The transportation sector is also called the logistics industry. It represents more than USD 3 trillion. That is 5% of the world's GDP. It has known an average growth of 7% per year for the past 20 years. Its evolution follows that of the evolution of commerce and exchanges. Local, national, regional, and global. It is a measure of the stage of integration of human societies globally. With the sustained growth of international exchanges, we have seen a sustained growth of cargo transportation by sea and air. With the sustained growth of tourism, we have seen an explosion of air transportation as well. At SCMO we only focus on cargo transportation.
Cargo transportation also includes rail and road transportation. While rail is both national and regional, it is limited by its infrastructure capacity, and the time and cost to expand it. Rail heavily relies on infrastructure, land ownership, legal system, government regulation, licenses, and a vast number of stakeholders. Road is more of a local, national, and sometimes regional means of transportation, and is highly flexible. It adapts easily to the infrastructure available, or lack thereof, and the markets' evolution. Trucks are produced daily, while ships and planes need to be carefully planned and financed. Air also depends on regulations and airports capacity, while sea depends on seaports capacity.
Globally, the cost of transportation increases from sea (rivers/ canals), to rail, to road, and to air. There are exceptions due to infrastructure unbalances. The transportation industry accessibility is easy with road, while is becomes very costly with sea and air, and extremely costly with rail. This accessibility dictates each transportation mode profitability. Very low for road, higher for sea and air, and usually regulated for rail. Each transportation mode's cycles naturally regulates each sector, unless governments have their say.
When considering the complete supply chain globally, we contemplate a mix of the logic of nexus, with that of modular matrix, that of modes of transportation, and that of national, regional, and global strategy. The supply chain state of evolution in a region is a representation of the understanding of our social and economic ecosystem in that region.
It always adapts to local factors, such as the Dabbawala network in India. It adapts to geographical & social factors, such as Hong Kong, Antwerp, and Singapore ports, Panama and Egypt canals, or landlocked Switzerland. It adapts to isolation such as Alaska airfreight hub, or as the resources industry must do. It can often transform a perceived challenge as a competitive advantage and growth opportunity, such as landlocked countries, regional hubs, logistics parks, special economic zones, alliances, niche markets, e-commerce, sustainability, tender management...etc.
The transportation industry is also perceived in a more inclusive way. Henceforth the rise of the term "logistics" that encompasses both transportation and warehousing. Henceforth the rise of the term "supply chain" that encompasses both transportation and warehousing along the chain-of-supply. Henceforth the logic of "multi-modal" that is facilitated by the concept of containers and internationalization, but also by a better overview and understanding of the transportation industry ecosystem.
At SCMO we help you adapt to the ever-changing market, create competitive advantage, build more capable organizations, and secure lasting results. We work with all industries directly and indirectly related with the logistics industry. We help you evaluate, assess, understand, study, take distance, audit, train, tender, implement, and mitigate risk with the only aim to developing growth strategies, and capturing new opportunities.
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