Transcript Lecture 2

GE 541
Professor T. R. Lakshmanan
Thursday - September 4, 2008
History of Transport is one of Innovation
Infrequent at first (e.g., wheel, stirrup, sailing ship)
Quickening pace in recent times
vehicles
e.g. steamship, locomotive, electric streetcar, internal
combustion engines, jet aircraft, containers, ‘megaships’
also
infrastructure
tunnels, suspension bridges, rail roads, interstate,
modern airports & marine terminals.
Cotton Freight Rates and North’s Index, 1820-1860
Freight Rates 1950-2000
Speed Trend Curves for Powered Vehicles
Components of a Transportation System
Transport
Vehicles
Information capital and
infrastructure
Transportation Services
Mobility, Access
Productivity
Environmental qua lity
Safety
Nonmaterial
infrastructure
Transportation
infrastructure
Information technology infrastructure,
intelligent transportation systems, etc.
Private and public information providers
Economic institutions, laws,
regulations, policies,
management regimes
Capsule Summary of the Innovations
Process
• Initial idea
• The invention
• The innovation
• Diffusion of the innovation into the economy
What factors promote knowledge
accumulation?
What circumstances promote rapid diffusion?
- Demand side factors
- Supply side factors
- ‘Secondary inventions’ (electric boat)
The Case of Auto Evolution
Technology users determining the evolution of a
new technology (e.g. car, scientific instruments)
Major Innovations
An Entire Technological System
e.g. the auto (and container)
Auto Subsystems
•
•
•
•
•
•
auto producers, dealers, distributors,
service stations & repair shops
auto credit & insurance agencies
highway construction & maintenance
driver licensing, traffic controls, law enforcement
supplementary technologies e.g. gas pumps, radar devices, auto
electronics
Complementary non physical technologies
- logistical and supply chains
Interplay of Physical and Organizations
Innovations
Institutions
Investment Banking
Public Bonding
Charters
Franchising
Voluntary Organizations
Resource Endowments
Urban
Infrastructure
Services
Technology
Metal Industries
Chemical Industries
New Materials
Preferences
Transport and Urban Evolution in US
19th Century Urban Areas
trolley cars
electric rail roads
early subways (Boston & NY) (1/2 million/sq. miles)
Early 20th Century
public transit systems
suburbanization of the professional middle class
Post World War II Era
A convergence of transport improvements, public policies
promoting cheaper land and housing and human capital
investments and robust economic growth led to a major urban
transformation




suburbanization of the working class
‘leap frog’ development, urban sprawl
hollowing out of central cities by 1980s
edge cities
Policies lowering home ownership costs
- Low interest home mortgages
- IRS provision allowing mortgage interest and local property
tax deductions from gross taxable income
GI bill, promoting a more skilled labor force and higher
incomes
Baby boom shifting the population to the urban periphery
with low cost housing
New technologies of land intensive production methods
leading to suburbanization of industrial and commercial
activities
Urban Morphological Evolution in the
Western Countries
- Until 1950 urban concentration around ports
- Growth of urban transit and metropolitan expansion
(up to 1950)
- Automobility and spread city (since 1950)
Transformation of the Freight Industry
Physical Technologies
-
Interstate Highways
Containers
Ports and terminals
Jet aircraft
Institutional Changes
- Reinvention of customs
- IT and cross-border delays
Declining importance of bulk goods
and
Increasing importance of high value goods
Statistical Profile of the US Freight Sector
Quantitative Change
Tonnage
from 4.54 billion to 6.21 billion
(a 37% increase)
Ton Miles
1854 billion to 3710 billion ton miles
(a 100% increase)
Qualitative Change
(more speed, reliability, time-definite, delivery of goods,
flexible destinations, logistical revolution)
Figure 1. Passenger and Freight Transport in the U.S. 1960-1998
9,000
8,000
Chained (1992)
$ (billions)
Passenger-miles
(billions)
Ton-miles
(billions)
7,000
billions
6,000
5,000
4,000
3,000
2,000
1,000
0
1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998
Source: National Transportation Statistics 2000, BTS, USDOT
Figure 3. Freight Traffic Intensity in the U.S. 1960-1998
35.0
60.0
30.0
50.0
Thousand
25.0
40.0
20.0
30.0
15.0
10.0
20.0
5.0
10.0
0.0
0.0
1
2
3
4
5
6
7
8
9
10
11
12
Source: National Transportation Statistics, BTS, USDOT
13
14
15
US$ GDP per
capita (1,000)
Ton-miles per
capita (1,000)
Tons per capita
Figure 4. GDP Freight Intensity
1
1.8
0.9
1.6
0.8
1.4
0.7
1.2
ratio
0.6
1
0.5
0.8
ton-miles per
US$1 GDP
0.4
0.6
0.3
0.4
0.2
0.2
0.1
0
0
1960
1965
1970
1975
1980
1985
1990
1991
1992
Source: National Transportation Statistics, BTS, USDOT
1993
1994
1995
1996
1997
1998
tons per
US$1,000 GDP
Comments:
Passenger Miles in pace with GDP growth (e=0.94)
Freight growth in pace with GDP (1960s & 1970s)
But slower growth since 1980
Freight intensity dropped
Tons/$(000) GDP from 1965 to 1998 by 54%
Ton miles / $ GDP
from 1960 to 1998 by 36%
Transport (shipping) costs declined
f.o.b. trade value dropped
from 9.5% (1950)
to 6% (1990)
The combination of the interstate highway system
(1957+), dropping transport costs, and the migration to
the sunbelt has lead to greater market integration, a
national production and consumption pattern.
(Percentage Increases)
Indicator
Tons
Ton-miles
Tons / capita
Ton-miles /capita
Tons /$U.S.(000)GDP
Ton-miles /$U.S. GDP
1960-1980
11
(1965-80)
92
1981-1998
23
-5.5
59
-31
-7
4
4
-33
-31
24
1960 - 80
- Relatively smaller freight hauled over longer distances
- Decline in freight intensity
31% (tons)
7% (ton miles)
1981 – 98
- Tons & ton miles growing modestly
- average distance of freight haul increased from 408 miles
(1960-80) to 593 from 1981-98 it went from 593 to 597
U.S. Freight by Value, 1993, 1997
Indi cator
1993
1997
(% increase, 1993-1997)
GDP (Billi ons) Cha ined
1992 dollars
Freight (value)
Freight (value) / GDP
7054
7270
3
6335
0.90
6944
0.96
9.6
6.6
Source: BTS Commodity Flow Survey, 1993-1997
Special Tabulations by Felix Amatagoe, 2001.
High value added sectors are
increasingly contributing to freight
movements and size of economy.
Top 5 Freight
Sectors by Value & Ton-Miles,
1993, 1997
Top 5 Sectors by V alue
Top 5 Sectors by Ton-Miles
1993
1997
1993
Value/Ton
Value/T
on
Sector
Value/
Ton
Sector
Electronic &
Other Elec trical
Equipment, Office
Equipment
Motorize d and
Other Vehicles
Miscellaneous
Manufacturers
$19,915
Electronic & Other
Electrical
Equipment, Office
Equipment
Motorize d and
Other Vehicles
Textiles, Leat her,
etc.
$21,955
Coal
$21
Coal
$22
$5,822
Cereal,
Grains
Basic
Chemicals
$122
$110
Machinery
$8,356
Machinery
$9,926
Gasoline &
Aviation
Fuel
$225
Textiles, Leat her,
Etc.
$8,266
Other Prepared
Foods, Fats, &
Oils
$1,008
Other
Prepared
Foods, Fats
& Oils
$873
Cereal,
Grains
Other
Prepared
Foods,
Fats &
Oils
Coal &
Petroleu
m
Products,
n.e.c.
Basic
Chemical
s
% of Total Value
of Top 5 Sectors
37.6
38.3
10.4
10.6
% of Total TonMiles
6.1
6.5
42.8
42.7
$6,216
$9,727
$11,591
$539
Top 5 commodities by value (knowledge intensive)
Top 5 commodities by tonnage (low value raw materials)
Sector
1997
Value/Ton
Sector
$1,008
$158
$446
Tonnes per US$1,000
GDP
Figure 7. International Comparison (II):
Freight Intensity
5.00
4.00
1970
3.00
1980
2.00
1990
1.00
1997
0.00
USA
United
King tom
France
Germany
Sweden
Japan
Qualitative Changes in the Freight Sector
Changing Context
- space shrinking technologies altering space-time relationships
(transport & communications)
- costs reduction and service enhancement
- global sourcing of materials, component and global marketing
- free trade regimes (GATT, WTO, NAFTA, etc.)
- more knowledge-intensive economy
- massive intra-firm trade
Factors of Underlying the Transformation of the Transport
Enterprise
Emerging
Information
Technologies
Transportation
Innovations
Logistical Innovations
and the 'New'
Transportation
Enterprise
Globaliza tion
& Competitive
Forces
Public Policies of
Trade & Transport,
Deregulation,
Liberalization &
Competition
Emerging
Knowledge Society:
Changing Nature of
Work & Work Force
Technical & Social
Factors
Source: Chatterjee, 2001
Drive for
Corporate
Advantage
Changes in
Firm &
Industry
Structure
Business Factors
Adapted from OECD, 1996