a new head and then try to get back, brush, and get dressed for

work (all the while hoping that you’re not late to work), or order a new

head online and use an old manual brush for the day (assuming that you

have one around the house). 3D printing promises to change all that.

With 3D printing, you have the ability to “generate” a new brush head

from scratch on your home printer. Given the right kind of printer, soft-

ware, blueprints, and input materials, with 3D printing, a customer

would have the ability to “manufacture” several products right at home.

3D printing (also called additive manufacturing) is a concept that has been

around for some time. Only now, however, is the idea gaining large-scale

interest. The basic principles behind 3D printing are as follows: A user de-

signs a product, typically with a computer-aided design (CAD) program.

Software then takes virtual blueprints of the CAD design and “slices” it

into digital cross-sections. The easiest way to understand this is to visual-

ize it (see Figure 10-2). Imagine slicing a cucumber into extremely thin

slices. The “printer” then uses these “slices” to successively use as a guide-

line for printing. The printer starts from the innermost slice and builds it.

It then layers the second slice on the first slice and binds it with a special-

ized binder. Successively, material and binders are deposited on the build

bed or platform until the layering is complete and the final 3D model has

been “printed.” The typical home printer uses color boxes. By contrast, a

3D printer uses “matter boxes” (such as iron and carbon). This is just an

extension of how the book marketplace has changed over the past

decade. In the early twentieth century, buyers had to buy physical copies

of books, but now they can just download the soft copy of a book. If they

choose to print the book, the home printer “slices” the book page by page

and prints one page (layering of the slices).

Figure 10-2 How 3D printing works.

As 3D printing evolves, you can imagine online repositories where people

(and manufacturers and retailers) would deposit their designs for other

users to use (similar to how customers upload reviews on products or

how online retailers deposit products on virtual store shelves). The

Internet can thus become a source for not only the sale, but also the dis-

tribution of goods. The technology for much of what we have described

already exists, but it is currently too expensive and untested to be widely

adopted (see Figure 10-3 for an image of a real 3D printer). Nonetheless,

there is a distinct likelihood that both of these issues will be solved in the

near future and that 3D printing will become widely accessible.

Figure 10-3 Real 3D printer.

Transportation Implications of 3D Printing

As expected, 3D printing promises to change the way companies do busi-

ness, along several dimensions. Customers, for example, can become

manufacturers and can fabricate products themselves. They will simply

need the raw materials (for example, plastic pellets), which they can then

use to fabricate product according to their own designs. Traditional man-

ufacturing as we know it will see a substantial reduction in demand.

Manufacturers will become more focused on developing high-quality

product blueprints, which will be stored and delivered via cloud comput-

ing (especially for simple products). This will have several implications

for transportation:

Reduced Need for Transportation: The ability of customers to serve as

captive fabricators for themselves will reduce the need to buy manufac-

tured goods. Of course, this will not mean that no consumers would ever

buy any finished goods; for example, there will continue to be a market

for physical books, even though consumers can download e-books (the

equivalent of the 3D printing “blueprint”) and print them (the equivalent

of the 3D printing “manufacturing”). However, it is conceivable that the

need for transportation will reduce at least somewhat because many non-

food items will potentially be manufactured at the end customer level.

Changing Product Mix in Transport: Currently, most downstream trans-

port (from the manufacturer to the end customer) consists largely of fin-

ished goods. With the ability of customers to make their own finished

goods, the focus of such transportation will arguably shift to transporting

raw materials rather than finished goods.

Changes in Technology

Changes in technology are affecting not only the way customers shop, but

also how transportation supports these activities. The first decade of the

twenty-first century was the decade of software. Several developments in

software technology occurred that directly impacted the transportation

industry. These include ERP, MRP, TMS, routing and scheduling, and cloud

computing. In the coming years, several other technological develop-

ments look poised to enter the mainstream, with strong implications for

transportation.

Self-Driven Vehicles

The concept of the self-driven automobile has been around for several

years, but it has heretofore rarely generated enough interest to be consid-

ered a viable, practical possibility. There are several reasons for that, but

we do not get into them here. The development of interest now is that the

technology is becoming advanced enough that it can be considered a vi-

able production possibility. As of this writing, three states in the United

States (Florida, California, and Nevada) have all passed laws making self-

driven vehicles street-legal within their boundaries.

A few technologies are currently trying to compete for supremacy in the

self-driven car marketplace. However, all of them have some basic ele-

ments in common: They all involve some combination of location moni-

toring (such as GPS—see Chapter 6, “Transportation Technologies”),

radar, and laser/lane visualizing. The GPS system helps the vehicle find

out its current location, its destination, and the most efficient route to get

there. Preloaded maps with posted speed limits ensure that the vehicle

stays under the speed limit at all times. The laser/lane visualizing equip-

ment captures a moving view of the road ahead. The digitized image is

parsed for straight or dashed lines, the lane markings. The vehicle is sup-

posed to stay within the lines at most times, so if it deviates and ap-

proaches or reaches the lane marking, the vehicle nudges itself away

from the marker, just as a human driver would do. Finally, radar equip-

ment ensures that the vehicle does not come unduly close to other bodies

(such as vehicles and pedestrians). The combination of these three tech-

nologies working together and communicating with each other by way of

an onboard computer allows the vehicle to drive itself (see Figure 10-4).

Figure 10-4 How self-driven vehicles work.

Transportation Implications of Self-Driven Vehicles

The large-scale introduction of self-driven vehicles in the mass market is

merely a few years away. Several commercial manufacturers have been

either developing or testing self-driven vehicles in a big way.

Manufacturers such as General Motors, Daimler, and Nissan have pub-

licly stated that, by the year 2020, they expect to have several commer-

cially available automobile models that can drive themselves. Google has

set a more ambitious target of 2017 for commercial introduction of this

technology in the marketplace. Although the previously mentioned appli-

cations are largely for self-driven cars, a similar level of excitement is

emerging around self-driven trucks. Caterpillar Inc., for example, already

introduced a fleet of self-driven 240-ton trucks at an iron ore mine in

Australia. There are several implications of this for the transportation in-

dustry, some of which we discuss next:

Reduced labor costs—The United States alone has an estimated 5.7 mil-

lion licensed professional drivers, and they drive the country’s vast fleets

of delivery vans, trucks, and tractor-trailers. According to the Wall Street

Journal, a full-time driver with benefits costs the transportation company

around $65,000 to $100,000. Eliminating this need for labor eliminates a

substantial cost from the transport network, which will result in better

margins and lower landed costs of goods. Of course, not all the drivers

will be replaced with robots in the near future, but some fraction seem-

ingly will. With the estimated driver shortage of 15 percent or more

across the United States, the introduction of self-driven trucks promises

to provide much relief to transportation managers and directors.

Changing route-planning algorithms—Currently, many truck opera-

tors drive along fixed routes, with trucks returning to their homes every

few days (in some cases, even every day). Thus, most trucks really operate

as a back-and-forth shuttle type of service between a set of locations.

However, with the advent of self-driven vehicles, the need to return a ve-

hicle to base will be greatly reduced, especially because drivers will not

need to go back home periodically. Trucks can be sent to places where

they are most needed, thus creating efficiencies in transportation net-

work optimization.

Hours of service (HOS) rules—Currently, no regulations cover any HOS

rules surrounding self-driven vehicles, but this will not necessarily be the

case after the technology is introduced in the mainstream. Given that the

trucks can be driven through automation, though, there seems to be no

direct reason to impose any HOS restrictions. This means that the amount

of idle time can potentially be reduced, thereby lowering transportation

costs and increasing the shelf life of landed products.

Intelligent Transport System (ITS)

Imagine the following scenario: You are driving to the ballpark to watch

your favorite team play in the biggest rivalry game of the year. You are

running late. When you get there, you realize that the parking lot is full

(no surprises here!). Now you begin looking for parking; it takes you 30

minutes to find a spot, and another 15 to walk to the field. You are not

happy, and understandably so. Your friends tell you, “You should have

gotten there earlier.” Now imagine if your car could guide you to the

nearest open spot without your having to look around. You would save

precious time, you wouldn’t miss the game, and you could accomplish

some more work at office before you left. That is the promise of ITS. The

idea behind ITS is to connect every vehicle in a network of transportation

users in such a way that each vehicle instantly tracks and shares informa-

tion (the key is sharing). When all (or at least a substantial number of)

users report information to the centralized ITS, everyone can quickly de-

termine where the accidents and tie-ups are and what routes to take to

avoid them. For the freight transport, this translates into quicker drive

times by way of more efficient traffic patterns and less time the freight

“sits on the road.”

Many modern cars and trucks today come equipped with mobile position-

ing and navigation systems. These systems can provide turn-by-turn di-

rections and information on, say, the restaurant, coffee shop, or rest area.

Many of these systems also incorporate real-time traffic information to

warn drivers of congestion and accidents. The problem, however, is that

these systems communicate with the driver, but not with other vehicles

or the road. This will soon change with the development of ITS.

Transportation Implications of ITS

Several governments have recognized the transportation implications of

having an integrated ITS in place. China, for example, spent $2.8 billion

on ITS in 2009. The U.S. government’s ITS Strategic Plan 2010–2014 also

envisions “a national, multi-modal surface transportation system that fea-

tures a connected transportation environment among vehicles, the infra-

structure and passengers’ portable devices.” It goes on to forecast a “con-

nected environment [that] will leverage technology to maximize safety,

mobility and environmental performance.” To this end, the

Transportation Department is investing in a number of new transporta-

tion technologies, including $11.5 million for vehicle-to-vehicle safety

communications; $9.3 million for vehicle-to-infrastructure communica-

tions, such as traffic signal and timing updates; $2 million for real-time

data capture and management for assessing traffic, transit, and freight

movement patterns; and $8 million for dynamic mobility applications to

find optimal ways for people and goods to be transferred between differ-

ent modes of transportation. The biggest implication of ITS will be traffic

management and waiting times:

Reduced transit and wait time—Proponents of lean manufacturing

consider waiting to be one of the seven key wastes to eliminate. Yet wait-

ing is prevalent. The average American spends four days every work year

just waiting in traffic. According to the 2012 Urban Mobility Report pub-

lished by Texas A&M University, the “cost” to trucks by waiting in conges-

tion (in terms of fuel, wasted time, and so on) was $27 billion in 2012 (not

including the value of goods being transported, spoilage charges, and so

on). At present, companies such as Google collect real-time traffic data

through crowdsourcing—if a user has Google Maps installed on a mobile

phone with GPS capabilities enabled, that person can transmit his or her

location to Google in real time, to determine what road the car is on and

at what speed he or she is traveling. When Google combines this informa-

tion with similar information gathered through other phones on the road,

across thousands of phones moving around a city at any given time, it

gets a reasonably good idea of live traffic conditions. However, because

vehicles are not directly reporting data into a centralized grid, the infor-

mation currently being gathered is rather spotty. (For example, if four

people are traveling in the same car, from a traffic standpoint, it is only

one car—from Google’s standpoint, however, it is four people, and Google

has no way to tell the difference.) Thus, the implementation of ITS has the

potential to save freight transit time substantially—to the extent of $30.2

billion, according to some estimates.

Geopolitical, Legislative, and Societal Changes

The past two decades have seen several changes in the geopolitical cli-

mate of the world. Rising affluence levels in many parts of the world, the

fall of the Iron Curtain, and the breaking down of barriers have impacted

transportation in unique ways. These and other changes will continue to

change many facets of the freight business. In this section, we discuss a

sampling of the changes the freight business is experiencing.

Rising and Erratic Fuel Prices

The past decade has seen fuel prices rise all across the world. In the

United States alone, the retail price of gasoline has risen from an average

of about $1.50 per gallon in 2003 to about $3.50 per gallon in 2013, an in-

crease of more than 130 percent. During the summer of 2008, the nation-

wide average surpassed $4.60 per gallon for diesel fuel. This steep in-

crease in prices stems from several factors. One of the largest is that, with

increased globalization, income levels in the poorer countries of the

world are rising rapidly. These rising income levels have created a

stronger world demand for fuel (through increased usage of personal au-

tomobiles, longer commutes, and travel for leisure). With the supply

tightly controlled by a few producers, the overall effect has been to push

prices up. As affluence levels in the developing world continue to in-

crease, the demand for fuel will continue to increase. This indicates that

unless alternative energy sources are employed, fuel prices will continue

to head upward for the foreseeable future. This upward pressure on fuel

prices has important implications for the transportation industry.

Transportation Implications of Rising Fuel Prices

Many freight businesses and governments have recognized the inevitabil-

ity of the upward trend in fuel prices. As a result, several initiatives are

expected to impact the transportation industry in the future. Some of

these are driven through political action; others are industry driven:

Fuel-efficient fleets—In many countries (including the United States),

the move to enhance fuel efficiency of the transportation fleet is two-

pronged, with efforts from both government and industry. The federal

government, for example, has proposed to impose fuel efficiency stan-

dards on trucks based on weight and intended use. For example, over-the-

road tractor-trailers would be required to achieve a 20 percent reduction

in fuel consumption and CO emissions by 2018. Heavy-duty pickups and

vans would be subject to different gasoline and diesel fuel standards,

with reductions ranging from 10 to 15 percent. Other work trucks would

have to reduce fuel consumption and greenhouse gas (GHG) emissions by

10 percent by 2018. Several older tractor-trailers thus would have to be

replaced in the near future in favor of more fuel-efficient ones, implying

upcoming capital expenses for many companies.

Alternative-fuel vehicles—Alternate fuels have been making their way

into automobiles for some time now, but most of the development has

taken place for cars rather than commercial vehicles. Several challenges

arise when adapting the same technology for commercial vehicles, espe-

cially trucks. A recent alternate-fuel development in motor cars technol-

ogy is to make the vehicles all electric. However, this is a challenge for

tractor-trailers because of the amount of freight they need to haul, and

even more for the massive distances they need to cover. Battery technol-

ogy has just not developed to the point that such massive amounts of

power can be stored without compromising massive amounts of space. To

tow two trailers, the first trailer would have to be all batteries, which is a

highly unviable solution. The same problem exists in outfitting trucks to

run on compressed natural gas (CNG) because CNG requires about six

times as much storage space as diesel, even when squeezed down to 3,000

pounds per square inch. This is a serious waste of storage space on vehi-

cles whose primary purpose is moving large volumes of goods. However,

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an alternative fuel is now emerging: liquefied natural gas (LNG). LNG is

created by chilling natural gas to 260°F below zero and squeezing it down

600 times in volume, and it needs only about 1.7 times the amount of stor-

age space as diesel. Upon startup, such trucks still use a few squirts of

diesel to get going, but overall, diesel use typically gets cut by about 95

percent. Currently, the bottleneck for wider adoption technology is the

lack of fueling stations, which runs about $1.5 million. However, it is only

a matter of time before more widespread adoption of this development

takes place.

Global Warming and Greenhouse Gases

The term global warming refers to the rise in the average temperature of

the earth’s atmosphere and oceans since the late nineteenth century and

its projected continuation. Since the early twentieth century, the earth’s

mean surface temperature has increased by about 0.8°C (1.4°F), with

about two-thirds of the increase occurring since 1980. Substantial consen-

sus within the scientific community is that one of the major causes of this

phenomenon is the increased concentration of GHG produced by human

activities such as burning fossil fuels and deforestation.

Transportation Implications of Global Warming

The deleterious effects of global warming have been well publicized (ris-

ing water levels, submerged low-lying areas, reduction of the polar ice

caps, and so on), and the transportation implications of the same are

clear (for example, the move to alternative-fuel vehicles). However, the

unintended positive effects haven’t received much attention:

Opening the Northern Sea Route—Global warming has transformed

the Arctic in recent years, and its summer ice cover has dropped by more

than 40 percent over the last few decades. Some news reports indicate

that the Arctic could be completely free of ice by the summer of 2030.

This raises the prospect that it might soon be possible to sail along the

Arctic’s sea routes with ease. This is an idea that is proving irresistible to

shipping companies, mining companies, and oil and gas exploration com-

panies. The Arctic route can cut 12 to 15 days (indicating a savings of 25

to 30 percent in terms of travel time) from traditional routes between

Asia (especially China) and Europe. In a world where time is money, this

savings in transit time is a goldmine for ocean shipping companies. The

rise in shipping interest along this route is staggering: In 2010, only four

ships sailed this route; in 2011, this number increased to 46. In 2013, at

least 370 vessels will likely sail this route, a growth rate of 9,250 percent

in just 3 years!

The Need for Infrastructure to Support Growing Populations

In 2011, the world’s population passed a milestone by exceeding 7 billion

people. In 1928, the world’s population stood at merely 2 billion. The

United Nations estimates that the population will rise to somewhere be-

tween 7.4 billion and 9.2 billion by 2030. (Other sources put this number

at 8 billion.) The sharp increase in population, coupled with rising living

standards around the world, will stress transportation and logistics sys-

tems already under duress. A related trend to population growth is in-

creasing urban migration, particularly in rapidly developing countries.

More people are moving away from the agricultural economy in pursuit

of opportunities in the cities. This migration worsens congestion and fur-

ther stresses urban infrastructure.

Transportation Implications of Population Growth and Migration

Some nations are investing heavily in their infrastructure to accommo-

date increased volumes. China, for instance, reportedly has invested the

equivalent of 9 percent of the nation’s gross domestic product (GDP) in

transportation infrastructure, with approximately $1 trillion directed to-

ward investments in cargo infrastructure. Most of this investment is fo-

cused on the nation’s export capacity at coastal shipping locations.

Transportation remains quite challenged inland to the west of these port

locations. In fact, it is believed to cost more to ship freight from western

cities in China to Shanghai than to ship across the ocean from Shanghai to

Los Angeles.

Other nations are finding it difficult to finance dramatic investments in

transportation. The United States, for instance, is facing a crumbling in-

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frastructure among many of its modes. Those that rely on public funding

(roadways and water transportation), in particular, are facing battles to

maintain and extend the infrastructure to sustain the growth in freight

and passenger traffic. Many locks and dams used to support barge trans-

portation on the Mississippi and Ohio River corridors were built to last 50

years; many are still in operation after more than 80 years of heavy use.

From time to time, disasters such as the Interstate 35 West bridge collapse

in Minneapolis, Minnesota, in 2007 serve as sober reminders of the need

to maintain existing infrastructure. As of 2012, more than 10 percent of

bridges were rated as “structurally deficient” in the United States, with

another 13 percent regarded as “functionally obsolete” to support mod-

ern traffic. Clearly, solutions are required to support safe and efficient

transportation of people and goods.

Without sufficient public funds, many local, state, and federal govern-

ments are turning to private funding sources. Public–private partnerships

(PPPs or P3s) are joint ventures between the public sector and one or

more private commercial interests. The partnerships assume a variety of

investment formats, but they were designed to support the new develop-

ment or enhancement of existing infrastructure that previously was re-

garded as a public asset. Understandably, the commercial entities have a

profit motive, which strikes some as disconcerting for a “public asset” to

be used to generate commercial interests. Partnerships are employed in

toll roads, bridges, and parking structures, among other forms of infra-

structure. PPPs are on the rise throughout much of the world, particularly

in locations with urgent investment needs for infrastructure

development.

4

Increasing Demands for Security and Safety in Transportation

As noted early in the text, transportation is an essential activity for any

economy. The more developed the economy, the higher the level of trade

and, hence, the more dependent the nation finds itself on reliable trans-

portation. To actively participate in the economy, it is essential for people

and goods to employ transportation. People and freight share many com-

mon rights-of-way, such as roads. The accidental injury and death statis-

tics tell the unfortunate, tragic story inherent to people and heavy equip-

ment interfacing on roadways.

In addition, our dependence on transportation can make transportation

modes a target for groups who seek to exert coercion through violent

means and disrupt an economy. Terrorists find transportation assets and

movement activity to be rich targets for invoking fear, interfering in

people’s lives, and interrupting the flow of goods. The disparate nature of

transportation assets and the overwhelming volumes of traffic make it

virtually impossible to guarantee safe transit throughout the world.

Transportation Implications of Security and Safety

With the deregulation of economic matters in transportation throughout

much of the world, regulatory focus is shifting to matters of safety and so-

cial concerns. In the United States, for instance, HOS regulations for driv-

ers of commercial motor vehicles remained unchanged from 1962 to

2004. The rules changed again in 2013 as regulators learned more about

the role of fatigue in contributing to accidents. Ongoing research will

likely result in more changes in the future, including the requirement for

carriers to use electronic on-board recorders (EOBRs) to monitor driver

time, replacing the paper logbooks that drivers have used for many

decades. Similarly, individual drivers, and the carriers that employ them,

are held to a higher standard for safety performance through the

Compliance, Safety, and Accountability (CSA) program initiated in 2010.

Emphasis will continue along these lines, with expectations and account-

ability for safety increasing.

As for terrorism, the primary focus to date remains the safe transport of

passengers. More concern will be directed to cargo in the future. An im-

mediate concern is the prevention of cargo transportation as a means to

willfully deliver harmful devices and chemicals. Documentation and

monitoring of suspicious shippers serve as the primary means of detect-

ing potentially dangerous cargo—only a small share of cargo containers

arriving at seaports is x-rayed or inspected upon arrival. Surveillance

technologies that allow for faster, efficient screening of cargo remain un-

der development and will see deployment at the largest ports in the near

future.

Another security concern that will grow in importance is the assurance of

safe transit of essential goods, such as food products. It is imperative that

the security of a nation’s food supply remain intact throughout the supply

chain, including the time in transit. Greater attention will be placed on as-

surances of proper containment to protect consumers from in-transit

food tampering. On a related basis, agricultural shippers will find it nec-

essary to maintain the genetic identity of the grains they sell throughout

their distribution. Genetically modified organisms (GMOs), or genetically

engineered crops, that help to improve pest resistance and crop yield are

feared in many settings, and are even banned in the European Union

(EU). It becomes essential, then, to distinguish GMO from non-GMO

grains, to ensure that the two are not comingled at any point between the

farm and the food processor. To date, the practice of distinguishing facili-

ties (such as grain silos and elevators) and transportation vehicles (such

as trucks and railcars) for GMO and non-GMO has not been common

practice. Such requirements can influence how facility and transporta-

tion capacities are dedicated and used in the future.

Summary

After reading this chapter and this book, you know that the transporta-

tion needs of society evolve with time. Transportation (especially goods

transportation) is a derived demand, in the sense that it is created as an

outcome of other economic necessities. As consumer tastes, societal pref-

erences, and international relations evolve, consumption patterns change

—and transportation changes to reflect these developments. Making pre-

dictions on the future of the nature of the transportation business is

fraught with risk. For example, a mere 25 years back, few would have

predicted that the U.S.’s largest import partner in 2013 would be China, a

country whose government the United States did not even formally recog-

nize until 1979. In this chapter, we have presented some trends that lately

seem to be emerging strongly: Internet-based commerce models (for ex-

ample, online shopping and 3D printing), automation (such as driverless

vehicles), environmental factors (as with alternative-fuel vehicles and the

Northern Sea Route), growing demands for transportation, and safety and

security throughout the supply chain. These issues will shape the direc-

tion the transportation business takes in the days to come. Let us all

watch, see, and reflect in a decade on whether the predictions hold true.

Key takeaways from this chapter include:

Transportation has played a significant role in the formation and devel-

opment of societies, and it will continue to influence future

developments.

Technologies such as the Internet influence the ways that commerce is

conducted. As e-commerce continues to grow, companies must adapt

their transportation systems to economically accommodate home

delivery.

New technologies are among the most significant developments within

the transportation field that are changing the way businesses think about

and implement transportation management.

Geopolitical, legislative, and societal changes will continue to exert con-

siderable influence on transportation practices. The firms that adapt to

these environmental circumstances effectively will achieve significant

advantages.

Endnotes

1. See T. M. Laseter and E. Rabinovich, Internet Retail Operations:

Integrating Theory and Practice for Managers (Boca Raton, FL: CRC Press,

2011).

2. Robin McKie, “China’s Voyage of Discovery to Cross the Less Frozen

North,” The Guardian. August 17, 2013.

http://www.theguardian.com/world/2013/aug/18/china-northeastern-

sea-route-trial-voyage

3. Chad W. Autry, Thomas J. Goldsby, and John E. Bell, Global Macrotrends

and Their Impact on Supply Chain Management: Strategies for Gaining

Competitive Advantage (New York: FT Press, 2013).

4. Ibid.

For Further Reading

Ashley, S. (2013), “Robot Truck Platoons Roll Forward,”

www.bbc.com/future/story/20130409-robot-truck-platoons-roll-for-

ward. Accessed 24 September 2013.

Blair, S. (2005), “East Meets West under the Mongols,” The Silk Road

Foundation Newsletter, www.silk-

road.com/newsletter/vol3num2/6_blair.php. Accessed 24 September

2013.

Durmaine, B. (2012), “The Driverless Revolution Rolls On,” CNN Money,

http://tech.fortune.cnn.com/2012/11/12/self-driving-cars/. Accessed 24

September 2013.

Goldsby, T. J., S. S. Rao, and S. E. Griffis (2011), “The Opportunities and

Challenges of Online Retail Logistics,” Logistics Quarterly (Winter): 46–47.

Guizzo, E. (2011), “How Google’s Self Driving Car Works,” IEEE Spectrum

(October): 11–12.

Laseter, T., and Rabinovich, E. Internet Retail Operations: Integrating

Theory and Practice for Managers, 1st ed. (Boca Raton, FL: CRC Press,

2011).

Rao, S. S. (2012), “Internet Retailers Get Revved Up—The Logistics of

Electronic Commerce from a B2C Perspective,” Industrial Management

(October): 14.