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The transportation industry provides the means for businesses to reduce their inventory and there by free up cash flow for other business opportunities. Transportation firms are increasingly able to offer more options to their customers with expanded service selection, increased reliability, and every improving transparency. Reliability and transparency allow firms to adjust inventory management and purchasing plans. Globalization is real, and is rapidly accelerating. The transportation industry is indispens-able for any firm looking to become a part of the global economy (Elia, 2011).  Transportation firms offer a growing company with global ambition expertise in emerging markets. Such expertise in diverse markets reduces the cost of entry into new markets. 


Role of Economy, Demographics, and Politics

Many factors have been attributed for the economic growth worldwide, but the services of transportation are a key to tying every market together. Today, access to new products is greater for consumers and new markets have greater opportunities for businesses with the improved services of transportation. The efficient operations, maintenance, and the development of the infrastructure of transportation will make the future economic growth more dependent upon. 

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Whether it is ports, airports, bridges or roads, the development of transportation infrastructure have been funded by Government agencies traditionally. The actual transportation equipment, Barges, trains, and trucks, in the United States are privately operated and owned. Infrastructure, that is publicly funded, is dependent providers to provide services to their customers by transportation owned privately. Generally, not developed for specific transportation users, transportation infrastructure is for use by all parties (with the notable exception in the United States of investment in rail infrastructure of private sector) (Prideaux, 2000).

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The anticipated and current levels of intermodal freight, both matching the infrastructure of transportation is a new challenge that exists. Goods moving safely and efficiently through the transportation chain are a dependent of the real challenge of economic growth. However, productivity in future may be limited as there are weak links in the transportation chain. In some cases, equipment used and/or physical location constrain freight terminals. With unanticipated cargo growth, other facilities are simply overwhelmed. In both cases, these “chokepoints” constrain the operational efficiency.

Policy and Procedures

It is becoming important for governments to correctly evaluate increasingly costly, and more complex, projects of transportation because public funds are used in the development of infrastructure for transportation. Being focal points in improving national freight performance, for various reasons, these projects, by local governments, often remain underfunded. With the concern that to improve national freight productivity, funding local freight projects involves decision making that is solid, governments must seek to use procedures and tools to ensure funds, that are needed, are used to finance the most important projects of transportation. Governments may use benchmarking and performance measures, in attempting to optimize performance of system, as one tool (Qu, 1999).  

The Government Performance and Results Act (GPRA) in 1993 required Federal agencies in U.S to identify measurable outcomes and goals in meeting objectives of the program. the Federal Highway Administration (FHWA) and other agencies within the U.S. Department of Transportation since that time, have sought to actively develop measures of performance for their modes respectively.  Authorities have responsibility for the Highway System and its intermodal connections international borders, port facilities, rail, and ports.  The authorities have sought to performance measure developments that are appropriate for this system, e.g. time delays through border crossings and urban areas. Measure of performance provides information about how much a process costs and how long it takes by establishing a method of calculating and identifying performance of various processes. Benchmarking involves comparing performance measures between similar processes to evaluate if the anticipated benefits were provided by recent changes and to determine which is more efficient, after performance measures are developed.  The 1998 financial benchmarking by Transport Canada of Canadian rail carriers against U.S. carriers is an example of benchmarking in transportation.  

Road Transport

The primary reason of establishing roads was for long distance travel and other additional needs such as social, economic and national defense. The use of road transport offered increased performance and, eventually, lower costs compared to animal propulsions systems. Road transport services as well as railways occupy prominent place in our economy, accounting for approximately 68.4% and 32.4% respectively of the total transport sector. As far as demographics are concerned, the total road length plays an important role in ensuring accessibility (Samanta & Mohanty, 2005). Garrison & Levinson (2006) indicated that pressure to improve the rural road system intensified after 1900 as farmers began to purchase and use automobiles and trucks. Garrison & Levinson (2006) say that roads were popular and the popularity of road improvements was pushed by the need to get farm products to railheads and by use of bicycles.

Air Transport

The airline transportation is an industry that is unique and fascinating. This is mainly because as a result of its impact on a wide and increasing numbers of travelers all over the world, its glamour and its reach, it usually captures the interest of a wide audience (Chan, 2000). Thus, the driving force of the world's economy can be regarded for the industry. Speaking for themselves as well as staggering is the figure of the airline industry currently. This is due to the fact that, either gotten induced, directly or indirectly, the industry is relatively worth more than $1,000 billion money (Belobaba, Odoni and Barnhart, 2009).

Involved in serving and transporting annually over 2.4 billion passengers, the industry also employs 32 million people approximately. On a yearly basis, the industry also transports an estimated 43 million tons of cargo. Accounting for 2% of overall global carbon emissions, it also contributes to only one accident in an approximate of 1.4 million flights. Mostly based on bilateral system, after a series of progressive developments this is the current condition of the global air transport. Moreover, through the air transport, almost a quarter values of worldwide manufactured exports usually reach their markets of destination (Chan, 2000). The industry also contributes greatly to travel as well as tourism. However, spiking oil prices and terrorism, the industry’s resilience has over the past faced challenges (Sweet, 2004). 

However, already in existence, the numerous bilateral systems have greatly enhanced the dramatic development of the global airline transport industry (Williams, 2006). This is mainly because there must be initial negotiations by the involved governments for the signing of a treaty level agreement between the origin and destination country before any airline industry from whichever country can start operating international services to several other countries. Thus, these treaties that are signed between countries usually regulate the airline transport between the two countries, and are referred to as the bilateral airline services agreements (Belobaba, Odoni, and Barnhart, 2009).

Marine Transport

Container shipping is a method of handling goods by packing smaller packages in a large container.  Advantages of this method are that it eliminates the need to handle smaller packages going to a common destination. The less handling of individual packages cuts down on accidentally damaged goods. The containers can be intermixed between the different modes. There are fewer transfer points. The less stopping points, the shorter the shipping time. Shipping costs are variable depending on the mode of transport used. Long-distance shipping is the least expensive shipping option. Industries which use a number of different shipping modes tend to locate at break-of-bulk points, where it is easy to repackage products and change the shipping method (Kristiansen, 2005).

Rail Transport

Railroads have achieved improvements over the years by tailoring investments and services to markets and reconfiguring services to eliminate dysfunctional activities. The rail mode of transport has been playing an integrating role in socio-economic development of the country. Samanta & Mohanty (2005) indicated that in United States the service of public utility provider and an undertaker for commercial purpose are the performed dual roles of the railways.

Insecurity to the Transportation Industry

Fuel and labor costs are two key variables for every company in the transportation industry. The industry is inherently labor and fuel intensive which exposes firms to fluctuating fuel and labor costs. Weather also affects the ability to provide time definite service. Consolidation is a major trend. Firms such as UPS and FedEx are developing into multimodal supply chain management companies. The airline industry has been saddled with overcapacity which has resulted in multiple bankruptcies and mergers.

Economic and Inflation Impact on Transportation

Like a lot of other industries in the world, the transportation industry has also been hurt by the effects of the crashing economy. With prices of oil being skyrocketed by international feuds, the price of gas per gallon has gone up, directly raising the cost of transporting goods from one place to another. Manufacturers are continually feeling pressure to find ways to cut the cost of transportation by any means necessary. Also, the transportation brokerage agents are forced to lower their rates to stay competitive in a market that can be dictated by outside forces, such as oil prices.

Energy Demand and Transportation

The world energy demand is increasing. A huge percentage of the world's energy is still derived from ecologically unacceptable sources of energy; especially fossil fuels that are still the dominant source of energy. Fossil fuels are slowly disappearing and their usage is causing more environmental threats and growing energy demand. In that reason there is a need for more environmentally friendly transport fuels to replace fossil ones. Today, there is a strong awareness and orientation in transport industry to renewable energy sources that are sustainable and free from greenhouse gases like solar, wind, small hydro, bio etc. Development of conventional and non-conventional hybrid systems are one step forward in achieving common goals in reducing carbon dioxide in the transport industry. Conventional hybrid systems is primarily a combination of internal combustion engines and intelligent electric drive systems, while non-conventional hybrid systems combine two or more sources of energy for the purpose of balancing their characteristics, and because of the greater system reliability. Since they are currently in the experimental stage, only a few systems can be found in the world, mainly in the automotive industry.

Utilizing Energy

Electricity generated by wind turbines is now the largest renewable source. Wind power is expected to triple within a decade, partly because it is the least-expensive renewable source. Solar thermal energy for space heating, once considered the most promising alternative source, but it so far has proven too fussy and too expensive for widespread use.

Both the European Union and the United States in 2002 announced research programs into using hydrogen as a fuel. Not a source of energy but a means of storing it in convenient form, hydrogen is produced by running an electric current through water (H2O) and by then separating out the hydrogen, which can be stored, distributed through pipelines, or used in fuel cells to generate electricity. Hydrogen also can be made from natural gas, and technologists are currently working on other ways of producing it. However, critics argue that hydrogen actually would yield less net energy than direct utilization of whatever fossil fuel sources are used to generate the hydrogen; they also argue that there would be no net reduction in pollution.

Hybrid systems also can be a solution for reducing carbon dioxide gas. Besides saving fuel, and reducing emissions, hybrids are used for better dynamics and driving pleasure.

Fuel and Transportation

Related technologies including; transmission wires, generating plants, coal mines, gas stations, refineries, pipelines and oil wells make up the most expensive and the plant’s largest system of technology. Based primarily on natural gas, coal, and oil, the services of energy, structure everyday life, both directly and by enabling global transport, telecommunications, air-conditioning and computing. For nearly half a century, environmentalists and technological innovators have been urging reduced reliance on fossil fuels, but technological momentum remains dominant. Alternative energy advocates long have believed that renewable energy from sun, wind, and biomass could supply the planet's needs.

Impact of Transportation on the Environment

Production, transportation and energy use in a large extent affect the environment and ecosystems. Energy impact on the environment is almost always negative, like the direct environmental disasters like oil spills, acid rain and radiation to the indirect consequences such as global warming. Since the energy needs of mankind, over the coming years, will continue to grow, there are necessary measures to reduce the impact of energy exploitation on the environment reduced to a minimum.

Two basic problems of non-renewable energy are that we find them in limited quantities and that they pollute the environment. Combustion of fossil fuels releases large amounts of CO2, which is a greenhouse gas. It is most likely reason because there has been a global temperature increase on Earth. Nuclear fuel is not dangerous for the atmosphere, but the compounds formed by nuclear reactions remain radioactive for years and should be stored in special tanks. With renewable energy sources we do not find such problems.

Intermodal Transportation

Inter-modal Transportation is a transportation system that uses more than one mode of transportation in the process of moving passengers or cargo (i.e. truck-rail-ship). Although inter-modal transportation is primarily concerned with the movement of cargo, it is often used to move people as well. For example, assume that you have a flight from Chicago to London. First, you would probably drive your automobile from Normal to the airport parking lot. Second, you would take a tram to the terminal. Third, you would take a moving sidewalk to the gate. Forth, your luggage would be placed on a conveyor. Fifth, you would complete the flight on the aircraft.

The biggest challenge of any transportation system is to move people and cargo in timely, cost-efficient manners.  Often, inter-modal transportation is the best way to achieve cost effectiveness. Inter-modal transportation allows one to look at the total picture, determining whether one mode, two, or three will deliver the cargo safely at the lowest cost within the allowable span of time. For inter-modal transportation to work, freight terminals must play an important role.  The site of the terminals must be adjacent to the arteries serving the different modes but also must be large in land area.  Often waterfront land ports are too expensive, so most terminals are located inland.

Moving People and Goods through Transportation Networks

Often a third party is used when transporting both cargo and passengers.  Usually the third party operates no vehicles.  They function as the shipment consolidators or travel agents. Inter-modal transportation is typically used by everyone, every day.  Often a person walks to their car, drives to their destination, and then walks into the building. 

Political, Legal, and Policy Issues

Economy based benefits are provided with safe and efficient transportation system development. By existing capacity performance optimization or by development of a new infrastructure, the system of transportation can be improved by the commitment of the Governments. The process of transportation, in overall, is provided with insights additionally with benchmarking and development of measures of performance. The freight movement’s improvement needs commitment and involvement from all stakeholders to be successful.

While the responsible use of performance measures and benchmarking could benefit transportation systems, potential misuse exists.  In assessing and developing performance measures, Governments must seek to maintain some degree of confidentiality, particularly where the intermodal transportation system’s private components are engaged.

Government is in the process of allocation of scarce funds to seek to improve overall performance and not in determining winners and losers.  The starting point for national dialogues among the public and private sector’s performance measurement and benchmarking should provide improvement to intermodal productivity and freight mobility.  In the intermodal process development, Governments must recognize the of specific segments’ performance measures, e.g., measuring the activities of facilities that are owned privately, may mean terminal operations , therefore the release and use of that information by all stakeholders should be sensitive.

Hybrid Transportation

Hybrid technology can be effectively applied to improve the efficiency of various engines, regardless of what it is used as fuel (gasoline, diesel fuel, alternative fuel or fuel cell). Hybrid vehicles not only emit less greenhouse gases and consume less fuel, they are completely silent when operating an electric motor and having an impressive performance.

Revolutionary progress made by hybrid technology is an intelligent power management that comes from two different sources so that each dimension of driving, during acceleration, on the open road, braking and stopping, and starting, be done in the best possible way.

This highly innovative solution consists of a gasoline engine with a minimum consumption of fuel, combined with a completely harmless environment, an electric motor connected to a set of nickel metal hybrid batteries for extra power. Both of these energy sources are working together under the supervision of a sophisticated computer to control power management for maximum efficiency in driving.

Currently almost all vehicle manufacturers are working on hybrid technology, experts from several branches of science working on the development of efficient hybrid systems.

Hybrid systems are a combination of two or more sources of energy for the purpose of balancing their characteristics, and because of the greater system reliability.

Since they are currently in the experimental stage, only a few such systems can be found in the world. There are several performances of hybrid systems:

  • Fuel cells in combination with gas turbines or micro turbines
  • Sterling engine combined with solar power
  • Wind power combined with storage tanks of energy, for example, internal combustion engines, turbines or fuel cells
  • Internal combustion engines or micro turbines in combination with storage tanks of energy

Advantages of Hybrid Transportation

The great advantage of hybrids is seen through the growing environmental awareness of citizens. Parallel with the development of environmental consciousness scientists will have to expand the product range of hybrid-powered systems, but also continue to invest in new technology. For a drastic increase in the popularity of hybrids we need more than one good model and individual tax breaks from more advanced countries.

Some advantages of hybrid systems compared to conventional energy sources:

•     The certainty of meeting load demands at all times is greatly enhanced by the hybrid systems

•     Designed for easy to operate, service and maintenance when required.

•     Most ecofriendly and clean source of power.

•     Lying of the expensive grid line, transmission and distribution losses can be eliminated.

•     Eliminates any associated expensive electricity bills.


In conclusion, the introduction of high speed roads, new automotive technologies and advanced computer-assisted traffic management will have significant implications in this mode of transport. Considering that the transportation sector has many inter-linkages with other actors, the legal, political, policy issues, social and economic co-benefits should be identified, so that improvements for the wider economy are compatible with the long-term objectives. 

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