The United States has the largest economy in the world. Not coincidentally, it also has the largest freight transportation system with an extensive physical network of infrastructure and entities that provides shippers with the following array of options:
• 140,000 miles of railroad tracks operated by freight carriers
• 25,000 miles of navigable waterways
• 9,800 coastal and inland waterway facilities
• 5,200 public-use airports
Third Party Logistics (3PL)
Moving freight in the modern world can be extremely complex. This complexity has given rise to logistics providers that offer customers a range of solutions to this problem, typically integrating warehousing and transportation services that can be scaled and customized to customers’ needs.
The success of these firms, generally referred to as “Third Party Logistics” (3PL) providers, can be seen in the more than US$200 billion a year they generate. (see table on right).
Familiar names like UPS and Fedex dominate the US market while major overseas firms include DHL Supply Chain and DB Schenker (Germany); Kuehne + Nagel and Panalpina (Switzerland); CEVA Logistics and SDV (France); Sinotrans (China); DSV Solutions (Denmark); and Nippon Express (Japan).
While some 3PLs own their own transport carriers, e.g. trucks, aircraft, trains, etc., most carriers themselves are independently owned and operated, contracting their services either directly to a client or through a 3PL firm.
In the US, trucking solutions remain the first choice of most shippers, with 70% of all manufactured and retail goods shipped in the US last year transported by truck while generating income totaling $46.2 billion.
While freight had historically been handled by traditional carriers such as ships, aircraft, rail and trucks, Fred Smith’s innovative Fedex revolutionized the industry in the 1970s with his massively disruptive innovation: overnight delivery using intermodal transport systems – in this case trucks and airplanes.
Today, fast freight dominates the global parcel market, with the Top 5 companies generating nearly $223 billion in 2011 (see table on right).
Congestion and Pollution
As mentioned above, trucking remains the shipper’s first choice for transport, but this has led to several problems as well. Increasingly, congestion around both hubs and highways decreases productivity and fuel efficiency not just for the trucking industry but for the nation as a whole.
This congestion leads to higher emissions by all roadway users, exponentially contributing to pollution. Meanwhile, recent studies have revealed a dramatic rise in the number of big rig accidents.
Finally, the wear and tear on the nation’s roads and bridges comes at a time of decreasing funds for their repair.
With an estimated cost of a trillion dollars just to bring the nation’s infrastructure back to par, it’s clear a solution must be found if the US is to keep enjoying the prosperity international trade brings.
Between the vagaries of the weather and ever increasing congestion around transportation hubs, the fast freight business is becoming anything but.
FAST FREIGHT MARKET
|Parcel Freight Services||213,297,000,000|
FAST FREIGHT MARKET: Top 25 3PL Operators
|1||DHL Supply Chain||32,160,000,000|
|2||Kuehne + Nagel||22,181,000,000|
|3||DB Schenker Logistics||20,704,000,000|
|5||C.H. Robinson Worldwide||10,336,000,000|
|7||UPS Supply Chain Solutions||8,923,000,000|
|21||Kintetsu World Express||3,321,000,000|
FAST FREIGHT MARKET : Top 12 Trucking Operators
|1||United Parcel Service||24,800,000,000|
|2||Yellow Freight System||2,900,000,000|
|6||Ryder Integrated Logistics||2,200,000,000|
|8||J.B. Hunt Transport Services||1,842,000,000|
|10||ABF Freight System||1,157,000,000|
|11||United Van Lines||1,129,000,000|
FAST FREIGHT MARKET : Top 5 Parcel Freight Ops
FAST FREIGHT : Global Infrastructure (miles)
|Country||Total Roads||Paved Roads||Railways||Waterways||Pipelines||Airlines|