Overview
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Andrew
Intermodal transportation is a shipping method that involves transporting products using multiple modes of transportation, like trucks, boats, trains, or aircraft in a standardized container. This method can improve efficiency, reduce costs, and minimize damages or loss. Therefore, the growth of intermodal transportation is directly related to the supply and demand of a product. By improving the efficiency of the transportation method, products will be supplied to consumers quicker. Additionally, the transportation costs will reduce, resulting in cheaper products or higher margins for companies. Minimizing damages, loss and theft also enables businesses to improve their margins, again, resulting in lower priced products or more profit for the company. If the company choses to reduce prices, the demand of their product will increase as well. Alternatively, the opposite is true as well; if developing new transportation methods that are quicker but cost more the product will be easier to supply but price will rise, and demand may fall. The article highlights this importance of developing the transportation system and these benefits associated with it (Coughlin, Eberts, Sloboda & Yao, 2007).
The transportation industry affects nearly every other industry because nearly every organization ships or receives products. If transportations costs rise, it will cause a domino affect that eventually will be directly passed onto the consumer. For example, an office may have office supplies like printer paper, pens or sticky notes shipped on a regular basis. These supplies often transport many miles before arriving to the office. The raw material is first transported to a manufacturing plant, then the product is transferred to a distribution center or warehouse, then to a wholesale store like Staples, and finally shipped to the office. Often the cost of transportation is pushed onto the next in line, progressively making the product more expensive each step of the way (ICF Consulting, 2002).
Additionally, it is also important to note the reverse is true as well. If the demand or supply for products as a whole decrease, the transportation industry has less business. If the transportation business declines, it means other industries are not producing as much product and/or consumers are not buying as much either. Economists are able to use this data to predict potential economic downturns (FCC, n.d.).
References
Coughlin, C. C., Eberts, R. W., Sloboda, B., & Yao, V. W. (2007). Introduction to the special issue: Transportation investment and economic development. The Annals of Regional Science, 42(3), 501–503. https://doi.org/10.1007/s00168-007-0179-6
How the Trucking Industry Affects All Other Industries | Fremont Contract Carriers. (n.d.). Www.fcc-Inc.com. https://www.fcc-inc.com/how-the-trucking-industry-...
ICF Consulting. Economic Effects of Transportation: The Freight Story Final Report. (2002). https://ops.fhwa.dot.gov/freight/documents/freight...
Drew
Growths in intermodal transportation can have a major effect on the supply and demand of products. Intermodal transportation leads to supply chain efficiency and is crucial for businesses to maintain competitiveness while meeting what the customer demands. Internodal Transportation can allow business to leverage the most cost-effective modes of transportation on different legs of the products journey to the consumer and offer substantial cost savings when compared to traditional single-mode transportation (Lasater, 2024). Naturally, as you open your supply chain to multiple forms of transportation, you have a massive enhancement of flexibility when it comes to finding reacting to changing market conditions and always changing business needs. In addition, with an increase in flexibility comes an increase in reliability. As businesses can now make sudden changes to their transportation modes it will allow them to lower the risk of disruptions through tracking and other systems that will keep shipments on track with high transparency to the customers.
When reading the article by Eberts, there were a few main points that stuck out. As I mentioned tracking above, Eberts hits on the sizable gap between date that is available and data that is required to answer the important questions. Acquiring this data can be difficult and poses a challenge for business leaders as many assumptions are to be made. For example, “Most analysis of the relations between transportation investment and economic productivity do not consider the intensity of use of transportation systems. Productivity studies typically treat all transportation systems as if all traffic flows are the same” (Eberts, 2000). In the end, these assumptions can lead to biases in the estimates of productivity thus leaving the decision maker with holes in the data. Addental, Eberts talked about future directions of transportation investment and how it takes on two forms: capital expansion and capital enhancement. With these investment directions comes questions that have not been asked in supply chain before and can lead to issues that go deeper than transportation as there are more priorities placed on other areas of the government investment.
Overall, transportation costs can have important economic effects. Improved transportation systems can reduce costs for delivery of goods and support faster and more reliable transportation. As business lower their transportation costs, they have the ability to make changes to the price of the product or service as it does not cost them as much to bring it to the consumer. Expanded demand, which will happen as a result can generate economies of scale and improve their productivity. For example, a study conducted by ICF consulting provided a great example of how improvement to the transportation system at Dell helped them improve their standing. “On-line ordering of custom configured computers with just-in-time delivery of components and in 1996 led to high levels of service to customers while having tight control of inventory developed by Dell Computer” (ICF and HLB, 2002). This made it possible for Dell to provide a high level of service to retail customers while holding inventories at low levels.
Reference:
Lasater, L. (2024, March 8). Benefits of Intermodal Transportation To Enhance Your Supply Chain. Red Arrow Logistics Transportation and Freight Forwarding. https://redarrowlogistics.com/industry-news/the-be...
Economic Effects of Transportation: The Freight Story Final Report. (2002). https://ops.fhwa.dot.gov/freight/documents/freight...
Eberts, R. (2000). Understanding the Impact of Transportation on Economic Development [Review of Understanding the Impact of Transportation on Economic Development].