Transport Economics: GU 1st Semester 2024-2025 Lecture Notes PDF

T R A N S P O RT ECONOMICS Dr Khaled Hussein Visiting Assistant Professor Department of Business Administration – Galala University (GU) Suez Governorate, Arab Republic of Egypt 3 I N T R O D U C T O RY PHA Principles...

T R A N S P O RT ECONOMICS Dr Khaled Hussein Visiting Assistant Professor Department of Business Administration – Galala University (GU) Suez Governorate, Arab Republic of Egypt 3 I N T R O D U C T O RY PHA Principles SE of Transport L E C T U R E 1 – PA RT 1 History of Transport and Distribution Management 5 W H AT I S T R A N S P O R TAT I O N ? o The unique purpose of transportation is to overcome SPACE which is shaped by a variety of HUMAN and PHYSICAL constraints such as DISTANCE, TIME, ADMINISTRATIVE DIVISIONS, AND TOPOGRAPHY. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 6 T R A N S P O R TAT I O N E V O L U T I O N 4000 BC - Horses 3500 BC - Fixed 312 BC - Paved 1044 AD - The and camels are 3500 BC - River 2000 BC - First wheels on carts are roads are built by compass was domesticated and boats are invented. chariots are built. invented. the Romans. invented in China. used for transport. 1814 - First steam- 1900 - First 1662 - First horse- 1801 - First Steam powered railway successful airship 1783 - First hot air 1816 - The earliest drawn public bus 'road locomotive' is train is built by was built by balloon launched. bicycle is made. was invented. run. George Ferdinand von Stephenson. Zeppelin. 1981 - First flight of 1904 - Wright 1957 - First man- the space shuttle 1908 - First Ford 1947 - First Brothers fly the 1942 - V2 rocket made satellite, lifts off, 20 years Cars supersonic flight first motor-driven travels 200 km. Sputnik 1, after the first manufactured. takes place. aeroplane. launched into orbit. manned space flight. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 7 F LO W S o Any movement must consider its geographical setting, which is linked to SPATIAL FLOWS and their patterns. The concept of flow has four major components: o Geographical o Each flow has an origin and a destination and, consequently, a degree of separation. Flows with high degrees of separation tend to be more limited than flows with low degrees of separation. o Physical o Each flow involves specific physical characteristics in terms of possible load units and the conditions in which they can be carried. Flows, depending on the transportation mode, can be atomized (smallest load unit) or massified (moving load units in batches). Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 8 F LO W S o Any movement must consider its geographical setting, which is linked to SPATIAL FLOWS and their patterns. The concept of flow has four major components: o Transactional o The realization of each flow has to be negotiated with providers of transport services, such as booking a slot on a containership or an air travel seat. A flow is commonly related to a monetary exchange between a provider of transportation services and the user. o Distribution o Flows are organized in sequences where the more complex are involving different modes and terminals. Many transport flows are scheduled and routed to minimize costs or maximize efficiency, often through intermediary locations. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 9 S PAT I A L F L O W o In human geography, spatial flows (spatial interactions) have the character of aggregated individual horizontal flows, mobilities and contacts of persons, goods, finances and information. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 10 THE SCALE OF T R A N S P O R TAT I O N o Local o The activity space is a variable spatial construct at the local scale and represents a range of origins and destinations individuals undertake within a time frame (daily, weekly). o Regional o At this level, the spatial constructs of networks and flows tend to become more ambiguous. They can take the form of metropolitan areas or urban regions (a series of cities) articulated along corridors. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 11 THE SCALE OF T R A N S P O R TAT I O N o Global o There are several spatial constructs that consider global networks and flows. For instance, a land bridge is a long-distance corridor dominantly serviced by rail. o Trade areas are also a common frame of reference under which markets and transport systems are articulated. It is the setting of global value chains that has led to one most complex spatial construct involving manufacturing and freight distribution. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 12 T H E R O L E O F T R A N S P O RT o In Operations Management o Operations Management is the administration of business practices to create the highest level of efficiency possible within an organization. o Operations management is concerned with converting materials and labour into goods and services as efficiently as possible. o Transport works as a logistics activity that connects all business aspects. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 13 T H E R O L E O F T R A N S P O RT o In Logistics Management o Logistics Management is the part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customer requirements. o Transport is the heart of any Logistics System of a product or service. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 14 T H E R O L E O F T R A N S P O RT o In Logistics Management o Logistics Management is the part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customer requirements. o Transport is the heart of any Logistics System of a product or service. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 15 T H E R O L E O F T R A N S P O RT o In Supply Chain Management o Supply Chain Management is management of the flow of goods and services and includes all processes that transform raw materials into final products. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 16 MAP OF EGYPT L E C T U R E 1 – PA RT 2 Transportation Modes 18 DIVERSITY OF MODES Transport modes are designed to either carry passengers or freight, but most modes can carry a combination of both. For instance, an automobile has the capacity to carry some freight, while a passenger plane has a bellyhold that is used for luggage and cargo. Each mode is characterized by technical, operational, and commercial characteristics defining its market opportunities. Technical characteristics relate to attributes such as speed, capacity, and motive technology, while operational characteristics involve the context in which modes operated, including speed limits, safety conditions, or operating hours. The demand for transport and the ownership of modes are dominant commercial characteristics, as transportation modes are used to support economic activities and generate income. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 19 M A I N PA S S E N G E R M O D A L OPTIONS Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 20 MAIN FREIGHT MODAL OPTIONS Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 21 R OA D T R A N S P O RT Road infrastructures are large consumers of space with the lowest level of physical constraints among transportation modes. However, physiographical constraints are significant in road construction, with substantial additional costs to overcome features such as rivers or rugged terrain. While historically, road transportation was developed to support non-motorized forms of transportation (walking, domestic animals, and cycling at the end of the 19th century), it is motorization that has shaped most of its development since the beginning of the 20th century, particularly with the setting of national highway systems. Road transportation has average operational flexibility as vehicles can serve several purposes but can rarely operate outside roads. Road transport systems have low barriers of entry, but high maintenance costs, both for the vehicles and infrastructures, which are related to low life spans of less than 10 years for a vehicle. They are mainly linked to light industries and freight distribution, where rapid freight movements in small loads are the norm. With containerization, road transportation has become a crucial link in freight distribution between ports and commercial hinterlands. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 22 R A I L T R A N S P O R TAT I O N Railways are composed of a traced path for a right of way on which wheeled vehicles are bound. Rail transportation also includes monorails and maglev, which are more recent developments of guided rail technology. They have an average level of physical constraints, and a low gradient is required, particularly for freight. Heavy industries are traditionally linked with rail transport systems, although containerization has improved the flexibility of rail transportation through its connectivity with road and maritime modes. Rail is the land transportation mode offering the highest capacity, with a 23,000 tons fully loaded coal unit train being the heaviest load ever carried. Gauges, however, vary around the world, often challenging the integration of rail systems. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 23 PIPELINES Pipeline routes are practically unlimited as they can be laid on land or underwater. They aim to move liquids such as petroleum products over long distances cost-effectively. The longest gas pipeline links Alberta to Sarnia (Canada), which is 2,911 km in length. The longest oil pipeline is the Transiberian, extending over 9,344 km from the Russian arctic oilfields in eastern Siberia to Western Europe. Physical constraints are low and include the landscape and pergelisol in arctic environments. Pipeline construction costs vary according to the diameter and increase proportionally with the distance and with the viscosity of fluids (from low viscosity gas to high viscosity oil). The Trans Alaskan pipeline, which is 1,300 km long, was built under challenging conditions and had to be above ground for most of its path. Pipeline terminals are essential since they correspond to refineries and harbors. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 24 M A R ITIM E T R A NSP O RT With physical properties such as buoyancy and limited friction, maritime transportation is the most effective mode of moving large quantities of cargo over long distances. Main maritime routes are composed of oceans, coasts, seas, lakes, rivers, and channels. However, due to the location of economic activities, maritime circulation takes place in specific parts of the maritime space, particularly over the North Atlantic and the North Pacific. The construction of channels, locks, and dredging are attempting to facilitate maritime circulation by reducing its discontinuity, but such endeavors are highly expensive. Comprehensive inland waterway systems include Western Europe, the Volga / Don system, the St. Lawrence / Great Lakes system, the Mississippi and its tributaries, the Amazon, the Panama / Paraguay, and the interior of China. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 25 M A R ITIM E T R A NSP O RT Maritime transportation has high terminal costs since port infrastructures are among the most expensive to build, maintain, and operate. These high costs also relate to maritime shipping, where the construction, operation, and maintenance of ships are capital- intensive. More than any other mode, maritime transportation is linked to heavy industries, such as steel and petrochemical facilities adjacent to port sites. Yet, with containerization, maritime shipping has become the cornerstone of globalization, allowing the trading of a wide range of goods and commodities. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 26 A IR T R A NSP O RT The core advantage of air transportation is speed and flexibility in network configuration. Air routes are practically unlimited, but they are denser over the North Atlantic, inside North America and Europe, and over the North Pacific. Even if planes can have a long range, the majority of services link city pairs less than 2 hours apart. Air transport constraints are multidimensional and include the site (a commercial plane needs about 3,300 meters of runway for landing and take-off), the climate, fog, and wind currents. Air activities are linked to the tertiary and quaternary sectors, notably finance and tourism, which lean on the long-distance mobility of people. More recently, air transportation has been accommodating growing quantities of high-value freight and is playing an increasing role in global logistics. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 27 INT ER M O D A L TR A N SP O RT Intermodalism concerns a variety of modes used in combination so that the respective advantages of each mode are advantaged. Although intermodal transportation applies to passenger movements, such as using the different, interconnected modes of a public transit system, it is over freight transportation that the most significant impacts of intermodalism have been observed. Containerization has been a powerful vector of intermodal integration, enabling maritime and land transportation systems to interconnect. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 28 TELECOMMU N I C AT I O N Telecommunication systems are paradoxical in terms of if they can be considered as a transport mode since telecommunications often do not have an apparent physicality. This physicality is real since they are structured as high-capacity networks with low constraints, which may include the physiography and oceanic masses crossed by fiber optic cables. They provide for the instantaneous movement of information (speed of light). Wave transmissions, because of their limited coverage, often require substations, such as for cellular phone and data networks where WiFi connections are of even more limited range. Satellites are often using a geostationary orbit, which is getting crowded. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 29 TELECOMMU N I C AT I O N High network costs and low distribution costs characterize many telecommunication networks, which are linked to the tertiary and quaternary sectors (stock markets, business to business information networks, etc.). Telecommunications can provide a substitution for personal mobility in some economic sectors, but the major impact is related to e- commerce, which has opened a whole range of commercial opportunities. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 30 P E R F O R M A N C E C O M PA R I S O N F O R SELECTED FREIGHT MODES Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 31 AT O M I Z AT I O N V E R S U S M A SS I F I C AT I O N I N T R A N S P O RTAT I O N M O D E S Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 32 HOW COVID -19 INFLUENCED T R A N S P O R TAT I O N Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis THANK YO U Dr Khaled Hussein [email protected] L E C T U R E 2 - PA RT 1 Modal Competition and Modal Shift Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 35 MODAL COMPETITION Each transportation mode As a result, modal has key operational and competition exists at commercial advantages and various degrees and takes properties. However, several dimensions. Modes contemporary demand is can compete or complement influenced by integrated one another in terms of transportation systems that cost, speed, accessibility, require flexibility in the frequency, safety, comfort, respective use of each etc. mode. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 36 MODAL COMPETITION Different geographical markets Different transport markets Different levels of service Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 37 DIFFERENT GEOGRAPHICAL MARKETS o If different markets are involved, modes will permit continuity within the transport system, particularly if different scales are concerned, such as between national and international transportation. This requires an interconnection, commonly known as a gateway, where it is possible to transfer from one mode to the other. Intermodal transportation has been particularly relevant to improving the complementarity and connectivity of different geographical markets. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 38 D I F F E R E N T T R A N S P O RT MARKETS o The nature of what is being transported, such as passengers or freight, often indicates a level of complementarity. o Even if the same market area is serviced, it may not be equally accessible depending on the mode used. Thus, in some markets rail and road transportation can be complementary, as one may be focusing on passengers and the other on freight. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 39 DIFFERENT LEVELS OF SERVICE o For a similar market and accessibility, two modes that offer a different level of service will tend to complement another with niche services. The most prevailing complementarity concerns costs versus time. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 40 WHY THERE IS COMPETITION AMONG DIFFERENT MODES? o There is modal competition when there is an overlap in geography, transport markets and level of service. Cost is one of the most important considerations in modal choice. Because each mode has its own price/performance profile, competition between the modes depends primarily upon the distance travelled, the quantities shipped and their value. While maritime transport might offer the lowest variable costs, road transport tends to be most competitive over short distances and for small bundles of goods. A critical factor is the terminal cost structure for each mode, where the costs (and delays) of loading and unloading a unit impose fixed costs that are incurred independent of the distance travelled. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 41 MODAL CHOICE Transportation modes have different cost functions according to the serviced distance (Figure 5.3). Using a simple linear distance effect, road, rail and maritime transport have respectively C1, C2 and C3 cost functions. While road has a lower cost for short distances, its cost increases faster than rail and maritime costs. At a distance D1, it becomes more profitable to use rail transport than road transport, while from a distance D2 maritime transport becomes more advantageous. These are referred as break-even distances. Point D1 is generally located between 500 and 750 km of the point of departure, while D2 is near 1,500 km. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 42 MODAL CHOICE Although the above relation is rather straightforward, it does not fit reality well, mainly for the following reasons: It assumes that modal options are interchangeable. For many origins and destinations, modal options such as rail or maritime may not be present and thus cannot be considered as an option. Therefore, a modal option with a higher cost will be used. Since rail and maritime transportation are discrete networks only accessible through terminals, most locations will involve a road transportation segment, which changes the cost structure. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 43 MODAL CHOICE The selection of a transportation mode is the outcome of several factors, cost being important, but also level of service, frequency and the general value of time attributed to the cargo being transported. It is thus a general trade-off between cost and value of time, which illustrates the attractiveness of a specific mode in relation to others. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 44 MODAL CHOICE Figure 5.4 represents the distribution of unit transport time across modes connecting two markets. It is assumed that all modal options are available (air, truck, rail and maritime). Each mode has a range of unit transport costs for which it is competitive and as such services this transport volume. However, the cargo volumes associated with a specific value of time vary. For instance, the high unit transport costs of air cargo correspond to the fastest trip time, which is linked with low volumes of goods being serviced. On the opposite side of the spectrum, goods with low values of time generate larger volumes serviced by maritime transportation and rail. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 45 MODAL CHOICE There is therefore a range of market shares associated with the value of time of freight, leading to a range of modal (and intermodal) options. Any change in the cost (or time) effectiveness of a transportation mode is expected to have an impact on its modal share of the goods it carries. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 46 MODAL CHOICE With increasing income levels, 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 differently upon modes. Those that offer the faster and more reliable services gain over modes that might offer a lower-cost, but slower, alternative. For passenger services, rail is challenged by the competition of road transport over short distances and aircraft for longer trips. For freight, rail and shipping have been impacted by competition from road and air modes. While shipping, pipelines and rail still perform well for bulk shipments, competition over the last decades has seen road and air modes capture an important market share of the high-revenue- generating goods. Road transportation continues to dominate passenger and freight transportation markets. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 47 MODAL COMPETITION DIMENSIONS o Although intermodal transportation has opened many opportunities for a complementarity between modes, transport operators are now competing over many modes in the transport chain. A growing paradigm thus involves supply chain competition, with the modal competition component occurring over three dimensions: 1. Modal usage 2. Infrastructure usage 3. Market area Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 48 MODAL USAGE o Modal usage. Competition that involves the comparative advantage of using a specific or a combination of modes. Distance remains one of the basic determinants of modal usage for passenger transportation. However, for a similar distance, costs, speed and comfort can be significant factors behind the choice of a mode. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 49 INFRASTRUCTURE USAGE o Infrastructure usage. Competition resulting from the presence of freight and passenger traffic on the same itineraries linking the same nodes. Each level of capacity used by a mode is therefore at the expense of the other mode. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 50 MARKET AREA o Market area. Competition between transport terminals for using new space (terminal relocation or expansion) or capturing new markets (hinterland). Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 51 MODAL SHIFT The technological evolution in the transport industry aims at adapting transport infrastructures to growing needs and requirements. When a transport mode becomes more advantageous than another over the same route or market, a modal shift is likely to take place. A modal shift involves the growth in the demand of a transport mode at the expense of another, although a modal shift can involve an absolute growth in both concerned modes. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 52 MODAL SHIFT The comparative advantages behind a modal shift can be in terms of costs, convenience, speed or reliability For passengers, this involved a transition in modal preferences as incomes went up, such as from collective to individual modes of transportation Modal shift can further be nuanced by time shift, for which the use of the same mode takes place at another time period, likely when there is less congestion All modes are affected by fuel price volatility, from the individual car owner to the corporation operating a fleet of hundreds of aircraft or ships Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 53 MODAL SHIFT DRIVERS o Higher transport costs increase the friction of distance and constrain mobility o Because higher fuel costs impact modes differently, a modal shift can be anticipated​ o Higher transport costs increase the friction of distance and constrain mobility Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 54 PA S S E N G E R S A N D F R E I G H T : C O M P L E M E N TA R I T Y V E R S U S COMPETITION o In some cases, both are carried in the same vehicle, as for instance in air transport, where about 80 percent of the freight is transported in the cargo holds of passenger aircraft o In others, different types of vehicle have been developed for freight and passenger traffic, but they both share the same road infrastructure, as for example in rail and road traffic o In shipping, passengers and freight used to share the same Sharing freight and passenger modes is not without difficulties, and indeed some of the major problems confronting transportation occur where the two compete for the use of scarce transport infrastructure Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 55 T H E M A I N A D V A N TA G E S O F J O I N T O P E R AT I O N S o High capital costs can be justified and amortized more easily with a diverse revenue stream o Maintenance costs can be spread over a wider base o The same modes or traction sources can be used for both freight and passengers, particularly for rail Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 56 T H E M A I N D I S A D V A N TA G E S O F J O I N T O P E R AT I O N S A R E o Locations of demand rarely match, since the origins and destinations of freight flows are usually quite distinct spatially from passenger traffic o Frequency of demand is different: for passengers the need is for high-frequency service, while for freight it tends to be somewhat less critical o Timing of service o Traffic balance o Reliability o Sharing routes favors passenger traffic, with passenger trains often given priority or trucks excluded from specific areas at certain times of the day o Different operational speeds, where passengers demand faster service but specific cargo, such as parcels, face similar requirements o Security screening measures for passengers and freight require totally different procedures Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis L E C T U R E 2 – PA RT 2 Road Transportation 58 T R A N S P O R TAT I O N P I L L A R S Spatial Setting Impact Infrastruct ure and Investment Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 59 ROAD TR A NSP ORT Road transportation involves moving passengers and freight with vehicles Setting Spatial Impact over a prepared surface. Infrastructure and Investment Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 60 ROAD TRANSPORT: SETTING o Road and rail are the two major modes comprising the land transport system. o Obviously, roads were established first, as steam rail technology only became available around the 18th century, in the midst of the Industrial Revolution. Historical considerations are important in assessing the structure of current land transportation networks. o Modern roads tend to follow the network structure established by previous roads, as was the case for the modern European road network. The modern roads of Italy, France and Britain follow the structure established by the Roman road network centuries before. o The most remarkable road transport engineering achievement of the modern era is without doubt the setting up of the American interstate highway system. Its construction began in 1956 with the strategic purpose of providing a national road system servicing the American economy and able to support troop movements and act as airstrips in case of an emergency (although the latter two purposes were never used). About 56,000 km were built between the 1950s and the 1970s, marking the years of its fastest expansion. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 61 ROAD TRANSPORT: SETTING Between 1975 and 2006, only 15,000 km were added to the system, underlining growing construction costs and diminishing returns. Overall, about 70,000 km of four-lane and six-lane highways were constructed, linking all major American cities, coast to coast. A similar project took place in Canada with the Trans-Canada Highway, completed in 1962. Other developed economies quickly followed. This trend now takes place in many developing economies, as one of the first signs of economic development is an accelerated process of road construction. For instance, China is building a national highway system that expanded to 136,400 km in 2017, surpassing the length of the American interstate (Figure 5.5). Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 62 63 R O A D T R A N S P O R T : S PAT I A L I M PA C T At the top of the hierarchy are freeways (highways), which are limited-access roads with no intersections. There are also Put together, this network enables point-to- arterials, which are roads having traffic point services, a notable advantage that signals at intersections, forcing vehicles to road transport has over other transport stop. These arterials are fed by collectors modes. and local roads, which have the main purpose of connecting specific activities (residences, retail stores, industries). Road transport modes have limited potential to achieve economies of scale. This is due to size and weight constraints imposed by governments and by the technical and While in the United States the maximum economic limits of engines. In most gross vehicle weight is 36 metric tons jurisdictions, trucks and buses have specific (79,000 lb), in Europe and China these weight and length restrictions which are figures are 40 and 49 metric tons (88,000 imposed for safety reasons, but also because and 108,000 lb) intensive road use by heavy trucks damages road infrastructure and increases maintenance costs. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 64 R O A D T R A N S P O R T: S PAT I A L I M PA C T Growth in road freight This is the result of growth of transport has been fuelled the loading capacity of The spatial cover of road largely by trade liberalization, vehicle and an adaptation of transportation is extensive, as modal shares of trade the vehicle to freight market but its scope remains local within the European Union segments such as and regional. and North American Free perishables, fuel, construction Trade Agreement (NAFTA) materials, or containers, or suggest. passengers’ demand for speed, autonomy and flexibility. Problems such as a significant growth of fuel consumption, Roads have a functional increasing environmental hierarchy depending on the externalities, traffic role they play in the transport congestion and safety network. (accidents) have also emerged. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 65 R O A D T R A N S P O R T: A D VA N TA G E S o In spite of the presence of alternatives, road transport retains significant advantages over other modes: o The capital cost of vehicles is relatively low, which makes it comparatively easy for new users to gain entry. This helps ensure that the trucking industry, for example, is highly competitive, but with low profit margins. Low capital costs also ensure that innovations and new technologies can diffuse quickly through the industry. o Road vehicles have a high relative speed compared with non-motorized forms of transportation and public transit, the major constraint being government-imposed speed limits. o Road transportation offers a flexibility of route choice, once a network of roads is provided. It has the unique opportunity of providing door-to-door services for both passengers and freight. o These multiple advantages have made cars, buses and trucks the modes of choice for many Source: Professortrip purposes, Jean-Paul Rodrigue -and have led The Geography to their of Transport market System dominance 5th Edition – for short-distance Taylor & Francistrips. 66 R O A D T R A N S P O R T: D I S A D VA N TA G E S o The success of cars and trucks has given rise to several serious problems. Road congestion has become a feature of most urban areas around the world. In addition, road transport is behind many major environmental externalities linked to transportation, particularly CO2 emissions. Addressing these issues is becoming an important policy challenge, from the local to the global. A symbiosis between types of roads and types of traffic with specialization (reserved lanes and hours) is to be expected. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 67 R O A D T R A N S P O R T: INFRASTRUCTURES AND INVESTMENTS o Road infrastructures are moderately expensive to provide, but there is a wide divergence of costs, from a gravel road to a multi-lane urban expressway. Because vehicles can climb moderate slopes, physical obstacles are less important than for some other land modes, namely rail and barges. o Most roads are provided as a public good by governments, while the majority of vehicles are privately owned. Capital costs, therefore, are generally assumed by the society and do not fall as heavily on one source, as is the case for other modes. Unlike many transport infrastructures where the network is paid for by the user through pricing mechanisms, 95 percent of the financing of road infrastructure is covered by the public sector, leaving the remainder covered by tolls. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 68 R O A D T R A N S P O R T: INFRASTRUCTURES AND INVESTMENTS o The public offering of free road infrastructure conveys several advantages to the private sector but can also lead to serious problems. The main advantage is clear: the users of roads commonly do not bear the full operating costs, implying that road transportation tends to be below real market price. For road freight transportation, this can be seen as a subsidy, as road maintenance is not part of the operating costs but is indirectly present with taxes and tolls. As long as there is spare road capacity, this situation works for the benefit of the users. However, when congestion starts to arise, users have limited, if any, influence on the construction of new and improved infrastructure to mitigate the problem, since they do not own the infrastructure and are using it for free. o Lobbying public entities to receive public road infrastructure investments can be a very long process, subject to constant delays and changes. Road users thus become trapped in a situation they can do little to change, since it is provided free of charge. o This can be labelled as the “free roads curse.” An entity owning and operating its own network, such as a rail company in North America, has the advantage of directly implementing improvements with its own capital if congestion arises on a segment of its network. It is thus better placed to cope with congestion. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 69 R O A D T R A N S P O R T: INFRASTRUCTURES AND INVESTMENTS o Governments can expropriate the necessary land for road construction, since a private enterprise may have difficulties taking it without government support. o Other important aspects about roads are their economies of scale and their indivisibility, underlining that the construction and maintenance of roads is cheaper when the system is extensive, but only to a point. However, all road transport modes have limited abilities to achieve scale economies. This is due to the size constraints imposed by governments and by the technical and economic limits of the power sources and what infrastructures can bear weight-wise. In most jurisdictions, trucks and buses have specific weight and length restrictions. In addition, there are serious limits on the traction capacities of cars, buses and trucks because of the considerable increases in energy consumption that accompany increases in the weight of the transported unit. For these reasons the carrying capacities of individual road vehicles are limited. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 70 R O A D T R A N S P O R T: INFRASTRUCTURES AND INVESTMENTS o Even if roads are costly infrastructures to build and maintain, they are also sources of revenue: o Costs. These include the costs to secure rights of way, including expropriation costs, which can be prone to delays. Development costs (planning), construction costs, maintenance and administration costs are significant. The constructions costs of a simple two-lane road can cost $2– 3 million per kilometres in a low-density area, a cost that can easily double for higher-density areas. Furthermore, there are losses in land taxes and external costs related to accidents and pollution. o Revenue. Road transportation is associated with multiple sources of public revenue. They include registration, gas taxes, sales taxes for the purchase of vehicles, tolls, parking and insurance fees. Another form of indirect income concerns traffic violations (e.g. speeding), which are using the rationale of public safety to hide revenue generation practices by local governments. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 71 R O A D T R A N S P O R T: INFRASTRUCTURES AND INVESTMENTS o In many cases governments have been inefficient custodians of road infrastructure, as it is tempting to delay road maintenance or improvements because of the high costs involved. o Budgetary problems are also prompting increases in taxes and tolls, the sale of assets and reductions in expenses. Consequently, a growing number of roads have been privatized and companies specializing in road management have emerged, particularly in Europe and North America. o This is only possible on specific trunk roads that have important and stable traffic. Private enterprises usually have vested interests to see that the road segments they manage are maintained and improved, since the quality of the road will be directly linked with revenue generation. o Most toll roads are highways linking large cities or bridges and tunnels where there is a convergence of traffic. Most roads are not economically profitable but must be socially present, as they are essential to service populations. It can thus be expected that roads will remain predominantly publicly funded in the future. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis L E C T U R E 3 – PA RT 1 Rail Transportation 73 R A I L T R A N S P O R TAT I O N : DEFINITION o Rail transportation refers to the movement of vehicles on guideways. The most common guideways are railways, but recent technological developments have also made monorails available, as well as magnetic levitation trains. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 74 R A I L T R A N S P O R TAT I O N : OVERVIEW o Rail transportation has been the product of the industrial era, playing a major role in the economic development of Western Europe, North America and Japan, where such systems were first massively implemented. o Rail transport systems dramatically improved travel time as well as the possibility to offer reliable and consistent schedules that could be included in the planning of economic activities such as production and distribution. o Rail transportation brought scheduling and reliability to transportation systems. o Because of its cost and time advantages, rail was able to supplant canal services in inland transportation, becoming the main driver of spatial change in industrializing regions of the world. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 75 R A I L T R A N S P O R TAT I O N : OVERVIEW o Rail transportation has been the product of the industrial era, playing a major role in the economic development of Western Europe, North America and Japan, where such systems were first massively implemented. o Rail transport systems dramatically improved travel time as well as the possibility to offer reliable and consistent schedules that could be included in the planning of economic activities such as production and distribution. o Rail transportation brought scheduling and reliability to transportation systems. o Because of its cost and time advantages, rail was able to supplant canal services in inland transportation, becoming the main driver of spatial change in industrializing regions of the world. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 76 R A I L T R A N S P O R TAT I O N : M A I N TYPES Penetrati on Lines Rail Type Transcont s Region in-ental Networks Lines Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 77 R A I L T R A N S P O R TAT I O N : P E N E T R AT I O N L I N E S Their main purpose is to link a port city with its hinterland, particularly in order to access natural resources such as minerals, agricultural products and wood products. The purpose of a penetration line is to convey large amounts of materials in a manner that would be prohibitive for road transport. It also represented one of the initial stages of rail development, notably in the United States, which later became regional networks linked by transcontinental lines. Penetration lines are today mainly found in developing countries (Africa and Latin America) and were partially the result of the colonial era. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 78 R A I L T R A N S P O R TAT I O N : REGIONAL NETWORKS These service high-density population areas of developed countries with the goal to support massive shipment of freight and passengers. Regions with the highest rail density are Western Europe, the north- eastern part of North America, coastal China and Japan. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 79 R A I L T R A N S P O R TAT I O N : T R A N S C O N T I N E N TA L L I N E S These lines were mainly established to improve territorial accessibility and for the setting up of national sovereignty. The most relevant examples are in the United States, Canada, Russia and Australia, which have built rail systems of this scale, such as between New York and Los Angeles, across Eurasia (between Dalian and Moscow), across Southern Australia (Perth and Adelaide) or across South America (Buenos Aires and Valparaiso). More recently, transcontinental rail lines have seen a renewal in interest by their capability to attenuate the discontinuity of maritime transportation by transporting containers, such as over the North American Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Landbridge andTaylor the&Eurasian Francis Landbridge. They are a chain in the global intermodal 80 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o Rail transportation has a strong economic rationale, making it a competitive modal option for the mobility of passengers and freight. o The ability of trains to haul large quantities of freight and significant numbers of passengers over long distances is the mode’s primary asset. o Overall, rail transportation is more efficient than road transportation, although its main drawback is flexibility, as traffic must follow fixed routes and transhipment must take place at terminals. o With containerized unit trains, economies of scale can readily be achieved, while roads have limited ability to benefit from this advantage. o Each additional container being carried by road involves the same marginal cost increase, while for rail there is a declining marginal cost per additional container until the unit train size is reached. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 81 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o Freight traffic is dominated by bulk cargo shipments, agricultural and industrial raw materials in particular. Rail transport is a greener inland mode, in that its consumption of energy per unit load per kilometre is lower than road mode. o Rail transport has comparative advantages in carrying heavy bulk traffic on specific itineraries over long distances. o For instance, a 10-car freight train can carry as much cargo as 600 trucks. Besides its emphasis on safety and reliability, rail transport favours the fast commuting of suburbanites during peak hours and has become an important mode supporting passenger movements in large cities. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 82 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o Freight traffic is dominated by bulk cargo shipments, agricultural and industrial raw materials in particular. Rail transport is a greener inland mode, in that its consumption of energy per unit load per kilometre is lower than road mode. o Rail transport has comparative advantages in carrying heavy bulk traffic on specific itineraries over long distances. o For instance, a 10-car freight train can carry as much cargo as 600 trucks. Besides its emphasis on safety and reliability, rail transport favours the fast commuting of suburbanites during peak hours and has become an important mode supporting passenger movements in large cities. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 83 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o Passenger rail transportation is particularly effective in countries that have a system of multiple interconnected cities, which is the case for India, China and Japan. They account for the largest use of passenger rail, with population density as the main driver. The Russian Federation has a much lower population density, but the extent of the territory and the lack of roads is the main driver of rail passenger-km. o The quantity of freight carried by rail is related to country size and the composition of the economy. Large countries imply longer national distances over which rail freight is carried, which results in more ton-km for an equivalent quantity of freight. Countries endowed with natural resources usually involve more rail tonnage. The United States, the Russian Federation, China, Canada and South Africa are all large countries where a substantial amount of natural resources are being carried by their rail system Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 84 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o The initial capital costs of rail are high because the construction of rail tracks and the provision of rolling stock are expensive. Historically, investments were made by the same source (either governments or the private sector) and before any revenues were realized. Rail thus has important entry barriers that tend to limit the number of operators. o High capital costs also delay innovation, compared with road transport, since rail rolling stock has a service life of at least 20 years. This can also be an advantage, since the rolling stock is more durable and offers better opportunities at amortization. On average, rail companies need to invest about 45 percent of their operating revenues each year in capital and maintenance expenses of their infrastructure and equipment. o Capital expenditures alone accounts for about 15 to 20 percent of revenue, while this share is around 3 to 4 percent for manufacturing Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – activities. Taylor & Francis 85 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o The initial capital costs of rail are high because the construction of rail tracks and the provision of rolling stock are expensive. Historically, investments were made by the same source (either governments or the private sector) and before any revenues were realized. Rail thus has important entry barriers that tend to limit the number of operators. o High capital costs also delay innovation, compared with road transport, since rail rolling stock has a service life of at least 20 years. This can also be an advantage, since the rolling stock is more durable and offers better opportunities at amortization. On average, rail companies need to invest about 45 percent of their operating revenues each year in capital and maintenance expenses of their infrastructure and equipment. o Capital expenditures alone accounts for about 15 to 20 percent of revenue, while this share is around 3 to 4 percent for manufacturing Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – activities. Taylor & Francis 86 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o In several countries, such as China, India, and Japan, rail transportation accounts for the majority of interurban passenger transportation. Rail transportation is still very important, mainly for passenger transportation, but has declined over the last few decades. o Among developed economies, there are acute geographical differences in the economic preference of rail transportation. o High-speed passenger rail projects, however, are improving its popularity, but the competition was mainly being felt on air transportation services rather than road transport. o For North America, rail transportation is strictly related to freight, with passengers playing a marginal role only along a few major urban corridors. Passenger trains are even getting delayed because priority is given to freight, impairing the reliability of the service. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 87 R A I L T R A N S P O R TAT I O N : S PAT I A L E C O N O M Y o It is only in the north-eastern part of the United States that passenger services are running on time, since Amtrak (the federally owned passenger rail operator) owns the tracks. Rail freight services are also facing the challenge of improving their reliability, which leads to a fragmentation of the types of services being offered. o Rail freight markets such as coal, grain, forest products or chemicals, the priority has consistently been the provision of high-capacity and low-cost forms of transportation. However, these services were unreliable but could be easily accommodated by stockpiling, a strategy common in the resource sector (e.g. power plants, grain elevators). o An emerging freight market for rail mostly concerns intermodal services that require a much higher level of reliability, similar to what is expected in trucking. Commercial changes such as large volumes of retail import containerized cargo and just-in-time manufacturing require Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – high reliability levels to support the related supply chains. Taylor & Francis L E C T U R E 3 – PA RT 2 Maritime Transportation 89 MARITIME T R A N S P O R TAT I O N : DEFINITION o Maritime transportation concerns the movement of passengers and freight over water masses, from oceans to rivers. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 90 MARITIME T R A N S P O R TAT I O N : MARITIME GEOGRAPHY AND ROUTES o Maritime transportation, like land and air modes, operates on its own space, which is at the same time geographical by its physical attributes, strategic by its control and commercial by its usage. While geographical considerations tend to be constant in time (except for the seasonality of weather patterns), strategic and especially commercial considerations are much more dynamic. o The physiography of maritime transportation is composed of two major elements: rivers and oceans. Although they are connected, each represents a specific domain of maritime circulation. The notion of maritime transportation rests on the existence of regular itineraries, better known as maritime routes. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 91 M A R I T I M E T R A N S P O R TAT I O N : MARITIME GEOGRAPHY AND ROUTES o Maritime routes. Corridors of a few kilometres in width trying to avoid the discontinuities of land transport by linking ports, the main elements of the maritime/ land interface. o Maritime routes are a function of obligatory points of passage, which are strategic places, of physical constraints (coasts, winds, marine currents, depth, reefs, ice) and of political borders. As a result, maritime routes draw arcs on the earth’s water surface as intercontinental maritime transportation tries to follow the great circle distance. o Maritime routes link maritime ranges representing main commercial areas between and within which maritime shipping services are established. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 92 M A R I T I M E T R A N S P O R TAT I O N : MARITIME GEOGRAPHY AND ROUTES o Maritime routes. Corridors of a few kilometres in width trying to avoid the discontinuities of land transport by linking ports, the main elements of the maritime/ land interface. o Maritime routes are a function of obligatory points of passage, which are strategic places, of physical constraints (coasts, winds, marine currents, depth, reefs, ice) and of political borders. As a result, maritime routes draw arcs on the earth’s water surface as intercontinental maritime transportation tries to follow the great circle distance. o Maritime routes link maritime ranges representing main commercial areas between and within which maritime shipping services are established. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 93 MARITIME T R A N S P O R TAT I O N : MARITIME GEOGRAPHY AND ROUTES o Maritime transportation, like land and air modes, operates on its own space, which is at the same time geographical by its physical attributes, strategic by its control and commercial by its usage. While geographical considerations tend to be constant in time (except for the seasonality of weather patterns), strategic and especially commercial considerations are much more dynamic. o The physiography of maritime transportation is composed of two major elements: rivers and oceans. Although they are connected, each represents a specific domain of maritime circulation. The notion of maritime transportation rests on the existence of regular itineraries, better known as maritime routes. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 94 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Maritime transportation is predominantly focused on freight, since there are no other effective alternatives to the long-distance transportation of large amounts of freight. The systematic growth of maritime freight traffic has been fuelled by: o Absolute Advantage o Comparative Advantage o Technical Improvement o Economies of Scale Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 95 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Absolute advantages. Linked with the geographical distribution of resources, implying that the places of production are usually different from the places of consumption. Large quantities of cargo therefore need to be carried over long distances. The growth in mineral and energy trades, the dominant cargoes carried by maritime shipping, is the outcome of both conventional demands from developed countries as well as new demands from developing economies. For instance, coal is mainly used for energy generation and steelmaking, activities that grew substantially in the developing world. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 96 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Comparative advantages. Concerns cargoes that under ideal circumstances would likely not be carried, but because of cost and capabilities differentials substantial shipping flows are generated. The international division of production and trade liberalization, commonly referred to as globalization, incited a large number of parts and finished goods to be carried over long distances, which has supported growth in container shipping. This has been associated with a change in the balance of maritime trade flows where developing economies have a wider involvement. Therefore, such cargoes can be temporary and subject to changes in their origins and destinations. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 97 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Technical improvements. Ships and maritime terminals have become more efficient in terms of their throughput and their ability to handle several types of cargoes (e.g. containers, natural gas, refrigerated goods), enabling the support of long-distance trade. o Economies of scale. The growth in the size of ships permitted maritime transportation to become increasingly cost-effective, a trend which has been strengthened by containerization. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 98 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Maritime traffic is commonly measured in deadweight tons, which refers to the amount of cargo that can be loaded on an “empty” ship, without exceeding its operational design limits. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 99 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Maritime freight is conventionally considered in two main markets o Bulk cargo. Refers to freight, both dry and liquid, that is not packaged, such as minerals (oil, coal, iron ore, bauxite) and grains. It often requires the use of specialized ships such as oil tankers as well as specialized transshipment and storage facilities. Conventionally, this cargo has a single origin, destination and client and is prone to economies of scale. Services tend to be irregular, except for energy trades, and part of vertically integrated production processes (e.g. oil field to port to refinery). The dynamics of the bulk market are mainly attributed to industrialization and economic development, creating additional demand for resources and energy. o Break-bulk cargo. Refers to general cargo that has been packaged in some way with the use of bags, boxes, drums and particularly containers. This cargo tends to have numerous origins, destinations and clients. Before containerization, economies of scale were difficult to achieve with break-bulk cargo, as the Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – loading and Taylor unloading process was very labor- and time-consuming. The & Francis dynamics of the break-bulk market are related to manufacturing and 100 M A R I T I M E T R A N S P O R TAT I O N : MARITIME TRAFFIC o The composition of maritime traffic has shifted from being dominated by liquid bulk (petroleum) to dry bulk and containers. Technical improvements tend to blur the distinction between bulk and break-bulk cargo, as both can be unitized on pallets and increasingly in containers. For instance, it is possible, and increasingly common, to ship grain and oil, both bulk cargoes, in a container. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 101 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o The global maritime shipping industry is serviced by about 100,000 commercial vessels of more than 100 tons, falling into four broad categories: Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 102 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Passenger vessels historically played an important role, since they were the only mode available for long-distance transportation. In a contemporary setting, passenger vessels can be divided into two categories: passenger ferries, where people are carried across relatively short bodies of water (such as a river or a strait) in a shuttle-type service; and cruise ships, where passengers are taken on vacation trips of various duration, usually over several days. The former tends to be smaller and faster vessels, while the latter are usually very large capacity ships having a full range of amenities. In 2018, about 28.5 million passengers were serviced by cruise ships, underlining an industry with much growth potential, since it services several seasonal markets where the fleet is redeployed to during the year. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 103 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o Bulk carriers are ships designed to carry specific commodities and are differentiated into liquid bulk and dry bulk vessels. They include the largest vessels afloat. The largest tankers, the Ultra-Large Crude Carriers (ULCC), are up to 500,000 deadweight tons (dwt), with the more typical size being between 250,000 and 350,000 dwt; the largest dry bulk carriers are around 400,000 dwt, while the more typical size is between 100,000 and 150,000 dwt. The emergence of liquefied natural gas (LNG) technology enabled the maritime trade of natural gas with specialized ships. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis 104 MARITIME T R A N S P O R TAT I O N : MARITIME TRAFFIC o General cargo ships are vessels designed to carry non-bulk cargoes. The traditional ships were less than 10,000 dwt, because of extremely slow loading and offloading. Since the 1960s these vessels have been replaced by container ships because they can be loaded more rapidly and efficiently, permitting a better application of the principle of economies of scale. Like any other ship class, larger container ships require larger drafts, with the current largest ships requiring a draft of 15.5 m. o Roll on/roll off (RORO) vessels, which are designed to allow cars, trucks and trains to be loaded directly on board. Originally appearing as ferries, these vessels are used on deep-sea trades and are much larger than the typical ferry. The largest are the car carriers that transport vehicles from assembly plants to the main markets. Their capacity is measured in the amount of parking space they can offer to the vehicles they carry, mostly measured in lane meters. Source: Professor Jean-Paul Rodrigue - The Geography of Transport System 5th Edition – Taylor & Francis L E C T U R E 4 – PA RT 1 Transport Economics: Introduction 106 CONTENTS o Revisiting transport concept o Revisiting economics concept o What is Transport Economics? o What transport economists do? o Issues relevant to transport economics o From supply chain to value chain o The economic characteristics of transport o Brainstorming over transport economics during COVID-19 Copyrights @ Dr Khaled Hussein 2024 107 T R A N S P O RT Transportation is a friction – a cost in both money and time – that must be incurred by individuals and firms to complete almost any market transaction. An efficient and extensive transportation system greatly enriches the standard of living in modern society by reducing the cost of nearly everything in the economy; expanding individuals’ access to and choices of employers and employers’ choices of workers; enabling firms and urban residents to benefit from the spatial concentration of economic activities, referred to as agglomeration economies; reducing trade costs and allowing firms to realize efficiency gains from specialization, comparative advantage, and increasing returns; and limiting firms’ ability to obtain market power by locating in geographically isolated markets with no competition. 108 ECONOMICS Economics can be defined in a few different ways. It’s the study of scarcity, the study of how people Microeco nomics use resources and respond to incentives, or the study of decision-making. It often involves topics like wealth and finance, but it’s not all about money. Economics is a broad discipline that helps us understand historical trends, interpret today’s headlines, and make predictions about the coming Economics years. For example, it help us to answer the following questions: o Why are some countries rich and some countries poor? Macroeco o Why do women earn less than men? nomics o How can data help us understand the world? o Why do we ignore information that could help us make better decisions? o What causes recessions? 109 T R A N S P O RT E C O N O M I C S Transport economics is a branch of economics founded in 1959 by American economist John R. Meyer that deals with the allocation of resources within the transport sector. It has strong links to civil engineering. 110 T R A N S P O RT E C O N O M I S T Transport economists are interested in the economic problems of moving goods and people; they are not normally so concerned with either the industries producing the vehicles and infrastructure (aircraft manufacturing, road construction companies, ship building, etc.) or with some of the very wide implications of transport policy (for example, on the balance of payments), although matters to do with the environment certainly attract increasing amounts of their attention. The Transport Economist will provide policy advice, develop transport sector and sub-sector strategies (roads, urban transport, railways, aviation and port), undertake economic assessments of systems and projects, and provide advice on the economic and financial impacts of transport projects, policies and initiatives. 111 I SS U E S I N T R A N S P O RT ECONOMICS While much of the economic analysis of transport issues is at the micro level (for Transport example, looking at the decisions of individuals Microecon or firms) or at the meso-level (focusing on omics transport industries or the importance of transport on a specific region), there is also some interest in the macroeconomic impacts of transport, for example on its effects on national productivity, globalization of trade, or labor force migration. Transport Economics Transport economists are now heavily involved Transport Transport in trying to assess the precise quantitative Macroeco Mesoecon effect of different policy options and with nomics omics forecasting likely changes in transport demand. 112 F R O M S U P P LY C H A I N T O VA L U E C H A I N Supply Chain and Value Chain Logistics o The growth in interest in o One way of looking at this is supply-chain logistics, which through the notion of ‘value spans all movement and chain’ initiated by Michael storage of raw materials, Porter (1985). A value chain is work-in-process inventory, Transpo the additional value added as and finished goods from point rt more inputs are incorporated of origin to point of Econom into the production process for consumption, and within that a specific final output. It just-in-time management, has ics describes the full chain of a led to a much more implicit business’s activities in the incorporation of economics creation of a product or service into transport activities. – from the initial reception of materials through its delivery to market, and everything in between. 113 VA LU E C H A I N A N D T R A N S P O RT E C O N O M I C S Figure 1.2 provides a simplified generic value chain. The key point about it is the extensive number of linkages required through a production process from the initial extraction of raw materials to the final delivery of goods to a market and their subsequent servicing. Transport is, at various levels of aggregation and in different forms, important at all stages. Just-in-time management is, when we look at the links between transport economics and transport logistics, important in ensuring that few resources are tied up in the process at any one time so that inventory holdings are optimized. 114 THE ECONOMIC CHARACTERISTICS OF T R AN S P O RT o Possibly the most important characteristic of transport is that it is not normally wanted in its own right. It is a major facilitator for enhancing personal welfare and for such things as economic development. o Demand and supply for transport exhibit unique features. o Fixed plant (for example, rail track, airports, etc.) component is usually extremely long-lived and expensive to replace. o Mobile plant (for example, ships and planes) s relatively short-lived and replacement usually occurs with physical obsolescence rather than technical obsolescence as with the fixed components. 115 THE ECONOMIC CHARACTERISTICS OF T R AN S P O RT Demand Fixed Plant Mobile Supply Plant 116 T R A N S P O RT S Y S T E M D U R I N G C O V I D - 1 9 PA N D E M I C Demand Fixed Plant Mobile Supply Plant L E C T U R E 4 – PA RT 1 Transport Economics: Introduction 118 CONTENTS o Revisiting transport concept o Revisiting economics concept o What is Transport Economics? o What transport economists do? o Issues relevant to transport economics o From supply chain to value chain o The economic characteristics of transport o Brainstorming over transport economics during COVID-19 THANK YO U Dr Khaled Hussein [email protected]