International Transport System - Assignment Example

International Transport System Abstract: This report discusses about the various aspects related to the transportation system worldwide. The paper tries to find out the total effects that the constant process of globalization has on the demand as well as the network management of the various transportation systems throughout the globe and which are the countries and which are the segments that are mostly being affected. The paper also deals with issues like how a local transport company should maintain a balance between quality customer service and employee relation. Both of these factors are essential for the company to operate profitably in a given market, and especially in this sector as the visible competition is very high. The last section of the report is more of a country specific analysis. It discusses about the effect of government regulation and deregulation on the transportation industry of Australia. The effect on the Australian airlines industry is discussed in details in this particular report. Basically the issues which are being covered in the report separately explain the critical factors that control the transportation business and how the transportation system reacts to these changes. Introduction: A constant growth in the total amount of freight that are being traded across the borders coupled with the increasing number of origins and destination throughout the world, makes the international transport system a topic to be studied.( Transportation, Globalization and International Trade, 2009). It is such an integral part of the global business cycle that, the study of global economy without the study of the advancements in the international transport system becomes meaningless. There are obvious pressures on the transport systems with the increasing demands in both the aspects like volume and distance that needed to be carried. This demand pull, explains the massive technical advancements made in this particular field. In the current era, global as well as local transportation system is expected to carry a large number of passenger as well as cargo, and also to deliver them as fast as possible. (Transportation, Globalization and International Trade, 2009). Many other technological developments apart from the basic containerization have resulted in the increased number freights that are now being moved across the seas and oceans (Transportation, Globalization and International Trade, 2009). To look at it in a different way it can be said that the massive change in the transportation system is not an effect of globalization, but it is the other way round as this technological growth in the international transportation which enhanced the process of globalization. It can be referred to as the “enabling factor”, which initiated and made globalization of the current level, possible. (Transportation, Globalization and International Trade, 2009). This means that international transport system is in a constant demand for increasing its distribution infrastructure and network. The basic three components of international transportation, that will be the basis of the discussion, are transportation infrastructure, the transportation services and transportation environment like the complex, legal, political and cultural issues concerned with transportation. Effect of globalization: The economic development in the Pacific Asia and China can be identified as the main contributing factor influencing International transport System. (Transportation, Globalization and International Trade, 2009). Since the distance of these countries are considerable when compared to the western part of the world, massive demands of maritime transportation system along with the demand for improvement in network setting is felt. The country China is pointed out especially for the reason that with the growth of the industrial sector of this country, the export and import activities of China has excessively increased. Like in the above mentioned case most of the trade takes place between geographical locations which are about three thousand kilometers apart. (Transportation, Globalization and International Trade, 2009). There are several modes through which the strategic business locations are connected through out the world. Strong transport chains should be implemented so that the flow of information and resources remain undisturbed. There are basically two main modes with the help of which most of the international trades are being conducted. Maritime shipping is definitely on of those modes, along with air transport. Among these two modes, maritime shipping is considered as more important due to the fact that it handles about ninety percent of the total tonnage that are being transported through out the globe. (Transportation, Globalization and International Trade, 2009). Cargo transmission by containerized shipping is the most advanced forms of tonnage transmission. The transportation system of the maritime consists of a series of major gateways which grants access to the industrial regions and also the consumption belts. To make the flow of transportation smooth there are some major hubs located at different points in the system. (Rodriguez, 1). These hubs act as points of interconnection. The other important and advanced mode of transport which caters to international locations is the airlines. Though when compared to the tonnage handling capacity this mode is much lower than the maritime shipping, but with advanced technological developments and sophisticated network management system, the value created by the airlines is much more than shipping. (Transportation, Globalization and International Trade, 2009). The other modes such as roads and railways controls very minute portion of the international trade affairs, these transport mainly caters to mostly national and regional transport activities. Transportation is one of the most critical components of global economy, not only because it enables the movements of the freights but this system also supports a wide range of passenger transportation. It is a strong transportation system which determines the availability and even price of goods in a dependent economy. Thus how fast an economy will grow, and how cheap and available most of the goods in that economy depends on the level and capacity of the transportation system of that nation. Also for the nation which is transporting or exporting the good to the other nation, it is equally important that they also do have a strong and network base, so that they reach the entire desired destinations, which have a demand for their good. Countries whose economy mostly depends on tourism and hotel industry must also concentrate on the quality and type of transportation system they are providing. With the advent of globalization the economies which wants to enjoy the fruit of the given opportunity, should have to focus on their external and internal linkages. It can be said that growth of global economy and improvement of transportation system are prerequisites for one and other. (Rodriguez, 1) As also mentioned earlier both of the aspects are interdependent, the advancement of one necessarily means the growth of the other. It has to be though considered that globalization have not transformed the purpose of transportation, rather the effectiveness in terms of volume carried and speed of delivery has been improved. The first major trade route was “Silk Road”, where Chinese textiles were exported by means of this road way to the Middle East countries. (Rodriguez, 1) From this example it can be said that purpose of trade and connection was same but the technology and the volume and speed by which the goods travel now have changed immensely. When more commercially oriented countries came to the existence, it was China again who built a transport network which supported the maritime activities. The transport network was a collection of canals and it was called the Grand Canal. (Rodriguez, 1) Parts of this network are still being used by the recent maritime transports. In the beginning of the nineteenth century though the first real maritime routes are being established, which linked cities and ports throughout the world. But it was till that time that capacity was given more importance than speed of transportation. It was in the end of the nineteenth century when oil replaced the use of coal as a fuel, the speed element came to the picture. (Rodriguez, 3) This shift also reduced the operation costs enabling more cargo to move incurring a lower cost. Side by side with technological advancements in the fields of design and engineering, modern maritime ships can take a load much greater than their older versions. Along with the maritime shipping industry the airline industry also has its contribution in the emergence of global economy. The airline industry started with the mail delivery system and by the second half of the twentieth century, the airline industry became fully commercialized transporting both cargo and passengers. (Rodriguez, 3) At this point of time transportation is not just a support system. Transportation is the major pull factor which is driving the economy. Relying on the highly technical and fast transportation system multinational corporations is diversifying their business. Most of the large production houses depend on the air bound or maritime transportation networks to get access to their raw material and labor. (Rodriguez, 3). Also these companies even depend on the foreign market for the sale of their products. If there is a severe problem in the transportation network the whole company and even the industry would suffer. For these reasons it can be safely said transportation is the main driving force of the global economy. The graph below shows how the value of exports increased with time and the other trend line indicates the growth of merchandise trade as a percent calculation of the entire world’s GDP. (Source: The Geography of Transport System By Jean Paul Rodriguez, 2009) The first notable point in the graph is the increasing trend of export values in the global economy. This shows how with the advent of globalization in the export values jumped up and increased almost exponentially. This gives a sure indication that how globalization have affected international transport. The second trend line gives indication about the contribution of the international transportation in the global economy. In the year 2006, the total merchandise trade contributes to about fifty percent of the world’s total GDP. This fact supports the earlier discussion made about international transport system being the main force driving the global economy. According to some analysts there are other driving factors which are contributing to the international transport system. One of them is the advancements made in the fields of Information and Communication Technology. (Black, Nijkamp, 43). From the discussions made so far it is clear that the magnitude in which trade activities in the world would take place, depends entirely on the capacity of the transport system. With more and more firms using internet as a source to reach out to the global market, transportation system definitely is the real backbone which supports this information exchange. In the case of industrial transportation specially, these factors come into picture. More and more the companies try to reach out to the global market through any communication channel; the need for transportation will increase. Information and communication flow in a wider geographical area is possible with the help of Information and Communication Technology, while the actual delivery of the goods and services is done with the help of the industrial transportation system. When the question of commercial transportation arises, the contribution of information technology has two types of effect. (Black, Nijkamp, 44). Here business level passenger transport is referred to as commercial transportation. The first negative effect that the improvement of information technology has over transport system is the introduction of video conferencing. (Black and Nijkamp, 44). Through video conferencing many business conferences are now being held so the business managers do not feel the need to travel. This definitely have some negative impact on the commercial transport system. (Black and Nijkamp, 44) But there is other side of it also. Some discoveries in the fields of information technology are making an appeal to the business class to go mobile. (Black and Nijkamp, 44). The extensive use of mobile phones, laptops, and palmtops are valid examples of such promotions. In this way the business class is encouraged to travel more extensively than before. Balancing customer and employee relation: The main aim of any business is to maximize profit. Maximizing profits mean delivering the right product and services at the right time and thereby extracting the right price out of it. The kind of service that we are going to discuss is not unique and the service provider cannot enjoy a monopoly in the market. Rather such services are available in abundance in any country. As a result of this satisfying the customers becomes very essential for any such delivery business. The main way a delivery service can satisfy the customers is by attaining maximum accuracy and speed. The delivery cycle should be very small so that the customers across the entire nation receive their parcels within no time. A wide range area has to be covered in very little time, keeping in mind the immense competition in the market. There is though another inherent component which creates customer loyalty and satisfaction. This component is the delivery manner and the personal care taken by the delivery person while dealing with the customers. To look at it this may be considered at the main distinguishing point of any delivery service. With almost similar kind of network facilities and the speed of delivery it is very difficult for any customer to distinctly identify any service on these parameters. The customers would definitely count on the experience they had previously with the particular service. Now to narrow down the target, it is the quality of service the delivery service provides is what matters the most. It is very essential for any delivery service to maintain a good relationship with all of their customers as the chances of shifting in this particular industry is very high. Also it is equally important to track down the regular customers and they should be handled with more care. But the question is who will do all these things. It is impossible for the management of the company to come in direct contact with all of the customers. It will be definitely the workers and the employees of the organization who will directly or indirectly come in contact with the customers. For any company, who wants to implement a customer loyalty program, it is very crucial to include the employees of the organization into that program. If the employee- employer relation of the organization is not good, no matter how hard the management tries to introduce more customer centric plans the system will be a failure. The employees will not feel motivated to carry out the plan and to create a good relationship with the customers. As a result of which in times of direct contact the satisfaction level on the part of the customer will always go down. The company must also keep in mind that like the customers, also the employees have high chances of shifting. An employee, with good knowledge about the network in which the company operates and all the other modes of operation, will be a real treasure in the hands of the competitors. For that matter to maintain the customer loyalty level, the employee satisfaction level also have to be maintained. The management should try and create an environment in where the employees feel that they are an important part of the company. If the employees themselves become an integral part of the organization, implementing any program would not be difficult. The employees will be motivated to work for the growth of the company as well as their individual level growth. Thus for any company a proper balance of employee and customer relationship will serve the purpose. Effect of regulation and deregulation in Australian Transport System: According to many theorists and analysts Australia is a quality example in where a proper study about the impact of globalization can be conducted. This is due to the fact that the economic structure of Australia is quite different from the other economies and it usually takes a “midway”. (Dunning, 203). The term midway is used here to indicate the both developed and developing economical structure of Australia. This country relies more on its commodity exports and being an island transportation system plays a major role in its economy. (Dunning, 203). It has to be noted that the country showed major economic reforms in the decade of 1980 and it looked be more of a country which was inward-looking which was very unlike most of the countries in Western Europe. It was this inward-looking policy which created domestic-international transportation service dichotomies in the transport sector of Australia. (Goh, 65). Australia had two different airlines policy catering to domestic and international air transport. Before these two separate policies, post- Second World War, Australia used to have only one airlines carrier that is the Australian National Airways. (Goh, 65). At that time an attempt was made from the Labor Government to nationalize the airline industry of Australia. This attempt of nationalizing the service industry was a common trend which was being observed in various nations after the Second World War. (Goh, 65). But the fact that is notable in this regard is that unlike the other countries, this attempt of nationalization failed at that point. As a result of this the national government of Australia formed their own airlines called the Trans Australia Airlines (TAA). (Goh, 66). At that point of time the demarcation of the two separate airlines policies was only theoretically present. There were no proper restrictions on any new airlines entering into the market. It was in the year 1958 that government first tried to tighten the screw by introducing restrictions in importing aircrafts. (Goh, 67). Several analysts believed that by passing this legislation the government tried to have a two way control over the two airline sectors (domestic and international) and they restricted the entry of new players in the market fore several years after that. Finally it was almost after ten years deregulation in Australian airline industry was implemented in different stages. (Goh, 71). The first stage was to separate the ownership structure in the domestic as well as international carrier companies. In the second stage the restructuring of the ownership structures called for the participation of the foreign players available in the international market. This move resulted in the concept of a single aviation market of both Australia and New Zealand. (Goh, 71). It is quite evident from the facts that the Australian government gave permission of the foreign participation to encourage the new entrants in the market. These were the first positive intent that the government showed towards the policy of deregulation of the transport industry. The third stage of the change in ownership structure came in the month of June 1995 when there was a public floatation of the remaining seventy fiver percent stake of the Qantas. (Goh, 72). Though it was the policy structure of the Australian Government which hindered the process of deregulation or privatization of the airlines industry but there is another reason why the process took so long. The Gulf War significantly hampered the privatization plans as the values of the companies dropped considerably at that point of time. (Goh, 72). The foreign investors also were then unwilling to invest in the economy. These may be considered as the main stages and steps of deregulation of the Australian airlines industry. But there are certain other indicators apart from these three stages which initiated the process of deregulation of the industry. It was at that period that the Australian government was looking for a public policy reform which included deregulation in the other related service industries like telecommunications and financial services. (Goh, 72). The government also might have been influenced by the US deregulation act in their airlines industry. Also another fact that might be equally significant was the introduction of the airline competition regulation which finally took proper shape in Airlines Agreement Act 1981, which affected the domestic airlines industry. (Goh, 73). The Act also distinguishes the services and the accessory services provided by the domestic airlines. In brief it can be said that the reformed policy in the Australian airlines transport industry is much more competitive. From the policy statements, one thing was clear that the Australian government was seeking more of a competitive solution at that point in the market. This resulted in the introduction of more new service providers in the Australian transport industry. In fact these developments lead to the formation of a single airlines industry or the trans-Tasman aviation market, including Australia and New Zealand. (Goh, 76). Conclusion: The transport industry can be categorized into the service industry sector but as we see it is much more than just a service providing mechanism. It should be noted here that this industry did not start its operation as a service providing sector, but it was used for the sake of trade. International transport industry observed many scientific and technological advancements and it was this urge of this industry to grow which almost initiated globalization and connected the entire world. The report here covers almost all the aspects and dimensions related to this system. The change and the growth path of this industry are very crucial to study. It is this changing trend of use and utilization of the transport systems which makes it clear that how the perception over this industry evolved. With time this industry got segmented into many concentrated service providing companies, which addressed many niche markets through out the globe. Not only the trade and passenger transport system have important contribution towards the economy but also this internal domestic transport system and the connectivity helps a country lot in the path of development. The last section of the report discusses about how the governments also realizes the importance of the internal and external transport system of the country. The report thus gives a total view of the international transport system in three different angles. All of these angles are equally present in most of the transport industries in the world. Reference: 1. Black William Richard, Nijkam Social change and sustainable transport. Bloomington, Indiana University.2002 2. Dunning John. Governments, globalization, and international business. England, Oxford University Press.1999 3. Goh Jeffery. The single aviation market of Australia and New Zealand. New York, Routledge Cavendish.2001 4. Rodriguez Jean-Paul. Transportation, Globalization and International Trade. The Geography of Transport system. New York, Routledge. 2009 Read More