Transportation Industry in the United States of America - Essay Example

Optimizing Inventory/Transportation Background The following paper studies the transportation industry in the United s of America. The transportation industry is one of the most important industries that aids in the economic growth of any industry and any economy. In the USA for example the movement of goods has played a significant role in the growth of the US economy over the past 20 years. The movement of the goods to the prospect of the overall US economy has increased from 12% in the year 1990 to 23% in the year 2008. It is found that the players who play an important role in the transportation of freight ranges from sole proprietorship firms to large scale enterprises. It is also estimated that the relative importance of freight transportation within the broad spectrum of the US economy is going to increase in the years to come. The transportation sector plays a major role in the extended enterprise supply chain. The following essay describes the importance of various modes of transportation and the relative benefits of each of these sectors. Figure 1 extended enterprise supply chain Discussion on Transportation modes Rail Where it is used The railroads were deregulated by the staggers Rail act in the year 1980. This led to the change of an US industry that was on the verge of bankruptcy to a profitable industry. The share of the railroad in the transportation of the freight ton-miles actually rose from 29.4% in the year 1990 to about 39.5% in the year 2007 (Association of American Railroads, 2015). The industry has consolidated into an oligopoly. The no. of railroads reduced from 40 in the year 1980 to 7 that are existent today. Materials that are transported America’s railroads help in the transportation of a full spectrum of commodities from one end of the country to another. The different types of commodities that are transported by the railroads of the country are: agricultural and food products- around 1.6 million car loads of different agricultural commodities and 1.7 million carloads of other commodities are transported through the railroads. Chemicals- around 2.2 million carloads of different chemicals are transported. Railroads also account for transporting about 70% coal to the different power stations that help in the generation of electricity. In 2014 rails also helped in the delivering of 13.5 intermodal containers and trailers. In addition to the above the railroads also carry and deliver about 1.3 million carloads of lumber and paper products that are used in building houses and magazines etc. Railroads also help in the delivery of motor vehicles to the tune of millions. They also help in the delivering of raw materials and parts that helps in the manufacture of the cars. Every year the railroads also help in the delivering of many other raw materials and other industrial products that are critical to the modern society. Why is the mode used? The advantages of rail transport over other modes of transportation are the following: Fuel efficiency- It is found that the railroads are more fuel efficient than other modes of transportation such as trucks. On the year 2014 for example it was found that rail road transported the freight by 479 miles per gallon of fuel. Greenhouse gas- When goods are transported using railroads the amount of green house gasses that are produced are 75% less than the amount produced when goods are transported by trucks. Congestion in Highways- It is found that a single rail can carry the same amount of freight that is carried by hundreds of trucks. Thus if the rails are used to transport goods then the amount of money that is wasted in the form of time and fuel is much less. Pollution- It is found that if one wants to move freight through the process of rail transport then the amount of emissions that is generated is far less. Costs on a per-tonne mile basis It is found that railroads is a capital intensive business and is also found that there is high percentage of fixed costs. Hence it is found that as the freight volume increases the higher fixed costs gets distributed and the cost per tonne falls. The railways also incur semi variable cost that increases with the no. of tonne miles. The principle variable costs have reduced from 49.5% in 1980 to 27.8% in 2009 (Prokop, 2014). Inland water Where it is used It is found that 31 states in United States of America are served by the Mississippi River System and Gulf Intracostal Waterway. This states that are located on the Gulf Coast and are located throughout Midwest and the Ohio Valley especially depend on the waterways and the inland water ways for the transportation. The different water ways make up the inland waterways Mississippi river system, Ohio River system, Columbia River system, GIWW and others. Mississippi consists of 38%, Ohio River comprises 35%, and Columbia comprises 2%, GIWW comprises of 16%. Materials that are transported Materials that are mostly transported by the inland waterways are coal that is 26.1%, Petroleum and products that are derived from petroleum to the tune of 31.6%. Chemicals and related products to the tune of 8.3%, Crude materials to the tune of 18.6% , farm and farm products to the tune of 9.1% and other goods to the tune of 6.2%. Why is the mode used? As of 2007 more than $312 billion in domestic cargo was transported in the form of domestic cargo. More than 1.2 billion tons of cargo was transported using the waterways that were shipped from 40 different states and territories. It is found that there are several advantages of waterways as a mode of transportation and this includes the fact that waterways are low cost modes of transportation, in several states there are plenty of kilometers of waterways that is easily navigable and thus provides important and easy mode through which transportation can occur (C2ES, 2009). Costs on a per-tonne mile basis It is found that there are infrastructure constraints to the amount of goods that can be transported by the ships and the railways. It is not possible for many trips to be accommodated solely by the rail or the ship. Ocean Ocean is the mode of transportation that is used to transport commodities to the outside world that is ocean is used for the export and import. OTR Where it is used One of the important advantages of the trucks over other modes of transportation that are used is the extensive presence of highways in the United States of America. The Eisenhower system of defense highways is one of the engineering feats that were recognized as one of the seven wonders in the United States (Association of American railroads, 2015). It is found that the rail and freight transport network in the United States are much less extensive than the road network. It was found that where as the miles of infrastructure of railways on between 1980 and 2007 decreased by 24% the road infrastructure was actually found to increase by 5% (Texas Transportation institute, 2007). Materials that are transported Trucks are used to transport a variety of materials ranging from food to chemicals and coal to other raw materials. They are the most extensively used transportation method. Why is the mode used? If there is increase in the breakage journey then the cost of transportation of the goods increases. The cost of transferring goods from one mode of transportation to another is high and the transfer of goods from one mode to another is prohibited. It is founds that for shorter distances the trucks are the only mode of transportation that is available. Costs on a per-tonne mile basis It is found that the cost of transportation varies greatly depending on the mode through which the transportation is taking place (ATA, 2015). It is found that the cost of moving the goods by either aero plane or truck is more expensive than using rail or ship. Conclusion Cost of transportation by rail or road is high due to the fact that the railroads have a responsibility to maintain their physical infrastructure and so do the trucks. However it is found that roads are the most commonly used mode of transportation due to the geographical spread. References Association of American rail roads., (2015). Delivering energy independence to America. Retrieved from https://www.aar.org/ Association of American Railroads., (2015). The Economic Impact of America’s Freight Railroads. Retrieved from https://www.aar.org/backgroundpapers/economic%20impact%20of%20us%20freight%20railroads.pdf ATA., (2015). ATA American Trucking Trends 2015. Retrieved from http://www.trucking.org/article.aspx?uid=d62a253d-b830-4fa3-b069-f7f8ff5d40df C2ES., (2009). Freight transportation. Retrieved from http://www.c2es.org/technology/factsheet/FreightTransportation Prokop, D., (2014). The business of transportation. CA: ABC-CLIO. Texas Transportation Institute., (2007). A modal comparison of domestic freight transportation effects on the general public. Retrieved from http://www.marad.dot.gov/wp-content/uploads/pdf/Phase_II_Report_Final_121907.pdf Read More