•Fifth Freedom. This freedom enables airlines to carry passengers from a home country to another intermediate country (A), and then fl y on to a third country (B) with the right to pick up passengers in the intermediate country. Also referred to as “beyond right”. This freedom is divided into two categories: Intermediate Fifth Freedom Type is the right to carry from the third country to the second country. Beyond Fifth Freedom Type is the right to carry from the second country to the third country.•Sixth Freedom. Not formally part of the original 1944 convention, it refers to the right to carry passengers between two countries (A and B) through an airport in the home country. With the hubbing function of most air transport networks, this freedom has become more common, notably in Europe (London, Amsterdam).•Seventh Freedom. Covers the right to operate a passenger service between two countries (A and B) outside the home country.•Eighth Freedom. Also referred to as “cabotage” privileges. It involves the right to move passengers on a route from a home country to a destination country (A) that uses more than one stop along which passengers may be loaded and unloaded.•Ninth Freedom. Also referred to as “full cabotage” or “open-skies” privileges. It involves the right of a home country to move passengers within another country (A).In the 1970s, the perspective changed and air transport was increasingly seen as just another transport service. Market forces were considered to be the mechanism for fi xing prices and it became widely accepted that airline companies should be given freedom within national markets to decide the nature and extent of their services, while the role of governments should be limited to operational and safety regulations. In the United States , the Air Deregulation Act of 1978 put an end to fi xed markets and opened the FirstSecondHomeCountry ACountry BThirdFourth Fifth SixthSeventh Eighth NinthFigure 4.6 Air freedom rights
Transportation modes • 111industry to competition. This liberalization process has spread to many other countries, although with important local distinctions. Many of the former private fi rms in the USA and many former state-owned airlines elsewhere that were heavily protected and subsidized, went bankrupt or have been absorbed by larger ones. Many new carriers have emerged, with several low-cost carriers such as Ryan Air and South-West Air, having achieved industry leadership. Internationally, air transport is still dominated by bi-lateral agreements between nations (Graham, 1995).As in the case of ocean shipping, there has been a signifi cant development of alliances in the international airline industry. The alliances are voluntary agreements to enhance the competitive positions of the partners. Members benefi t from greater scale economies, a lowering of transaction costs and a sharing of risks, while remaining commercially independent. The fi rst major alliance was established in 1989 between KLM and North West Airlines. The “Star” alliance was initiated in 1993 between Lufthansa and United Airlines. In 1996, British Airlines and American Airlines formed the “One World” alliance. Other national carriers have joined different alliance groupings. They cooperate on scheduling, code sharing, equipment maintenance and schedule integration. It permits airlines that may be constrained by bi-lateral regulations to offer a global coverage (Agusdinata and de Klein, 2002).Prior to deregulation movements (end of 1970s–early 1980s), many airline services were taking place on a point-to-point basis. Figure 4.7 shows two airline companies servicing a network of major cities. A fair amount of direct connections exists, but mainly at the expense of the frequency of services and high costs (if not subsidized). Also, many cities are serviced, although differently, by the two airlines and connections are likely to be inconvenient. With deregulation, a system of hub-and-spoke networks emerges as airlines rationalize the effi ciency of their services. A common consequence is that each airline assumes dominance over a hub and services are modifi ed so the two hubs are connected to several spokes. Both airlines tend to compete for fl ights between their hubs and may do so for specifi c spokes, if demand warrants it. However, as this network matures, it becomes increasingly diffi cult to compete at hubs as well as at spokes, mainly because of economies of agglomeration. As an airline assumes Before DeregulationAfter DeregulationHubHubFigure 4.7 Airline deregulation and hub-and-spoke networks
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dominance of a hub, it reaches oligopolistic (if not monopolistic) control and may increase airfares for specifi c segments. The advantage of such a system for airlines is the achievement of a regional market dominance and higher plane loads, while passengers benefi t from better connectivity (although delays for connections and changing planes are more frequent) and lower costs.Air transport is extremely important for both passenger and freight traffi c. In 2000, 1.4 billion passengers traveled by air transport , representing the equivalent of 23 percent of the global population. Passenger traffi c is made up of business travelers and the general public, many of whom are holiday-makers. Air transport is a very signifi cant factor in the growth of international tourism. Figure 4.8 indicates the continued domination of US carriers in passenger transport.In 2000, 30 million tons of freight was transported, a fi gure that represents one third of the value of all international trade . This freight traffi c is made up of electronics, parcels and parts with a high value-to-weight ratio that are at the heart of contemporary just-in-time and of fl exible production systems. Freight is carried in the belly-hold of passenger airplanes, and provides supplementary income for airline companies. However, with the growth of the freight traffi c an increasing share is being accounted for by all-cargo planes and specialized air freight carriers, either as independent companies or as separate ventures by conventional passenger carriers (see Figure 4.9).Modal competition A general analysis of transport modes reveals that they each possess key operational and commercial advantages and properties. Modes can compete or complement each other in terms of cost, speed, reliability, frequency, safety, comfort, etc. Cost is one of the most important considerations in the choice of mode. Because each mode has its own price/performance profi le, the actual competition between the modes depends primarily upon the distance traveled, the quantities that have to be shipped and the value of the goods. Thus, while maritime transport might offer the lowest variable costs, over short distances and for small bundles of goods, road transport tends to be most competitive. A critical factor is the terminal cost structure for each mode, where the costs (and delays) of loading and unloading the unit impose fi xed costs that are incurred independent of 0 20,000 40,000 60,000 80,000 100,000 120,000Delta Air LinesAmerican AirlinesUnited AirlinesNorthwest AirlinesUS AirwaysLufthansaContinental AirlinesAll Nippon AirwaysAir FranceBritish AirwaysFigure 4.8 World’s 10 largest passenger airlines, 2000 (in 1,000 passengers) (Source: IATA, World Air Transport Statistics)
Transportation modes • 113the distance traveled (see Chapter 5). As shown in Figure 4.10, different transportation modes have different cost functions. Road, rail and maritime transport have respectively C1, C2, and C3 cost functions. While road has a lower cost function for short distances, its cost function climbs faster than rail and maritime cost functions. At a distance D1,it becomes more profi table to use railway transport than road transport while from a distance D2, maritime transport becomes more advantageous. Point D1 is generally located between 500 and 750 km of the point of departure while D2 is near 1,500 km.With increasing levels of income the propensity for people to travel rises. At the same time, international trade in manufactured goods and parts has increased. These trends in travel demand act differentially upon the modes. The modes that offer faster and more reliable services gain over modes that offer a lower cost, but slower, alternative. For passenger services, rail has diffi culty in meeting the competition of road transport over short distances and aircraft for longer trips. For freight, rail and shipping have suffered from competition from road and air modes for high value shipments. While shipping, pipelines and rail still perform well for bulkier shipments, intense competition over the last thirty years has seen road and air modes capture an important market share of the high revenue-generating goods. Figure 4.11 shows the modal split in one major market region, where trucks dominate, particularly in terms of value of shipments.0 1,000 2,000 3,000 4,000 5,000Federal ExpressUnited Parcel ServiceKorean Air LinesLufthansaJapan AirlinesSingapore AirlinesCathay PacificNorthwest AirlinesBritish AirwaysAir FranceFigure 4.9 World’s 10 largest freight airlines, 2000 (in 1,000 tonnes)Figure 4.10 Distance, modal choice and transport cost DistanceTransport costs per unitRoadRail MaritimeD1 D2C1C2C3
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There are important geographical variations in modal competition. The availability of transport infrastructures and networks varies enormously. Some regions possess many different modes that in combination provide a range of transport services that ensure an effi cient commercial environment. In many parts of the world, however, there are only limited services, and some important modes may be absent altogether. This limits the choices for people and shippers, and acts to limit accessibility. People and freight are forced to use the only available modes that may not be the most economic for the nature of the demand. Goods may not be able to fi nd a market, and people’s mobility may be impaired.For these reasons, transport provision is seen as a major factor in economicdevelopment (see Chapter 3). Areas with limited modal choices tend to be among the least developed. The developed world, on the other hand, possesses a wide range of modes that can provide services to meet the needs of society and the economy.Concept 2 – Intermodal transportationThe nature of intermodalism Competition between the modes has tended to produce a transport system that is segmented and un-integrated. Each mode has sought to exploit its own advantages in terms of cost, service, reliability and safety. Carriers try to retain business by maximizing the line-haul under their control. All the modes saw the other modes as competitors, and were viewed with suspicion and mistrust. The lack of integration between the modes was also accentuated by public policy that has frequently barred companies from owning fi rms in other modes (as in the United States before deregulation), or has placed a mode under direct state monopoly control (as in Europe). Modalism was also favored because of the diffi culties of transferring goods from one mode to another, thereby incurring additional terminal costs and delays.The use of several modes of transport has frequently occurred as goods are shipped from the producer to the consumer. When several modes are used this is referred to as multimodal transport. Within the last forty years efforts have been made to integrate separate transport systems through intermodalism. What distinguishes intermodal from multimodal transport is that the former involves the use of at least two different 65.614.43.66.954.535.117.414.80.232.40.1010203040506070Truck Rail Pipeline Air Water Other andunknownValueWeightFigure 4.11 Modal shares of US–NAFTA-partner merchandise trade, 2000
Transportation modes • 115modes in a trip from origin to destination under a single transport rate. Intermodality enhances the economic performance of a transport chain by using the modes in the most productive manner. Thus, the line-haul economies of rail may be exploited for long distances, with the effi ciencies of trucks providing local pick up and delivery. The key is that the entire trip is seen as a whole, rather than as a series of legs, each marked by an individual operation with separate sets of documentation and rates.Figure 4.12 illustrates two alternatives to freight distribution. The fi rst is a conventional point-to-point multimodal network where origins (A, B and C) are independently linked to destinations (D, E and F). In this case, two modes (road and rail) are used. The second alternative involves the development of an integrated intermodal transport network . Traffi c converges at two transshipment points, rail terminals, where loads are consolidated. This can result in higher load factors and/or higher transport frequency, especially between terminals. Under such circumstances, the effi ciency of such a network mainly resides in the transshipment capabilities of transport terminals.The emergence of intermodalism has been brought about in part by technology (Muller, 1995). Techniques for transferring freight from one mode to another have facilitated intermodal transfers. Early examples include piggyback (TOFC: trailers on fl at cars), where truck trailers are placed on rail cars, and LASH (lighter aboard ship), where river barges are placed directly on board sea-going ships. The major development undoubtedly has been the container , which permits easy handling between modal systems. Containers have become the most important component for rail and maritime intermodal transportation.While handling technology has infl uenced the development of intermodalism, another important factor has been the changes in public policy. Deregulation in the United States in the early 1980s liberated fi rms from government control. Companies were no longer prohibited from owning across modal types, and there developed a strong impetus towards intermodal cooperation. Shipping lines, in particular, began to offer integrated rail and road service to customers. The advantages of each mode could be exploited in a seamless system. Customers could purchase the service to ship their products from door to door, without having to concern themselves about modal barriers. With one bill of lading clients can obtain one through rate, despite the transfer of goods from one mode to another (Hayuth, 1987).The provision of through bills of lading in turn necessitated a revolution in organization and information control. At the heart of modern intermodalism are data handling, processing and distribution systems that are essential to ensure the safe, reliable and cost-effective control of freight movements across several modes. Electronic Data ACDFEBMultimodal point -to-point networkACDFEBIntermodalintegrated networkRailRoadTransshipmentTransshipmentFigure 4.12 Multimodal and intermodal transportation
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Interchange (EDI) is an evolving technology that is helping companies and government agencies (customs documentation) to cope with an increasingly complex global transport system.Intermodalism, the container and maritime transportIntermodalism originated in maritime space, with the development of the container in the late 1960s and has since spread to integrate other modes. It is not surprising that the maritime sector should have been the fi rst mode to pursue containerization. It was the mode most constrained by the time taken to load and unload the vessels. Containerization permits the mechanized handling of cargoes of diverse types and dimensions that are placed into boxes of standard dimensions. In this way, goods that might have taken days to be loaded or unloaded from a ship can now be handled in a matter of minutes (Slack, 1998).One of the keys to the success of the container is that the International Standards Organization (ISO) very early on established base dimensions. The reference size is the 20-foot box, 20 feet long, 8 feet high and 8 feet wide, or 1 Twenty-foot Equivalent Unit (TEU). The other major size is the 40-foot box, which has the capacity to carry 4,400 VCRs or 267,000 video games or 10,000 pairs of shoes. Containers are either made of steel or aluminum and their structure confers fl exibility and hardiness. Each year, about 1.5 million TEU worth of containers are manufactured. The global inventory of containers was estimated to be around 15.9 million TEU by 2002. The standard 20-foot container costs about $2,000 and a 40-footer about $4,000.Among the numerous advantages related to the success of containers in international transport, it is possible to note several elements:•Standard transport product. A container can be manipulated anywhere in the world as its dimensions are an ISO standard. Indeed, transfer infrastructures allow all elements (vehicles) of a transport chain to handle it with relative ease. The rapid diffusion of containerization was facilitated by the fact that its initiator, Malcolm McLean, purposely did not patent his invention. Consequently all segments of the industry, competitors alike, had access to the standard. It necessitated the construction of specialized ships and of lifting equipment.•Flexibility of usage. A container can transport a wide variety of goods, ranging from raw materials (coal, wheat), manufactured goods, and cars to frozen products. There are specialized containers for transporting liquids (oil and chemical products) and perishable food items in refrigerated containers or reefers. About 1 million TEUs of reefers were being used by 2002.•Management. The container , as an indivisible unit, carries a unique identifi cation number and a size type code, enabling transport management not only in terms of loads, but in terms of unit. Computerized management reduces waiting times considerably and allows the position of containers to be traced at any time. It enables containers to be assigned according to the priority, destination and available transport capacities.•Costs. Containerization of shipping has reduced costs signifi cantly. Before container-ization, maritime transport costs could account for between 5 and 10 percent of the retail price of manufactured products; this share has been reduced to 1.5 percent. The main factors behind costs reductions reside in the speed and fl exibility incurred by containerization. It has permitted shipping to achieve ever greater economies of scale through the introduction of larger ships. A 5,000 TEU containership has operating costs per container that are 50 percent lower than a 2,500 TEU vessel.
Transportation modes • 117•Speed. Transshipment operations are minimal and rapid. A modern container ship has a monthly capacity of three to six times more than a conventional cargo ship. This is notably attributable to gains in transshipment time as a crane can handle roughly 30 movements (loading or unloading) per hour. Port turnaround times have thus been reduced from 3 weeks to about 24 hours. It takes on average between 10 and 20 hours to unload 1,000 TEUs compared with between 70 and 100 hours for a similar quantity of general cargo. A regular freighter can spend between half and two-thirds of its useful life in port. With less time in port, containerships can spend more time at sea, and thus be more profi table to operators. Further, containerships are on average 35 percent (19 knots versus 14 knots) faster than regular freighter ships. System-wide, the outcome has been a reduction of costs by about 30 percent because of containerization.•Warehousing. The container limits the risks for goods it transports because it is resistant to shocks and weather conditions. The packaging of goods it contains is therefore simpler and less expensive. Containers fi t together, permitting stacking on ships and on the ground. The container is consequently its own warehouse.•Security. The contents of the container are anonymous to outsiders as it can only be opened at the origin, at customs and at the destination. Thefts, especially those of valued commodities, are therefore considerably reduced.In spite of numerous advantages in the usage of containers, some drawbacks are evident:•Consumption of space. A containership of 25,000 tons requires a minimum of 12 hectares of unloading space. Conventional port areas are not adequate for container handling. Consequently, containers have modifi ed the local geography of ports (see Chapter 5).•Infrastructure costs. Container handling infrastructures, such as gantry cranes, yard equipment, road and rail access, represent important investments for port authorities and load centers. Several developing countries cannot afford these infrastructures and so cannot participate in international trade.•Management logistics . The management logistics of containers is very complex. This requires high levels of information technology for the recording, positioning and ordering of containers handled.•Empty travel. At the global scale, it is rare for the origins and destinations of containers to be in equilibrium. Most container trade is imbalanced, and thus containers “accumulate” in some places and must be shipped back to locations where there are defi cits. Many containers are moved empty. Either full or empty, a container takes the same amount of space on the ship or in a storage yard and takes the same amount of time to be transshipped. As a result, shipping lines waste substantial amounts of time and money in repositioning empty containers.•Illicit trade. By its confi dential character, the container is a common instrument used in the illicit trade of drug and weapons, as well as for illegal immigrants. Concerns have also been raised about containers being used for terrorism. Electronic scanning systems are being implemented to remotely inspect the contents of containers at major gateways.Intermodalism and other modesWith the deregulation and privatization trends begun in the 1980s, containerization, which was already well established in the maritime sector, could spread inland. The
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shipping lines were among the fi rst to exploit the intermodal opportunities that US deregulation permitted. They could offer door-to-door rates to customers by integrating rail services and local truck pick up and delivery in a seamless network. To achieve this they leased trains, managed rail terminals, and in some cases purchased trucking fi rms. In this way, they could serve customers across the country by offering door-to-door service from suppliers located around the world. The move inland also led to some signifi cant developments, most notably the double-stacking of containers on rail cars. This produced important competitive advantages for intermodal rail transport (Muller, 1995).Other parts of the world have not developed the same degree of synergies between rail and shipping as is found in North America. However, there appears to be a trend towards closer integration in many regions. In Europe, rail intermodal services are becoming well established between the major ports, such as Rotterdam, and southern Germany, and between Hamburg and Eastern Europe (van Klink and van den Berg, 1998). Rail shuttles are also making their appearance in China .While rail intermodal transport has been relatively slow to develop in Europe, there are extensive interconnections between barge services and ocean shipping, particularly on the Rhine (Notteboom and Konings, 2004). Barge shipping offers a low-cost solution to inland distribution where navigable waterways penetrate to interior markets. This solution is being tested in North America, where the Port Authority of New York and New Jersey is sponsoring barge services to Albany and several other destinations.While it is true that the maritime container has become the work horse of international trade , other types of containers are found in certain modes, most notably in the airline industry. High labor costs and the slowness of loading planes, which require a very rapid turnaround, made the industry very receptive to the concept of a loading unit of standard dimensions. The maritime container was too heavy and did not fi t the rounded confi guration of a plane’s fuselage, and thus a box specifi c to the needs of the airlines was required. The major breakthrough came with the introduction of wide-bodied aircraft in the late 1970s. Lightweight aluminum boxes could be fi lled with passengers’ baggage or parcels and freight, and loaded into the holds of the planes using tracking that requires little human assistance.A unique form of intermodal unit has been developed in the rail industry, particularly in the USA. Roadrailer is essentially a road trailer that can also roll on rail tracks. It is unlike the TOFC (piggyback) system that requires the trailer be lifted onto a rail fl at car. Here the rail bogies may be part of the trailer unit, or be attached in the railway yard. The road unit becomes a rail car, and vice versa. It is used extensively by a major US rail company, Norfolk Southern, whose “Triple Crown” service provides just-in-time deliveries between the automobile parts manufacturers located in Michigan, and the assembly plants located in Georgia, Texas and Mexico and Canada .Intermodalism and production systemsNS’s Triple Crown Service is but one example of how transport chains are being integrated into production systems. As manufacturers spread their production facilities and assembly plants around the globe to take advantage of local factors of production, transportation becomes an ever more important issue. The integrated transport chainis itself being integrated into the production and distribution processes. Transport can no longer be considered as a separate service that is required only as a response to supply and demand conditions. It has to be built into the entire supply chain system, from multi-source procurement, to processing, assembly and fi nal distribution (Robinson, 2002).
Transportation modes • 119While many manufacturing corporations may have in-house transportation departments, increasingly the complex needs of the supply chain are being contracted out to third parties. Third party logistics providers (3PL) have emerged from traditional intermediaries such as forwarders, or from transport providers such as FEDEX or Maersk-SeaLand. Because the latter are transporters themselves, they are referred to as fourth party logistics providers (4PL). Both groups have been at the forefront of the intermodal revolution that is now assuming more complex organizational forms and importance. In offering door-to-door services, the customer is no longer aware or necessarily concerned with how the shipment gets to its destination. The modes used and the routing selected are no longer of immediate concern. The preoccupation is with cost and level of service. This produces a paradox, that for the customer of intermodal services geographic space becomes meaningless; but for the intermodal providers routing and modal choice assume an ever greater importance.Concept 3 – Passengers or freight?Advantages and disadvantagesWith some exceptions, such as buses and pipelines, most transport modes have developed to handle both freight and passenger traffi c. In some cases both are carried in the same vehicle, as for example in the airlines where freight is transported in the cargo holds of passenger aircraft. In others, different types of vehicle have been developed for freight and passenger traffi c, but they both share the same road bed, as for example in rail and road traffi c. In shipping , passengers and freight used to share the same vessel, but since the 1950s specialization has occurred, and the two are now quite distinct, except for ferries and some RORO services.The sharing by freight and passengers of a mode is not without diffi culties, and indeed some of the major problems confronting transportation occur where the two seek to co-inhabit. For example, trucks in urban areas are seen as a nuisance and a cause of congestion by passenger transport users. The poor performance of some modes, such as rail , is seen as the outcome of freight and passengers having to share routes.This raises the question as to whether freight and passengers are compatible. The main advantages of joint operations are:•High capital costs can be justifi ed more easily with a diverse revenue stream (rail, airlines, ferries).•Maintenance costs can be spread over a wider base (rail, airlines).•The same traction sources can be used for both freight and passengers, particularly for rail.The main disadvantages of joint operations are:•Locations of demand rarely match – origin/destination of freight is usually quite distinct spatially from passenger traffi c.•Frequency of demand is different – for passengers the need is for high frequency service, for freight it tends to be somewhat less critical.•Timing of service – demand for passenger services has specifi c peaks during the day, for freight it tends to be more evenly spread throughout the day.•Traffi c balance – on a daily basis passenger fl ows tend to be in equilibrium, for freight, market imbalances produce empty fl ows.
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•Reliability – although freight traffi c increasingly demands quality service, for passengers delays are unacceptable.•Sharing routes favors passenger traffi c – passenger trains are given priority; trucks may be excluded from areas at certain times of the day.•Different operational speeds – passengers demand faster service.•Security screening measures for passengers and freight require totally different procedures.A growing divergence In several modes and across many regions passenger and freight transport is being unbundled.•Shipping. It has already been mentioned that in the maritime sector passenger services have become divorced from freight operations, the exception being some ferry services where the use of RORO ships on high frequency services adapt to the needs of both market segments. Deep sea passenger travel is now dominated by cruise shipping which has no freight-handling capabilities, and bulk and general cargo ships rarely have an interest or the ability to transport passengers.•Rail. Most rail systems still operate passenger and freight business. Where both segments are maintained, the railways give priority to passengers, since rail persists as the dominant mode for inter-city transport in India , China and much of the developing world. In Europe, the national rail systems and various levels of government have prioritized passenger service as a means of checking the growth of the automobile, with its resultant problems of congestion and environmental degradation (see Chapter 8). Signifi cant investments have occurred in improving the comfort of trains and in passenger rail stations, but most notable have been the upgrading of track and equipment in order to achieve higher operational speeds. Freight transport has tended to lose out because of the emphasis on passengers. Because of their lower operational speeds, freight trains are frequently excluded from daytime slots, when passenger trains are most in demand. Overnight journeys may not meet the needs of freight customers. This incompatibility is a factor in the loss of freight business by most rail systems still trying to operate both freight and passenger operations. In Europe, there are signs that the two markets are being separated. First, it is occurring at the management level. The liberalization of the railway system that is being forced by the European Commission is resulting in the separation of passenger and freight operations. This had already taken place in the UK when British Rail was privatized. Second, the move towards high-speed passenger rail service necessitated the construction of separate rights of way for the TGV trains. This has tended to move passenger train services from the existing tracks, thereby opening up more daytime slots for freight trains. Third, the Dutch are building a freight only track, the Betuwe Line, from the port of Rotterdam to the German border, having already sold the freight business of the Netherlands railway (NS) to DB (Deutsche Bahn), and having opened up the freight business to other fi rms. In North America, the divorce between freight and passenger rail business is most complete. The private railway companies could not compete against the automobile and airline industry for passenger traffi c, and consequently withdrew from the passenger business in the 1970s. They were left to operate a freight only system, which has generally been successful, especially with the introduction of intermodality. The passenger business has been taken over by public agencies, AMTRAK in the USA, and VIA Rail in Canada . Both are struggling
Transportation modes • 121to survive. A major problem is that they have to lease trackage from the freight railways, and thus slower freight trains have priority (Figure 4.13).•Roads. Freight and passenger vehicles still share the roads. The growth of freight traffi c is helping increase road congestion and in many cities concerns are being raised about the presence of trucks (see Chapters 7 and 9). Already, restrictions are in place on truck dimensions and weights in certain parts of cities, and there are growing pressures to limiting truck access to non-daylight hours. Certain highways exclude truck traffi c – the parkways in the USA for example. These are examples of what is likely to become a growing trend – the need to separate truck from passenger vehicle traffi c. Facing chronic congestion around the access points to the port of Rotterdam and at the freight terminals at Schiphol airport, Dutch engineers have worked on feasibility studies of developing separate underground road networks for freight vehicles.•Air transport. Air transport is the mode where freight and passengers are most integrated. Yet even here a divergence is being noted. The growth of all-freight airlines and the freight-only planes operated by some of the major carriers, such as Singapore Airlines, are heralding a trend. The interests of the shippers, including the timing of the shipments and the destinations, are sometimes better served than in passenger aircraft. The divergence between passengers and freight is also being accentuated by the growing importance of charter and “no frills” carriers. Their interest in freight is very limited, especially when their business is oriented towards tourism, since tourist destinations tend to be lean freight generating locations.Method 1 – Technical performance indicatorsIndicatorsMultimodal transportation networks rest upon the combinatory costs and performance of transport modes, or what is referred to as economies of scope. For instance, a single container shipped overseas at the lowest cost from its origin can go from road, to seaway, to railway and to road again before reaching its destination. Freight shippers and carriers therefore require quantitative tools for decision-making in order to compare performances of various transport modes and transport networks. Time-effi ciency 0 50 100 150 200 250 300CanadaFranceGermanyItalyJapanUnited KingdomUnited StatesPassenger-kms (billions) Ton-kms (billions)1979.7Figure 4.13 Domestic rail passenger travel and freight activity, G7 Countries, 1996 (Source: US Department of Transportation, BTS, G–7 Countries: Transportation Highlights)
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becomes a set imperative for both freight and passenger transit in private as well as in public sector activities.Performance indicators are widely used by geographers and economists to empirically assess the technical performance (not to be confused with economic performance, for there can exist a lag between the two) of differing transport modes, in other words their capacity to move goods or passengers around. Hence, basic technical performance calculations can be particularly useful for networks’ global performance analysis as well as for modal comparison, analysis, and evaluation by bridging both physical attributes (length, distance, confi guration, etc.) and time-based attributes (punctuality, regularity, reliance, etc.) of networks. Some indicators are currently used to measure freight and passenger transport. Table 4.1 gives a few of the most common ones.Passenger-km or ton-km are standard units for measuring travel that consider the number of people traveling or ton output and distance traveled. For example, 120 passenger-km represents 10 passengers traveling 12 kilometers or 2 passengers traveling 60 kilometers, and so on. More specifi cally, such indicators are of great utility by allowing cross-temporal analysis of a transport nexus or given transport modes.Economic impact indicatorsUndoubtedly, transportation plays a considerable role in the economy with its omni-presence throughout the production chain, at all geographic scales. It is an integralconstituent of the production–consumption cycle. Economic impact indicators help to appreciate the relationship between transport systems and the economy as well as to inform on the economic weight of this type of activity. Geographers should be familiar with basic econometric impact indexes (see Table 4.2).Effi ciency is usually defi ned as the ratio of input to output, or the output per each unit of input. Modal variations in effi ciency will depend heavily on what is to be carried, the distance traveled, the degree and complexity of logistics required as well as economies of scale. Freight transport chains rest upon the complementarity of cost-effi cient and Table 4.1 Commonly used performance indicatorsIndicator Passenger Freight DescriptionPassenger/freight density passenger-km/km ton-km/km A standard measure of transport effi ciency.Mean distance traveled passenger-km/passenger ton-km/ton A measure of the ground covering capacity of networks and different transport modes.Mean per capita passengers/population tons/population Used to measure theton output (freight) relative performanceMean number of trips of transport modes.per capita (passenger)Mean occupation number of passengers actual load (ton)/ Especially useful withcoeffi cient aboard/total carrying overall load capacity increasing complexity capacity (%) (ton) (%) of logistics associated with containerization of freight (i.e. the problem of empty returns). Can also be used to measure transit ridership.
Transportation modes • 123time-effi cient modes, seeking most of the time a balanced compromise rather than an ideal or perfect equilibrium.Maritime transport is still the most cost-effi cient way to transport bulk merchandise over long distances. On the other hand, while air transport is recognized for its unsurpassed time-effi ciency versus other modes over long distances, it remains an expensive option. Thus, vertical integration, or the absorption of transportation activities by producers, illustrates the search for these two effi ciency attributes by gaining direct control over inputs.Transportation and economic impactsThe relationship between transport systems and their larger economic frame becomes clear when looking at restructuring patterns which carriers and fi rms are currently undergoing. Structural mutations, best illustrated by the popularity of just-in-time practices, are fuelled by two opposing yet effective forces: transporters seek to achieve economies of scale while having to conform to an increasingly “customized” demand.Factor substitution is a commonly adopted path in order to reduce costs of production and attain greater effi ciency. Containerization of freight by substituting labor for capital and technology is a good illustration of the phenomenon. Measures of capital productivity for such capital-intensive transport means are of central importance; an output/capital ratio is then commonly used. While the output/labor ratio performs the same productivity measurement but for the labor input (this form of indicator can be used for each factor of production in the system), a capital/labor ratio aims at measuring which factor predominates within the relationship between capital and labor productivity. The above set of indicators therefore provides insights on the relative weight of factors within the production process.More scale-specifi c indicators can also be used to appreciate the role of transport within the economy. Knowing freight transport both contributes to and is fuelled by a larger economic context, freight output can be confronted against macro-economic indicators: an output/GDP ratio measures the relationship between economic activity and traffi c freight, in other words the traffi c intensity. At the local level, the status of the transport industry within the local economy is given by a transport sector income / local income ratio. Still at a micro-scale, fi nally, a measure of the relative production value of freight output is provided by an output/local income ratio.Underlying objectives of application of such indicators are as varied as they are numerous. Effi ciency indicators constitute valuable tools to tackle project viability questions as well as to measure investment returns and cost/subsidy recovery of transport systems. Input–output analyses making use of some of the above indicators are also instrumental to the development of global economic impact indexes and productivity assessment concepts such as the Total Factor Productivity (TFP) and to identify sources of productivity gains.Table 4.2 Measures of effi ciencyEffi ciency indicators Scale-specifi c indicators(Factors of production) Micro Meso-macrooutput/capital transport sector income/ output/GDP local incomeoutput/labor output/local income
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Specialization index In transport, to fi nd out if a terminal is specialized in the transshipment and/or handling of a particular kind of merchandise or if, inversely, it transfers a wide variety of merchandise, we can calculate a specialization index. For example, the index can be used to know if a port is specialized in the handling of a certain type of product (e.g. containers) or if it handles a wide range of merchandise. As a consequence, such an index is quite versatile and has a variety of applications; it informs geographers on the activities of any type of terminal (port, train and airport ). In the case of an airport terminal, one could ask if a given airport deals with only a single type of fl ights/passengers (local, national, international, etc.) or if it welcomes several. The specialization index (SI) is calculated using the following formula:SIttiiii=⎛⎝⎜⎜⎞⎠⎟⎟∑∑22which is the total of squares of tonnage (or monetary value) of each type of merchandise i (ti) handled at a terminal over the square of the total volume tonnage (or monetary value) of merchandise handled at the terminal.So, if the specialization index tends toward 1, such a result indicates that the terminal is highly specialized. If, inversely, the index tends toward 0, it means that the terminal’s activity is diversifi ed. Thus, the specialization index is called upon to appreciate the degree of specialization/diversifi cation of a port, an airport, a train station or any type of terminal.Location coeffi cient Certain kinds of merchandise are often transshipped at particular terminals rather than at others. Thus, the degree of concentration of a certain type of traffi c in a terminal (port, airport, train station) compared with the average for all the terminals, can be measured by using the location coeffi cient.The location coeffi cient is the share of traffi c occupied by a type of merchandise at a terminal over the share of traffi c of the same type of merchandise among the total traffi c of all terminals of the same type.In the fi eld of transportation, the location coeffi cient (LC) is calculated by using the following formula:LCMMMMtitittt=⎛⎝⎜⎜⎜⎞⎠⎟⎟⎟⎛⎝⎜⎜⎜⎞⎠⎟⎟⎟∑∑∑
Transportation modes • 125where Mti is the traffi c of a merchandise t at a terminal i, Mt is the total of all merchandises of type t for all terminals and M is the total of all types of merchandises for all terminals.The greater the value of the index, the greater is the degree of traffi c of a certain type of merchandise. Possible outcomes are of three types:•A fi gure lower than 1 indicates that the traffi c of the chosen merchandise in the terminal is under-represented compared with the same merchandise in all the terminals.•A fi gure equal to 1 indicates that the quantity of traffi c of the chosen merchandise in a terminal is proportional to its participation in total traffi c.•Finally, a coeffi cient above 1 indicates that the traffi c of the chosen merchandise in a given terminal is preponderant in total traffi c.Beside using the location coeffi cient to evaluate the relative weight of a type of traffi c in a terminal, the location coeffi cient can be used to appreciate the importance of an economic activity for a community compared with the importance of the same activity within a defi ned larger area (e.g. province, country, world, etc.). The larger geographic entity is also known as the benchmark and is critical in the calculation of the location coeffi cient.ReferencesAgusdinata, B. and W. de Klein (2002) “The Dynamics of Airline Alliances”, Journal of Air Transport Management, 8, 201–11.Brooks, M. (2000) Sea Change in Liner Shipping, New York: Pergamon.Graham, B. (1995) Geography and Air Transport, Chichester: Wiley.Hayuth, Y. (1987) Intermodality, Essex: Lloyds of London Press.Muller, G. (1995) Intermodal Transport, Westport, CT: Eno Foundation.Notteboom, T. and R. Konings (2004) “Network Dynamics in Container Transport by Barge”, Belgeo,5, 461–77.Robinson, R. (2002) “Ports as Elements in Value-driven Chain Systems: The New Paradigm”, MaritimePolicy and Management, 29, 241–55.Slack, B. (1998) “Intermodal Transportation” in B.S. Hoyle and R. Knowles (eds) Modern Transport Geography, 2nd edn, Chichester: Wiley, pp. 263–90.Slack, B. (2004) “Corporate Realignment and the Global Imperatives of Container S hipping” in D. Pinder and B. Slack (eds) Transport in the Twenty-First Century, London: Routledge, pp. 25–39.van Klink, A. and G.C. van den Berg (1998) “Gateways and Intermodalism”, Journal of Transport Geography, 6, 1–9.
Transport terminalsAll spatial fl ows, with the exception of personal vehicular and pedestrian trips, involve movements between terminals. With these two exceptions, all transport modes require assembly and distribution of their traffi c, both passenger and freight. For example, passengers have to go to bus terminals and airports fi rst in order to reach their fi nal destinations, and freight has to be consolidated at a port or a rail yard before onward shipment. Terminals are, therefore, essential links in transportation chains. The goal of this chapter is to examine the strong spatial and functional character of transport terminals. They occupy specifi c locations and they exert a strong infl uence over their surroundings. At the same time they perform specifi c economic functions and serve as foci for clusters of specialized services.Concept 1 – The function of transport terminalsThe nature of transport terminals A terminal may be defi ned as any facility where freight and passengers are assembled or dispersed. They may be points of interchange involving the same mode of transport. Thus, a passenger wishing to travel by train from Paris to Antwerp may have to change in Brussels, or an air passenger wishing to fl y between Montreal and Winnipeg may have to change planes in Toronto. They may also be points of interchange between different modes of transport, so that goods being shipped from the US Mid-West to the Ruhr in Germany may travel by rail from Cincinnati to the port of New York, be put on a ship to Rotterdam, and then placed on a barge for delivery to Duisberg. Transport terminals, therefore, are central and intermediate locations in the movements of passengers and freight.In order to carry out the transfer and bundling of freight and passengers, specifi c equipment and infrastructures are required. Differences in the nature, composition and timing of transfer activities give rise to signifi cant differentiations in the form and function between terminals. A basic distinction is between passenger and freight transfers, because in order to carry out the transfer and bundling of each type, specifi c equipment and infrastructures are required.Passenger terminalsWith one exception, passenger terminals require relatively little specifi c equipment.This is because individual mobility is the means by which passengers access buses, ferries or trains. Certainly, services such as information, shelter, food and security are required, but the layouts and activities taking place in passenger terminals tend to be simple and require relatively little equipment. They may appear congested at certain 55
Transport terminals • 127times of the day, but the fl ows of people can be managed successfully with good design of platforms and access points, and with appropriate scheduling of arrivals and departures. The amount of time passengers spend in such terminals tends to be brief. As a result bus termini and railway stations tend to be made up of simple components, from ticket offi ces and waiting areas to limited amounts of retailing.Airports are of a different order. They are among the most complex of terminals functionally (Caves and Gosling, 1999). Moving people through an airport has become a very signifi cant problem, not least because of security concerns. Passengers may spend several hours in transit, with check-in and security checks on departure, and baggage pick up and in many cases customs and immigration on arrival. Planes may be delayed for a multitude of reasons. The result is that a wide range of services have to be provided for passengers not directly related to the transfer function, including restaurants, bars, stores, hotels, in addition to the activities directly related to operations such as check-in halls, passenger loading ramps and baggage handling facilities. At the same time, airports have to provide for the very specifi c needs of the aircraft, from runways to maintenance facilities, from fi re protection to air traffi c control.Measurement of activities in passenger terminals is generally straightforward. The most common indicator is the number of passengers handled, sometimes differentiated according to arrivals and departures (see Figure 5.1). Transfer passengers are counted twice (once on arrival, once on departure), and so airports that serve as major transfer facilities inevitably record high passenger totals. This is evident in Figure 5.1 where in-transit passengers at the two leading airports, ATL and ORD, account for over 50 percent of the total passenger movements. A further measure of airport activity is number of aircraft movements, a fi gure that must be used with some caution because it pays no regard to the capacity of planes. High numbers of aircraft movements may not be correlated with passenger traffi c totals.0 1020304050607080Atlanta (ATL) Chicago (ORD)London (LHR) Tokyo (HND)Los Angeles (LAX)Dalas/Ft Worth (DFW) Frankurt/Main (FRA) Paris (CDG)Amsterdam (AMS)Denver (DEN) Phoenix (PHX) Las Vegas (LAS)Madrid (MAD) Houston (IAH) Detroit (DTW)Figure 5.1 World’s largest passenger airports, 2003 (in millions) (Source: Airports Council International. http://www.airports.org/)
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Freight terminalsFreight handling requires specifi c loading and unloading equipment. In addition to the facilities required to accommodate ships, trucks and trains (berths, loading bays and freight yards respectively), a very wide range of handling gear is required that is determined by the kinds of cargoes handled. The result is that terminals are differentiated functionally both by the mode involved and the commodities transferred. A basic distinction is that between bulk and general cargo:•Bulk refers to goods that are handled in large quantities that are unpackaged and are available in uniform dimensions. Liquid bulk goods include crude oil and refi ned products that can be handled using pumps to move the product along hoses and pipes. Relatively limited handling equipment is needed, but signifi cant storage facilities may be required. Dry bulk includes a wide range of products, such as ores, coal and cereals. More equipment for dry bulk handling is required, because the material may have to utilize specialized grabs and cranes and conveyer-belt systems.•General cargo refers to goods that are of many shapes, dimensions and weights, such as machinery and parts. Because the goods are so uneven and irregular, handling is diffi cult to mechanize. General cargo handling usually requires a lot of labor.A feature of most freight activity is the need for storage. Assembling the individual bundles of goods may be time-consuming and thus some storage may be required. This produces the need for terminals to be equipped with specialized infrastructures such as grain silos, storage tanks, and refrigerated warehouses, or simply space to stockpile.Measurement of freight traffi c through terminals is more complicated than for passengers. Because freight is so diverse, standard measures of weight and value are diffi cult to compare and combine. Because bulk cargoes are inevitably weighty, terminals specialized in such cargoes will inevitably record higher throughputs measured in tons than others more specialized in general cargoes. This is evident from Figure 5.2, where the traffi c of the two leading ports, Singapore and Rotterdam, is dominated by petroleum . The reverse may be true if the value of commodities handled is the measure employed. The problem of measurement involving weight or volume becomes very diffi cult when many types of freight are handled, because one is adding together goods 0 50 100 150 200 250 300 350RotterdamSingaporeShanghaiHong KongNagoyaAntwerpPusanYokohamaMarseillesHamburg19972000Figure 5.2 Throughput of the world’s major ports, 1997–2000 (in millions of metric tons)
Transport terminals • 129that are inherently unequal. Care must be taken in interpreting the signifi cance of freight traffi c totals, therefore.The diffi culty of comparing traffi c totals of different commodities has led to attempts to “weight” cargoes based upon some indication of the value added they contribute to the terminal. The most famous is the so-called “Bremen” rule. This was developed in 1982 by the port of Bremen and was based on a survey of the labor cost incurred in the handling of one ton of different cargoes. The results found that handling one ton of general cargo equals three tons of dry bulk and 12 tons of liquid bulk. Although this is the most widely used method, other “rules” have been developed by individual ports, such as Rotterdam, and more recently by the port of Antwerp. The “Antwerp rule” indicates that the highest value added is the handling of fruit. Using this as a benchmark, forest products handling requires 3.0 tons to provide the same value added as fruit, cars 1.5 tons, containers 7 tons, cereals 12 tons, and crude oil 47 tons (Haezendonck, 2001).Terminal costsBecause they jointly perform transfer and consolidation functions, terminals are important economically because of the costs incurred in carrying out these activities. The traffi c they handle is a source of employment and benefi ts regional economic activities, notably by providing accessibility to suppliers and customers. Terminal costs represent an important component of total transport costs. They are fi xed costs that are incurred regardless of the length of the eventual trip, and vary signifi cantly between the modes. They can be considered as:•Infrastructure costs. Include construction and maintenance costs of facilities such as piers, runways, cranes and structures (warehouses, offi ces, etc.).•Transshipment costs. The costs of loading and unloading passengers or freight.•Administration costs. Many terminal facilities are managed by institutions such as port or airport authorities or by private companies. In both cases administration costs are incurred.Because ships have the largest carrying capacities, they incur the largest terminal costs, since it may take many days to load or unload a vessel. Conversely, a truck or a passenger bus can be loaded much more quickly, and hence the terminal costs for road transport are the lowest. Terminal costs play an important role in determining the competitive position between the modes. Because of their high freight terminal costs, ships and rail are unsuitable for short-haul trips.Figure 5.3 represents a simplifi ed assumption concerning transport costs for three modes. It should be noticed that the cost curves all begin at some point up the cost axis. This represents terminal costs, and as can be seen, shipping (T3) and rail (T2) start with a signifi cant disadvantage compared with road (T1).Competition between the modes is frequently measured by cost comparisons. Efforts to reduce transport costs can be achieved by using more fuel-effi cient vehicles, increasing the size of ships, and reducing the labor employed on trains. However, unless terminal costs are reduced as well, the benefi ts would not be realized. For example, in water transportation, potential economies of scale realized by ever larger and more fuel-effi cient vessels would be negated if it took longer to load and off-load the jumbo ships.Over the last forty years, very signifi cant steps to reduce terminal costs have been made. These have included introducing information management systems such as EDI
130
(electronic data interchange) that have greatly speeded up the processing of information, removing delays typical of paper transactions. The most signifi cant development has been the mechanization of loading and unloading activities. Mechanization has been facilitated by the use of units of standard dimensions such as the pallet and most importantly, the container . The container, in particular, has revolutionized terminal operations (see Chapter 4). For the mode most affected by high terminal costs, ocean transport, ships used to spend as much as three weeks in a port undergoing loading and loading. The much larger ships of today spend less than a couple of days in port. A modern container ship requires approximately 750 man-hours to be loaded and unloaded. Prior to containerization it would have required 24,000 man-hours to handle the same volume of cargo. The rail industry too has benefi ted from the container, which permits trains to be assembled in freight yards in a matter of hours instead of days.Reduced terminal costs have had a major impact on transportation and international trade . Not only have they reduced over-all freight rates, thereby reshaping competition between the modes, but they have also had a profound effect on transport systems. Ships spend far less time in port , enabling ships to make many more revenue-generating trips per year. Effi ciency in the airports, rail facilities and ports greatly improves the effectiveness of transportation as a whole.Activities in transport terminals represent not just exchanges of goods and people, but constitute an important economic activity. Employment of people in various terminal operations represents an advantage to the local economy. Dockers, baggage handlers, crane operators, and air traffi c controllers are example of jobs generated directly by terminals. In addition there are a wide range of activities that are linked to transportation activity at the terminals. These include the actual carriers (airlines, shipping lines, etc.) and intermediate agents (customs brokers, forwarders) required to carry out the transfers. It is no accident that centers that perform major airport , port and rail functions are also important economic locales.Terminals favor the agglomeration of related activities in their proximity and often adjacent to them (see Figure 5.4). This terminal–client link mainly involves warehousing and distribution (A). The contribution of transport terminals to regional economic growth can often be substantial. As the regional demand grows, so does the traffi c handled by the related terminal. This in turn can spur further investments to expand the capabilities of the terminal and the creation of a new terminal altogether (B).Economists have identifi ed clusters as a critical element in shaping competition between countries, regions and industries (Porter, 1990). Clusters are defi ned as a population of interdependent organizations that operate in the same value chain and are geographically concentrated. This concept has been recently applied to seaports (de DistanceRoadRailMaritimeC1C2C3T1T2T3Figure 5.3 Terminal costs
Transport terminals • 131Langen, 2004). The seaport cluster is made up of fi rms engaged in the transfer of goods in the port and their onward distribution. It also includes logistics activities as well as processing fi rms and administrative bodies. The performance of the seaport cluster is defi ned as the value added generated by the cluster, and is shaped by the interrelationships between the structure of the cluster and its governance. Cluster structure refers to the agglomeration effects and the degree of internal cohesion and competition. Cluster governance relates to the mix of, and relations between, organizations and institutions that foster coordination and pursue projects that improve the cluster as a whole. When applied to the port of Rotterdam, it was suggested that a key role was played by the intermediary fi rms, those that operated services and activities for core transport fi rms. High levels of trust between fi rms led to lower transaction costs, and leader fi rms were very signifi cant because they helped strengthen the agglomeration.Presented as a new approach, cluster theory is extending what others, including geographers, have recognized for some time, that port activity, historically at least, generates strong agglomeration economies that produce strong spatially distinct port communities (Slack, 1989). Despite similarities in results from economic impact studies, airports and rail terminals have not yet received the attention of cluster theorists.Concept 2 – Terminals and locationLocation and spatial relations play a signifi cant role in the performance and development of transport terminals. As in all locational phenomena there are two dimensions involved. First is the issue of site, or absolute location. Terminals occupy very specifi c sites, usually with stringent requirements. Their site determinants may play an important role in shaping performance. The second component is relative location, or location relative to other terminals in the network. The spatial relations of terminals are an extremely important factor in shaping competition. Together, absolute and relative locations provide justifi cation for the fundamental signifi cance of geography in understanding transport terminals.The nature of the function of the terminal is critical to understand its site features. Locations are determined according to the mode and the types of activities carried on. ABTerminalTerminal-dependentactivitiesAgglomerationInter-terminal linkTerminal-client linkCluster Structure(Dis)agglomerationforcesInternal competitionCluster barriersHeterogeneityClustergovernanceIntermediariesTrustLeader firmsCollective actionregimesCluster performanceValue addedFigure 5.4 Terminals as clusters and growth poles
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